Price action: December corn futures dropped 5 1/2 cents to $4.92 but gained 15 1/4 cents on the week.
5-day outlook: Corn futures struggled to reverse overnight weakness despite increasing support from outside markets as the U.S. dollar faded notably from early morning strength. While corn prices were weaker heading into the weekend, they retained most of Thursday’s gains and closed above prior resistance, which now serves as support. The 40-day moving average, currently at $4.89, has proven pivotal for corn futures, which is evidenced by the December contract’s test of the area for five straight sessions before Thursday’s breakout. A return below the 40-day would infer a failed breakout on the daily bar chart, a bearish omen. However, if prices remain above $4.89, the bullish technical posture should prevail over the coming week, though the upcoming October WASDE and Crop Production reports on October 12 could disrupt that thesis.
30-day outlook: October is historically bullish for corn futures, before succumbing to fresh selling pressure in the month of November. Strength in October should be viewed as a selling opportunity, especially as carry out is seen at over 2 billion bushels. Current data makes the likelihood of a large miss in production unlikely in the October Crop Production report released next week. That renders any sustained strength will need to come from the demand side, which has picked up slightly in the past month, but an excess of ending stocks will likely continue to keep sellers interested in selling rallies, limiting gains throughout the month.
90-day outlook: Following potential seasonal strength in October, the seasonal gets much more bearish through November. Add in continued falling river levels and lagging export demand, and the situation looks much more bearish for corn over the next quarter. The USDA is projecting a 385 million bushel jump in corn exports from 2022-23, and the current outstanding sales indicates that is unlikely. Granted, export demand can turn on a dime, especially if El Niño brings an early end to seasonal rains in Brazil, harming second crop corn production, current prospects indicate an abundance of domestic corn, which will weigh on prices into the winter months.
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