Price action: December corn futures sunk 2 3/4 cents to $4.15 3/4 and settled on session lows. Prices marked an 8 1/4 cent loss on the week.
5-day outlook: Corn futures were trading higher ahead of today’s updated Crop Production and Supply and Demand reports from USDA, which sparked some modest selling pressure and forced prices to settle near this week’s lows. USDA opted to leave most of the balance sheet unchanged today, making minor adjustments after incorporating ending stocks reported in the Quarterly Grain Stocks report last week. USDA raised 2024 production to 15.203 billion bu., above 15.186 billion bu. in September and expectations of 15.155 billion bu. That leaves the estimated yield at 183.8 bushels/acre, up 0.2 bushels from a month ago. Prices found modest strength into the close. Bulls managed to hold key support this week, which leaves the door open for a bounce next week. December futures have worked into a precarious position. That is, if prices continue to go much lower, it could negate the uptrend currently in place from the August low. Harvest selling and commercial hedge pressure has left the door open for extended weakness as of late, though we feel it is overdone.
30-day outlook: On the surface, today’s USDA reports look modestly bearish, which encouraged selling pressure intraday. A deeper dive into the objective yield data in the Crop Production report is quite puzzling. USDA raised yields in Iowa, Kansas, Missouri and Nebraska and cut estimated yields in Indiana and Ohio. Each of those states are part of the 10 objective yield data sets. Ear counts were down from September in eight of the ten objective yield states (Illinois, Indiana, Iowa, Kansas, Minnesota, Nebraska, Ohio, South Dakota and Wisconsin), with only Wisconsin and Minnesota showing increases. Huge drops in Iowa and Indiana were stunning. Population was a mixed bag for the states, though overall, were down as well. With population and ear counts both showing declines, implied ear weights are seen as smashing the prior record. The coming month will allow for additional objective data to be collected, giving a better idea of where production will end up. This continues to give us confidence that the current USDA yield forecast is too high, which is likely to shore up the balance sheet in the coming months.
90-day outlook: The world balance sheet will become more of a focus and price-action driver in the coming quarter. South America has begun planting and relatively dry soils have limited planting pace. But, fertilizer costs in Brazil are expensive relative to the price of corn. The high input costs of corn could lead to more producers opting to plant beans. While bearish for beans, which already see the world balance sheet at record levels, it could tighten up the corn balance sheet. If Brazil does not plant as much corn as currently expected, it could also drive additional importers to the U.S. market, including China, which currently does not have any sales on the book for U.S. origin corn. USDA lifted their export estimate 25 million bushels to 2.325 billion bushels in today’s report, reflecting their optimism for the export market.
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