Price action: March corn futures closed steady at $4.28, settling well off overnight highs.
5-day outlook: Corn futures struggled to maintain overnight strength and ended the day nearer session lows, capping a disappointing few days of trade. Reports of Trump’s plan to increase tariffs on Mexico weighed heavily on corn prices the past couple of days, with retaliation likely harming this marketing year’s corn exports, which have been pacing remarkably well. Choppy trade is likely to persist until there is more clarity on trade policy and seeing what is actually done come Trump’s inauguration on January 20. Next week, USDA will release monthly corn-for-ethanol use for the month of October, which is likely to show a record for the month. Corn for ethanol use so far this year has been what is likely a record, a healthy sign for the balance sheet as the market looks to offload bushels. The downside seems limited over the coming week but recent technical selling pressure has been discouraging.
30-day outlook: Traders will keep a close eye on export sales over the coming month to see if sales remain quite strong with the change in the White House coming at hand. Commitments continue to run at the highest mark since 2021-22 despite a lackluster start to the marketing year. Use, particularly exports, will need to continue to run hot in order to help mitigate the expansion of the balance sheet due to this year’s impressive yield. While we anticipate total supplies to come down, the effects of any change to 2024-25 production won’t be known until January at the earliest, at least officially.
90-day outlook: South American weather will play a key role in the world balance sheet over the coming quarter. The return of La Nina and unpredictable weather could eventually support U.S. corn prices, but La Nina has been slow to develop despite shifting out of El Nino in the spring. Ocean temperatures have remained ENSO neutral despite continuous calls for La Nina, with World Weather Inc. noting in a special report that neutral conditions are quite possible for the next couple of months. Low corn prices also pressure producers to find alternative, more profitable crops, with reports this week indicating Brazilian producers are likely to substantially increase cotton plantings.. Any change to the planted acreage in Brazil could send additional demand to the U.S. market, further providing a floor under prices, but given abundant supplies under current assumptions, corn prices are likely to face persistent selling on any sustained rally.
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