Price action: July corn futures plunged 29 3/4 cents to close at $6.30 3/4, marking a 9 1/2 cent loss on the week. December futures led the complex lower, losing 32 3/4 cents on the day before settling at $5.88, near the session low and marked a 9 1/2 cent loss on the week.
5-day outlook: Corn futures succumbed to heavy selling pressure though losses were mitigated by technical support in the latter half of the session. December futures were at the highest level above the 10-day moving average for the life of the contract earlier this week, showing the explosiveness of the recent run higher. Profit taking amidst a potentially wetter forecast does not necessarily point to the end of the first summer rally of the year, although bears have placed the pressure on bulls to recover some of the 40-cent selloff. Crop moisture stress is going to remain a serious concern over the coming week for the driest areas in the central Corn Belt, with sporadic and light rainfall expected in Illinois, Missouri and the immediate surrounding areas, World Weather Inc says. Crop conditions are likely to continue to deteriorate in Monday’s report, thwarting beliefs that production loss is behind us and adding fuel to the weather market.
30-day outlook: Next Friday’s acreage and Quarterly stocks reports are known as severe market catalysts that can change the trend of a market, evidenced by the 2019 report that changed the bullish trend and sent corn back below $4.00. Analysts expect just 100,000 less acres than the March report at 91.9 million acres, according to a Bloomberg survey. There was substantial risk this spring in the Red River basin of projected acres not getting planted, but the dryness in the latter half of May and early June allowed producers to plant at a rapid pace, evidenced by the minimal drop in the survey. A surprise in the Quarterly Stocks report could send reverberations through the market, but weather is still likely to prevail in determining price action over the next month. If El Niño holds true and brings excess moisture into the Corn Belt in July along with cooler-than-normal temperatures, much of the production loss from continued dryness thus far could very well be priced in and price remove weather premium out of the market.
90-day outlook: Risk of production loss has been driving the market higher since mid-May, but prior to that, prices were under pressure because of deteriorating demand prospects. Ethanol continues to fall behind the pace needed to reach current USDA estimates and it is our belief that the USDA will adjust corn for ethanol use in the upcoming Supply and Demand report. Exports have been poor, evidenced by the USDA’s release this morning that showed old-crop export sales of 36,000 MT for the week ended June 15. This was down 87% from the previous week and 74% from the four-week average. Export sales were at the bottom of the expected range. The Brazilian harvest of a record crop is underway, and bushels will be hitting the world market in the coming months. Outstanding commitments of U.S. corn are well below what is needed to hit the USDA export estimate and we believe that USDA will lower this in the upcoming Supply and Demand report as well. Demand is known to change on a dime, but current prospects are not looking good for corn bulls. Higher carry-in from old-crop could dampen risk appetite heading into the 2023-24 crop year and help keep a lid on prices over the next few months.
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