Price action: December corn futures plunged 10 3/4 cents to $4.10, though still eked out a 9 1/4 cent gain on the week.
5-day outlook: Corn futures gave up most of this week’s gain, falling back below notable support and confirming bears’ technical grasp. Bulls challenged significant resistance each day from Tuesday onward this week, though sellers reemerged in the latter half of the sessions, driving prices from intraday highs. The overnight session and this morning both saw little buying interest, contrary to every other day this week. Bulls will need to hold support at $4.04 and the psychological $4.00 mark early next week. Followthrough selling to the latter mark is likely given today’s weakness, though the $4.00 has acted as a key support and resistance level on the long-term chart. If bulls can maintain that support next week, it is likely that it will continue to support prices into the August Supply and Demand reports released from USDA on August 12.
30-day outlook: The coming month will provide a lot of insight to the supply side of the new-crop balance sheet. USDA will use FSA data to update planted acres in the August Crop Production and WASDE reports. That will give insight into how many of the 3.356 unplanted acres in the June Acreage Report ended up being planted. USDA is likely to adjust their harvested percentage as well, given significant damage to acres in the upper Corn Belt from flooding earlier this summer. Meanwhile, strong crop conditions could warrant an adjustment to yield as well. Our studies indicate that strong crop conditions this late in the summer typically are followed by strong yields, with this year’s conditions indicating a record yield by a wide margin. The combination of a likely decrease in harvested acres has us projecting another 150 million bushels on top of USDA’s July estimate of 15.100 billion bushels. Late season weather problems or greater negative effects from the wet growing season could hinder production prospects, but given the current data we have, record supplies look likely.
90-day outlook: Once the supply outlook is better hashed out in the coming months, focus will return to demand and the continued expansion of the balance sheet. USDA has been quick to adjust use higher along with anticipated higher supply for the 2024-24 marketing year. Export sales for new-crop have been rather unremarkable so far but are in line with a year ago. Lower prices have drawn additional demand for feed and ethanol use has been strong in recent months, helped by lower prices and strong demand for ethanol. USDA is penciling in record corn use for new-crop and we are even more optimistic. Still the expanding balance sheet due to a fruitful growing season and record supplies is likely to continue to weigh heavily on prices over the coming quarter.
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