Price action: December corn futures surged 7 1/4 cents to $4.13 1/4 and closed on session highs, marking a 7-cent gain on the week.
5-day outlook: Corn futures shrugged off weakness from the soybean market and closed near this week’s highs. Strong gains in the wheat market helped out corn bulls today as well. The reaction seen after yesterday’s reports has bulls optimistic that an interim low could be in place in corn futures. The weak finish to the week in the soy market is a bit concerning for corn bulls but spread action and limited losses in soy points to the downside likely being limited, leaving the door open for corn prices to work higher next week as well. Bulls are looking to overcome the early September highs before working near our initial sales target around $4.25.
30-day outlook: This week’s updated Crop Production Report showed an unexpected bump in corn yield to 183.6 bu. per acre. Despite an increase in the estimated yield, ears per acre, which correlate highly with yield, are actually down 1.5% from year-ago in the 10 objective yield states tracked by USDA. The objective data implies a 6.6% year-over-year jump in ear weights. Our analysis indicates USDA is likely too optimistic on corn yield at this time and we are sticking to our Crop Tour estimate of 181.1 bushels per acre at this juncture. When paired with continued improvements in demand, that tightens the new-crop balance sheet up and is likely playing a role in recent strength. Reports from the combine over the coming month and continued clarity over production is likely to fuel price action over the coming month (and then some). We anticipate the top-end of the yield is likely in place, but it will be another month before another update from USDA.
90-day outlook: As prices came to and below the psychological $4.00 mark in late summer, demand has markedly picked up, a sign that prices have become “cheap enough.” The $4.00 mark has plenty of historical significance, acting as a ceiling for prices from 2014 to 2019 most recently and very limited strength above $4.00 from its initial test in 1980 until 2008. Prices bouncing from that level could indicate a new floor, a claim that is likely to be challenged in the next couple of months. While improving demand has pared losses below $4.00 recently, the true test will occur over the coming quarter as South American crop prospects come to focus.
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