Market Commentary for 7/26/24
The corn market fluctuated up and down this past week depending on the morning and midday weather reports. If weather could be accurately predicted, so could price direction.
Are The Lows in Yet?
While December corn was up 6 cents overall last week, it has been trading lower since the stocks report on June 30th when it last hit $4.40. The lowest trading point of the calendar year so far has been $4.04 on July 15th.
A few market participants are suggesting the low is in for the year; however, historically speaking that would be a long shot. In the last 16 years, the low for the year only happened in July once, back in 2022, which was from a fundamental standpoint a very different year compared to 2024.
While funds are, or were, record short last week, farmers are also sitting on a lot of unpriced 2023 corn. I think these two groups could offset each other’s position if the market were to try and rally in the next two months. Also, basis values began to drop this week, signaling farmers are starting to move their old crop grain because they need space for the 2024 crop.
Corn In Drought
When comparing the drought monitor this week to a year ago, it leans bearish.
Right now, 4% of the corn belt is experiencing drought conditions, compared to 59% one year ago.
Ultimately, timely rains last year in July and August helped push the final yield up. While 3 weeks without any rain this year could still impact final yields negatively, any rain within the next 10 days increases the chances for near trendline yields or even a new record.
Crop Touring
This past week I drove I-29 from Omaha, NE to Sioux City, IA, then highway 60 to Worthington, MN, and finally highway 169 from Mankato, MN to Minneapolis.
I had previously seen aerial photos on social media of flooded fields near Omaha, so I was expecting to see considerable damage during my drive. While I did see extensive crop damage for the first 10 miles outside of Omaha, beyond that it was very limited, and fields look pretty good in the Missouri River valley.
Corn and beans on the hills north of Sioux City also generally looked really good. There were a few low-lying fields that had been lost, but it wasn’t much.
Across the Minnesota state line there was evidence of an extremely wet spring. There were certainly some fields that were uneven and still untassled.
I expect there will be some yield reductions throughout southern Minnesota. However, there were also many fields that looked like they will produce average or better yields too. While Minnesota’s crop will likely be below average it might not be as bad as some think.
Before the trip I expected to see a lot of acres lost to flooding throughout Minnesota and the Missouri River valley, but after my drive I think the online hype doesn’t match the reality.
Bottomline:
Overall, weather this year has been better than many market participants predicted, and it will continue to dictate corn price direction for the next 30 days.
Based on historical trends, it is unlikely the low on December corn for the calendar year has been hit. Plus, farmers have a lot of unpriced old crop corn still in the bin, with very little new crop sold. This probably means prices could still trend lower.
Want to read more by Jon Scheve?
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Is Corn Done Going Down?
Corn Will Probably Struggle To Rally Moving Forward
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Why I Prefer Using Futures Instead of HTAs
