Corn Slips Amid Harvest Progress and Weather Concerns; USDA Yield Estimates in Focus

Corn prices have seen modest declines due to profit-taking and technical selling, with 5% of the U.S. crop harvested. However, delays are possible in some southern regions as the storm Francine makes landfall. The USDA's upcoming production report is expected to slightly lower yield estimates, but overall yields are predicted to remain at record levels until harvest progresses more extensively.  

Demand for corn in food, fuel, and exports remains strong, with weekly ethanol production data from the U.S. Energy Information Administration expected soon. In Russia, IKAR has reduced its corn production estimate to 12 million tons, the smallest crop in several years.

Recent weather conditions, including a global heatwave, have benefited corn prices, with corn futures rising for the second consecutive week due to reductions in U.S. crop estimates and dry weather in Europe, Mexico, and Ukraine. Investors might consider exposure through the Teucrium Corn Fund (CORN), which tracks various corn futures contracts to mitigate the negative effects of rolling contracts.

Despite the current USDA forecast of a record national average corn yield of 183.1 bushels per acre for 2024, record yields combined with flat demand have led to projected ending stocks exceeding 2 billion bushels, resulting in lower December corn futures prices.

The USDA will continue adjusting yield estimates through the harvest season, with the final yield estimate expected in January 2025. Historically, U.S. corn yields have increased by about 1.9 bushels per acre per year since 1945, with droughts causing significant deviations from yield trends. In recent decades, these deviations have become smaller, with yields closely following long-term trends. Understanding these patterns can aid in developing risk management and marketing strategies.

However, analysts anticipate a slight cut in corn yield estimates in the USDA’s Thursday report. The U.S. corn crop is currently 95% in the dough stage, and 29% mature, with the harvest 2% ahead of average. Weekly export inspections reported 836,413 metric tons of corn shipped, with Mexico being the largest destination. Corn planting for Brazil’s first crop is at 15% completion, slightly behind the previous year's pace.

Data for Technical Analysis (1D) CFD US Corn Futures - Dec 24 (ZCZ4)

Resistance : 406.47, 407.41, 408.95

Support : 403.39, 402.45, 400.91                        

1D Outlook

Source: TradingView                        

Buy/Long 1 If the support at the price range 399.39 - 403.39 is touched, but the support at 403.39 cannot be broken, the TP may be set around 406.48 and the SL around 397.39, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 406.47 – 410.47, TP may be set around 414.00 and SL around 401.39, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 406.47 – 410.47 is touched, but the resistance at 406.47 cannot be broken, the TP may be set around 402.46 and the SL around 412.47, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 399.39 - 403.39, TP may be set around 397.00 and SL around 408.47, or up to the risk appetite.       

Pivot Points Sep 11, 2024 03:05AM GMT

Sources: VettaFi, Southern Ag Today