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Commentary

What a month for corn. Corn futures pushed higher on the final trading day of the month. August was the month in which the market digested USDA's 188.8 bushel per acre yield estimate and 2.5 million-acre increase in planted are for corn, and yet we close out the month higher than where we ended the month of July. That is a big upset in my opinion, but I think the rally this week is aided by Pro Farmer and other crop scouts who are pegging corn yield below USDA guesstimates. December corn closed up for the month by 7 cents. Current prices continue to stir strong demand, as the marketplace continues to seem satiated by the prospect of a record crop. However, while USDA’s condition ratings remain remarkably high, our in-field observations during Crop Tours certainly indicated yield-robbers are present on a rather widespread scale. An early frost is possible this week in portions of the upper Midwest as temps remain well below average for much of the Midwest. Corn has lacked sufficient heat recently to help the crop reach maturity in a timely manner, and temperatures are expected to stay below normal next week, further slowing the maturation process in my opinion. Very little rain is forecast over the Midwest, leading to some concerns for soybeans too as dryness could take the top end off of the crop in my opinion.

The demand side of corns balance sheet is robust. This week’s export sales showed future shipments totaling 82.3 million bushels of weekly new crop sales bringing our cumulative ‘25/’26 total to 739 million bushels, double last year’s sales at this time and continuing to narrow the gap with 2021’s record pace, now trailing by roughly 20 million (or -2.7%). What’s more impressive is the fact that this demand comes with zero bushels sold to China, who was by far the top buyer driving this record pace four years ago. Instead, we’re seeing massive demand from a wide range of traditional top destinations, namely Mexico, who was also this week’s top buyer at roughly 24.4 million bushels.

The yearly high low for the December corn contract is 479.6 (high) and 3.92 (low). It is my belief that one should look for the market to trade to 4.32 (gap) and then the 50% retracement on chart at 4.36. Above these levels the market could push the 4.46/4.50 area. Consecutive closes under 4.15 could turn the market back down to the near-term lows at 3.97 and 3.92. In summation uncertainties with this year’s crop size has prodded managed money to cover shorts amid near record demand. 

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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