Quick Look:
- Price Declines: Jul 24 Corn at $4.25 1/2, Sep 24 Corn at $4.31 3/4, Dec 24 Corn at $4.43.
- Oversupply: Record 2023 production and 16% more stored corn lower prices.
- USDA Report: Mixed crop conditions with significant declines in some states.
- Upcoming Data: The June Acreage report and grain stock data show higher planting and 4.873 billion bushels of corn.
As of June 25, 2024, the corn market is experiencing notable price declines across various contracts. The upcoming release of two pivotal crop reports on June 28, 2024, details grain stocks and planted acres for the second quarter. It is going to influence market prices significantly. This anticipation has created a sense of uncertainty among traders and producers alike.
2023 Record Corn Production Causes Price Drop
The recent trading session saw a notable downturn in corn prices. Jul 24 Corn closed at $4.25 1/2, down by 8 cents. Meanwhile, Nearby Cash settled at $4.12 7/8, a decrease of 6 3/4 cents. Sep 24 Corn finished at $4.31 3/4, falling by 7 3/4 cents. Dec 24 Corn concluded at $4.43, a reduction of 8 3/4 cents, and New Crop Cash ended at $4.08 3/8, down 7 1/2 cents. These price drops reflect a market struggling with an abundance of supply and a lack of bullish momentum.
Several factors are currently shaping market dynamics. This time last year, new crop corn futures were trading above $6.00 due to limited supply caused by adverse weather conditions and geopolitical tensions. Most of all – the invasion of Ukraine. In stark contrast, 2023 marked a record production year for both the US and Brazil. Thereby leading to an oversupply and substantial price drops. There has also been a 16% increase in stored corn compared to the previous year, further contributing to the downward pressure on prices. As the last trading day of the quarter approaches, managed money traders are likely to avoid new positions until the next session, adding to the market’s current volatility.
Mexico Buys 209,931 Metric Tonnes of US Corn
The latest USDA report, dated June 24, 2024, reveals mixed conditions across various states. Illinois, Indiana, and Ohio saw significant declines in their crop conditions, with drops of 11, 18, and 16 points, respectively, on the Brugler500 index. Similarly, Minnesota and South Dakota reported decreases of 15 and 12 points, while Iowa, Missouri, and Nebraska saw slight improvements with increases of 1, 7, and 4 points respectively. This varied performance underscores farmers’ challenges in different regions, further complicating the market outlook.
Additionally, a private export sale of 209,931 metric tonnes of corn to Mexico was reported on June 25, 2024. This sale included 22,098 tonnes of old crop and 187,833 metric tonnes of new corn. Besides, the upcoming June Acreage report is anticipated to show an increase of 317,000 acres. Therefore bringing the total to 93.353 million acres. This estimate exceeds the trading range of 89 to 91.3 million acres, potentially indicating higher production levels and impacting future market dynamics.
Producers Hold 516,000 Short Positions at $4.50
The grain stock data set for release on June 28, 2024, is expected to show 4.873 billion corn stocks as of June 1, which is 770 million bushels more than a year ago. The range of guesses spans from 4.675 to 5.013 billion bushels, highlighting the uncertainty and potential volatility in the market.
Current market trends reveal that producers are holding fewer short positions compared to the same period last year. In June 2023, there were 646,000 short positions for $6.30, whereas in June 2024, there were 516,000 short positions with prices around $4.50. The recent COT report indicates that producers hold more shorts than longs, reflecting a bearish sentiment. Contracts recently closed with losses ranging from 5 to 9 1/4 cents, signifying ongoing market weakness.
