The bulls seem to have abandoned corn futures and are giving few indications they expect to return anytime soon.
On Monday, Aug. 26, the CME Group September and December contracts sank to their lowest levels since October 2020, with the spot month down 23% from a year ago and the contract falling 26% since the start of 2024. Analysts continue to point to record yields from this year’s domestic corn crop on top of last year’s record US corn production as major pressuring factors.
Also, global supplies are ample, and a barrage of old crop corn supplies is weighing on the US market as many farmers, who’ve been holding last year’s harvest in hopes prices may eventually firm, have finally succumbed to releasing their stored 2023 corn to make room for the 2024 harvest, which adds even more pressure to the four-year low prices.
Earlier in August, the US Department of Agriculture (USDA) forecast 2024 US corn production at 15.147 billion bushels, down 195 million bushels, or 1.3%, from the prior year’s record-high production. But the average yield for the 2024 crop was forecast at a record-high 183.1 bushels per acre, which is up 5.8 bushels, or 3.3%, from 177.3 bushels in 2023.
Findings from more than 1,600 cornfields sampled during the recent Pro Farmer Midwest crop tour affirmed the USDA’s expectations for a bumper corn crop, with six out of the seven Corn Belt states projected to have above-average corn yields. Scouts on the tour said the corn yield in top-producing Iowa set a record high for the tour records. The USDA earlier this month forecast record yields for Iowa, Illinois and Indiana, but one analyst said the final US corn yield is often lower than the USDA’s August outlook.
Near ideal weather conditions for this year’s crop also has been a pressuring factor on prices. The USDA’s good-to-excellent condition ratings have been above their five-year average throughout the season. And while corn conditions often decline during the typically scorching late summer months, most days in August this year have seen cooler than normal temperatures, which may help develop fatter corn kernels and ultimately boost corn yields.
US wheat futures sinking to fresh contract lows also have contributed to spillover pressure on corn futures. Cheap wheat from the Black Sea region is squashing nearly all competitive opportunities on the global export market. But the USDA indicated there was potential growth for US corn exports. In its August World Agricultural Supply and Demand Estimates report, the Department raised its forecast for 2024-25 corn exports to 2.3 billion bushels, up 75 million bushels from the previous month’s outlook and up 50 million bushels from 2.25 billion bushels estimated in the current marketing year that ends Aug. 31.