Corn Might Be Peaking
Jan 07, 2025
Zack Gardner
Grain Marketing & Origination Specialist
I’VE BEEN BULLISH, EVEN FRIENDLY, toward corn the past couple months. However, my bullishness is starting to wane. Based on the chart below, it seems like we might be peaking again.
Click to view.
Why is my bullishness starting to fade?
In their December report, the USDA raised our corn export number by 150 million bushels and raised corn usage via ethanol by 50 million, finally recognizing the good demand we’ve been having. It didn’t send us higher because the market has known about our good corn demand from a strong cash market in the U.S. export system. It was more about confirming what we already knew and where we should be pricing. But the cap on the market was that the USDA also lowered the Chinese corn import figure by 2 MMT (78.7 million bushels), taking it down to 14 MMT. Lowering the Chinese corn import estimate—combined with selling pressure from farmers rewarding the rally—made corn struggle to break through the 200-day moving average of $4.52 on March futures.
What does this tell us to do?
The easy answer is to part ways with any corn we’re paying $0.07/month storage on. We’ve seen an approximately $0.50 cash rally since harvest, and we just got confirmation from the USDA that the solution to high prices is high prices (slowing Chinese demand). This probably indicates that the top is near for the time being. After all, we need the market to continue rallying at least $0.07/month to break even on bushels in storage. That’s a tall order with prices currently at the high of the past six months.
For bushels in the home bins, I could make the case both ways. It could go higher, but taking the money and running at approximately $4.50 futures probably isn’t a bad move either. We’re at the high of the past six months, and if we remember back to last year, the winners were the guys who settled for okay-ish pricesand paid down interest in the first four months of the year. If it does go higher, we can always focus on marketing next year’s corn crop, which we will probably need to be more diligent about anyway with the price of new crop beans likely causing more corn acres next spring.
What could cause us to break through the 200-day moving average of $4.52?
I think for the time being, corn is running out of steam just shy of the 200-day moving average of $4.52. Farmer selling is putting downward pressure on the market, supply is meeting demand and basis is backing off. Two wild cards are a potential yield decrease on the January report and China showing up to the table to buy corn. I still think our national yield should be in the 180s, as there is plenty of corn everywhere. But with how dry our corn harvest was, we left a lot of yield out in the field via shrink.
As for China buying, we’re the only corn supplier in town until Brazil’s safrinha corn crop is ready in July. I don’t think China will need corn due to other cheaper feed substitutes, but if they do, we have the global market basically cornered on corn until next summer.
Grain Marketing & Origination Specialist
I’VE BEEN BULLISH, EVEN FRIENDLY, toward corn the past couple months. However, my bullishness is starting to wane. Based on the chart below, it seems like we might be peaking again.
Click to view.
Why is my bullishness starting to fade?
In their December report, the USDA raised our corn export number by 150 million bushels and raised corn usage via ethanol by 50 million, finally recognizing the good demand we’ve been having. It didn’t send us higher because the market has known about our good corn demand from a strong cash market in the U.S. export system. It was more about confirming what we already knew and where we should be pricing. But the cap on the market was that the USDA also lowered the Chinese corn import figure by 2 MMT (78.7 million bushels), taking it down to 14 MMT. Lowering the Chinese corn import estimate—combined with selling pressure from farmers rewarding the rally—made corn struggle to break through the 200-day moving average of $4.52 on March futures.
What does this tell us to do?
The easy answer is to part ways with any corn we’re paying $0.07/month storage on. We’ve seen an approximately $0.50 cash rally since harvest, and we just got confirmation from the USDA that the solution to high prices is high prices (slowing Chinese demand). This probably indicates that the top is near for the time being. After all, we need the market to continue rallying at least $0.07/month to break even on bushels in storage. That’s a tall order with prices currently at the high of the past six months.
For bushels in the home bins, I could make the case both ways. It could go higher, but taking the money and running at approximately $4.50 futures probably isn’t a bad move either. We’re at the high of the past six months, and if we remember back to last year, the winners were the guys who settled for okay-ish pricesand paid down interest in the first four months of the year. If it does go higher, we can always focus on marketing next year’s corn crop, which we will probably need to be more diligent about anyway with the price of new crop beans likely causing more corn acres next spring.
What could cause us to break through the 200-day moving average of $4.52?
I think for the time being, corn is running out of steam just shy of the 200-day moving average of $4.52. Farmer selling is putting downward pressure on the market, supply is meeting demand and basis is backing off. Two wild cards are a potential yield decrease on the January report and China showing up to the table to buy corn. I still think our national yield should be in the 180s, as there is plenty of corn everywhere. But with how dry our corn harvest was, we left a lot of yield out in the field via shrink.
As for China buying, we’re the only corn supplier in town until Brazil’s safrinha corn crop is ready in July. I don’t think China will need corn due to other cheaper feed substitutes, but if they do, we have the global market basically cornered on corn until next summer.