Grain Outlook December corn contracts tumble

The following marketing analysis is for the week ending Feb. 24.

CORN — Stale news is how I would best describe trade action when traders returned from the long President’s Day holiday weekend. Yes, we saw a bounce to begin the week based on a weekend frost in Argentina and less rain there than expected; but it didn’t take long for prices to reverse lower ahead of the Feb. 23 U.S. Department of Agriculture’s Outlook Forum.

The USDA numbers were viewed as slightly negative and price action that day reflected the reaction. The May contract has been unable to punch through the January high of $6.86 per bushel and prices took out all moving average support levels on post-report trading. The December contract broke out of its February range by extending the downside to $5.74.25 per bushel. This was the lowest the December 2023 contract has traded going back to last August when it hit $5.64 per bushel.

A poor showing in wheat prices this week added pressure to the corn market with moisture in the hard red wheat areas and an overall lack of demand for U.S. wheat. The personal consumption expenditures price index increased by 0.6 percent to 5.4 percent on an annual basis in January vs. 5.3 percent in December and shot the U.S. dollar index to its highest since early January.

The USDA forum released full supply/demand balance sheets hours ahead of the Forum opening. They pegged the 2023-24 U.S. corn acreage at 91 million acres vs. estimates for 90.9 million acres and 88.6 million planted acres last year. In the last 13 years, the March prospective acreage report number was below the February Outlook number five times; but the final corn acreage number has been below the February number nine times.

The U.S. corn yield will begin at a record 181.5 bushels per acre vs. 179.7 bu./acre estimated and 173.3 bu./acre last year. It seems early to be forecasting such a large number. U.S. production is forecasted at 15.085 billion bushels vs. 14.949 billion bushels estimated at 13.73 billion bushels last year. This production level would be the second-largest U.S. corn crop.

The 2023-24 carryout is pegged at 1.887 billion