Harvest is underway for portions of the Midwest, with early corn yield results coming in bountiful, as expected. While the U.S. supply of corn looks to be abundant, demand for U.S. corn is increasing thanks to recent lower prices. And so, where to from here for corn prices?

What’s happened

Back in late August, I alerted you to the fact that the average rally in corn, after finding a harvest low, was approximately 50 cents.

Since that writing, December 2024 corn futures posted a bullish key reversal on weekly charts, bottoming out at around $3.85. This type of technical trade action can be interpreted as technical bottoming formation, suggesting that the harvest low may have occurred.

Shrugging off a bearish Sept. 12 USDA WASDE report, corn futures prices have been trading in a modest sideways fashion for the past two weeks. December corn futures continue to hold price support at the $4 level, while overhead price resistance is currently at $4.15.

From a marketing perspective

The recent 30-cent price rally was welcome for many farmers, who used it as an opportunity to get more current with cash sales for both old and new crop corn.

But where to from here? Lurking are things that could either propel the rally significantly higher, or bring it to an abrupt halt in the days and weeks ahead. Three of these items could prove to be beneficial to prices, and two might bring the rally to an end. Here are the five things to watch.

Dry weather in Brazil. Part of the recent corn rally was due to severe dry weather occurring in portions of Brazil. They are just beginning to plant first-crop corn. If rain does not materialize as forecasted, dry weather could continue to support U.S. prices on the hopes that more export business will come to the United States at harvest time.

Lower expected corn planted acres in Argentina. Brazil is beginning to plant corn, and so is Argentina. However, according to the Buenos Aires Grain Exchange, the Argentine corn planting area for the 2024-25 season may drop nearly 17% due to ongoing issues with leafhopper pest infestation and drought.

Looking at the chart below, this reduction in acres and ultimately production, is not currently priced into the market, or yet acknowledged by the USDA. More time is needed to see what occurs in the coming weeks in Argentina. 

Fund Activity. Money managers last bought back just over 44,000 contracts of corn, according to the Commodity Futures Trading Commission report. They reduced their short position to 132,000 contracts, the smallest in four months.

This is viewed as evidence that the funds have been slowly exiting their bearish stance. In fact, since establishing a record short position at nearly 354,000 contracts in late July, they have been net buyers (exiting portions of their short positions) seven of the past nine weeks. Will they continue to exit short positions? If so, this will help to keep corn prices supported.

The Fed and the U.S. dollar The U.S. dollar index has been inching lower in anticipation of the interest rate cut produced by the Fed. It is now holding near the $100 level, down from $106 earlier this summer.

Why does the value of the dollar matter? A lower dollar is beneficial for U.S. exports, as it allows for other countries to potentially want to import more because currency exchange rates make U.S. commodities cheaper to purchase. For the past two months, many commodities have been consolidating near historic price lows – waiting to see about global economies and which way the U.S. dollar starts to move.

Tariff Response by China? The Biden administration last week locked in an extension of tariffs on Chinese imports, affecting things like electric vehicles, solar cells and steel. Traders are watching China’s response to this, as there is concern that China could retaliate against American commodities in some fashion.

China recently announced a one-year anti-dumping investigation of Canadian canola, (which sent canola prices plunging lower). This was a response to Canada imposing additional tariffs on imports of electric vehicles from China.

Prepare yourself

These are the five main price components to monitor for now. The missing pieces of the puzzle will be placed soon enough.

Many price scenarios can unfold in the coming days.

Current market perception continues to lean slightly negative due to ample harvest supplies. However, a glimmer of friendly news could spur additional short covering and a significant price corrective rally. However, a lack of friendly news will likely keep corn prices in a sideways pattern for the short term.

Manage your risk. Be ready for any surprise.

Reach Naomi Blohm: 800-334-9779 Twitter: @naomiblohm   and [email protected]

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