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Ag Marketing IQ: Look for these potential price targets in the weeks ahead.

Naomi Blohm, senior market adviser

October 19, 2023

6 Min Read
Five dollar bill and corn kernels
Getty Images/iStockPhoto/JJ Gouin

Two months ago, I wrote about finding the timing of the potential harvest price low for December corn futures. Over the past decade, the harvest low was anchored six times in August, three times in September, and once in October. Also looking at the past decade, the average price rally for December corn futures after the harvest low was found was 64 cents.

What’s happened

This year it seems as though the December corn futures “harvest low” occurred on Sept. 19, 2023, with a low price of $4.67-3/4.

Since then, December corn futures have traded as high as $4.99, a rally of 31-1/4 cents. Is this it for a harvest rally this year? Will corn futures be able to climb over that $5 price hurdle? If so, what are realistic higher price targets?

Fundamentals are mixed

Core fundamentals for corn prices remain mixed. On the friendly side, lower national yields of 173 bushels per acre due to intense summer heat and sporadic rainfall across the Midwest is a supportive factor.

On the demand side, export demand for U.S. corn may be picking up in the coming weeks as low river levels in Brazil are making for difficult logistics. Also, Ukraine seems to be struggling to get exports moving with the ongoing war. Combined, this may create some short-term window of opportunity for improvement in US export demand.

Related:Soybeans likely hit their fall lows – what’s next?

Also supportive to corn, firm energy prices and superb ethanol margins, are keeping corn demand for ethanol quite active. In this week’s weekly ethanol report, production of ethanol was up 3% from the week prior, and up 2% from last year. Ethanol stocks are said to be the lowest since December of 2021.

These are all supportive factors for corn prices.  However, on the flipside, the most recent USDA spreadsheet says that even with all of the positive news above, ending stocks of corn for the 2023/24 crop year are pegged at a large 2.1 billion-bushel carryout. This is the likely culprit of why December corn futures are struggling to climb above $5.00.

From marketing perspective

December corn futures have been in a very slow uptrend since the finding the harvest low back on Sept. 19. The market fundamentals for corn are currently leaning slightly friendly, and the funds have started to ease up on those short positions.

The Commitment of Traders data from last week showed that the funds exited (bought back) nearly 46,000 short positions, and now are net short at 113,000 contracts.

Seasonally, December corn futures prices have a tendency to grind higher until late October, according to the 5, 15, and 30 year price patterns.

Related:Did that friendly USDA report signal a rally ahead?

While the December corn futures charts are still showing supportive signs for another potential move higher, please be mindful that fresh fundamental news is needed to justify that final push up.

Prepare yourself

You’re likely going to be busy in the fields wrapping up harvest over the coming weeks, and not giving as much focus to the markets as you might like to.

There are reasons why the corn prices might have one more push higher in the coming weeks, and also reasons why prices could slide lower. You need to be ready for either scenario.

Should prices be able to break out to the upside and clear the $5 price hurdle, that would likely be a cue for the funds to exit more short positions (buy them back to exit), and bring new buyers into the market. Yet, keep in mind, that 2.1 billion bushel ending stock may keep any notion of sky high corn prices out of view.

In my opinion, based on current technical indicators for December 2023 corn futures on daily charts, here are three possible price scenarios for the weeks ahead, again, friendly fundamental news is needed to justify the price move higher.

Potential price targets higher for December 2023 corn futures

December corn futures still have overhead technical resistance at $5.00. However, a close above $5.00 points to these next three potential upside price targets:

  1. The $5.09 area, which is currently where the 100-day moving average lies.

  2. The next target higher would then be $5.25-1/2 which fills the gap on the chart left from July 31, 2023.

  3. Finally, there is an inverted head and shoulders formation, which suggests an ultimate price target higher (again, we need some fresh, friendly news to make this happen) toward the $5.32 area, which is also near the top of down trend line from the spring highs in 2022. (Also note, a $5.32 potential price objective would be just over a 64-cent rally from the Sept. 19 low. And as I mentioned above, the average post-harvest price rally for corn over the past decade was 64 cents.)

Potential price targets lower for December 2023 corn futures

While I’m optimistic that prices will push higher in the coming weeks, I’m also very aware that a lack of friendly news might leave prices trading sideways to lower. And something to be watching would be the short term, upward trend line of support.

Should that break, and prices fall lower, then a retest of the $4.67-3/4 price low, would be the likely target. You need to be prepared for that price potential scenario as well.

The coming weeks will be full of market information; better clarity of a potential uptick in export demand, two global wars to monitor, energy prices that are on the verge of racing higher should the wars escalate, and fund positions to monitor.

Be mindful of these events and potential price targets. Have a plan ready to execute for either price scenario.

Reach Naomi Blohm at 800-334-9779, on X (previously Twitter): @naomiblohm, and at [email protected].

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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