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Did we hit the ‘spring low’ for corn?

Ag Marketing IQ: Various fundamental aspects are lining up to potentially suggest the low price for 2024 corn may be in place. Is a rally now looming?

Naomi Blohm, senior market adviser

May 2, 2024

5 Min Read
Corn kernels with dollar bill
Getty Images/iStockPhoto/stevanovicigor

After trading in a 15- to 20-cent sideways pattern for the past two months, July corn futures appear to be potentially breaking through resistance levels on charts – to the upside.

Finally, enough snippets of friendly news may be accumulating at the same time to provide fundamental support for a price breakout move to the upside.

What’s happened

Here are the pieces of the puzzle, potentially falling into place to provide a “spring low.”

  • Brazil's safrinha crop continues to endure hot and dry conditions that are expected to continue throughout the month of May.

  • U.S. corn planting has slowed with wet conditions and more rain forecast into the weekend and early next week. If the corn crop is not 50% planted when trade returns from Mother's Day weekend, watch out.

  • Weekly ethanol production increased this week from 954,000 barrels per day (bpd) to 987,000 bpd last week, putting 2023-24 production up 4.1% from this time a year ago.

  • In Wednesday afternoon’s crush report, the USDA said 468.75 million bushels of corn were used for fuel alcohol production in March. That’s above analysts’ estimates and up 5% on the month and 7% on the year.

  • Seasonally, corn has a tendency to find a spring low in the first few weeks of May.

  • Managed money funds exited over 40,000 contracts of short corn positions last week.

  • July corn futures prices are testing overhead resistance on both daily and weekly charts. If funds exit additional short positions, that could ignite a further rally.


From a marketing perspective

“I swear I’m going to pull the trigger on pricing my grain if we get a summer rally. I just didn’t sell enough last summer.” Memories of last summer’s $1.20 corn rally and $3 soybean rally in one month’s time still linger for many producers.

The grain market rallied fast last summer. Producers were wrapping up planting and were quite concerned about the hot and dry weather forecast bearing down on Midwestern crops. It was emotionally hard to “pull the trigger” on cash sales, with the crop struggling to grow in the ground.

While it took one month for the market to gain that $1.20 price action in corn, unfortunately the 2023 summer rally fell apart in just over one week’s time.

You also need to decide if the market rallies, where are you going to set your next targets for cash sales, and how much will you plan to sell?

Vice versa, if the market starts to fall lower, will you have the discipline to make the cash sale?

One way to develop a balanced approach is to cash contract a comfortable percentage of your expected production on a potential “summer rally.” On that summer rally, also set a floor with the use of put options on the remainder of your expected production.

If you make cash sales, remember call options can be purchased to offset forward contracts, providing the potential for upward price appreciation. Also, some producers have told us that having call options in place gives them the confidence and discipline to forward sell.

A balanced approach can allow you to participate if the market heads lower or higher. More importantly, it keeps your emotions in check so you can make responsible sales. Have thorough conversations with your advisor as to when and how to implement such a strategy.

Prepare yourself

With rain occurring for many portions of the Midwest, delaying spring planting, use these rainy days as an opportunity to plan out your marketing strategies! The final late spring/early summer rally can come and go in a frenzy and you need to be ready with your plan.

Grain marketing is a process that is dependent on a wide, ever-evolving set of circumstances. Yet with a consistent and disciplined approach, you will gain confidence in your skills. Creating a plan now plays a crucial role in avoiding the consequences of a wait-and-see approach to grain marketing.

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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