Corn futures have traded higher in response to the friendly January 12 USDA report, with nearby contracts gaining over thirty cents. The report was the new cornerstone and set a positive tone for price activity for the first half of 2023.

Ending stocks for the 2022/23 crop year remain tight, at 1.242 billion bushels, even with a reduction of corn demand for feed and exports. Looking ahead, old crop corn prices should remain firm, with basis levels likely also staying firm until the 2023/24 crop gets planted this spring, and summer weather outlook is known.

But with flakey outside market considerations and fear of further demand loss on the export front, how high can prices actually rally in the coming months? Here is your guide for navigating potential pricing opportunities for corn that you may still have in your bin. For the purpose of this article, I will be using the May 2023 corn futures contract to illustrate various scenarios.

Potential targets for higher price scenarios

The friendly January 12 USDA report put a solid floor in the market. The report allowed corn futures to create a bullish key reversal on the report day, usually viewed as a “bottoming signal” on charts.

The report was also friendly enough to allow corn futures to trade above short term resistance levels on charts. The end result is that May 2023 corn futures prices are now trading above that pennant flag formation, that had been corralling prices since summer.

Can this higher price trend continue, if so, what are the potential targets higher?

Price Target 1 = $7.00

Looking at the same May 2023 corn daily chart from a slightly different perspective (I removed the pennant flag lines), you can see the next potential target higher is the $7.00 area.

This could be achieved on any type of short term weather scare from South America. Now take note, should prices get to the $7.00 area, there will likely be cash grain moved, and prices could have a hard time trading higher than this price point. A greater amount of bullish news would be needed to justify a price breakout higher than the $7.00 resistance area on the May 2023 futures contract.

Price Target 2 = $7.33-1/4

There is a gap on this May 2023 corn futures chart at $7.33-1/4. This gap occurred after the three-day Juneteenth holiday weekend in June of 2022.

There is an old adage in this industry that “gaps on charts like to get filled.” Now, the question is what friendly fundamental news is needed to justify May 2023 corn futures price to be able to trade above that $7.00 price hurdle, and then proceed higher to $7.33-1/4?

The odds get slimmer, as the combination of friendly news needed would be bad weather in South America, (likely on that second crop corn in Brazil that gets planted in late March), and a suddenly strong surge in U.S. export sales.

Price Target 3 = $7.60 area

Now, let’s say that friendly news actually starts to show up in the coming weeks. From a technical perspective, one could argue that prices could retest the price highs for this May 2023 corn contract that it saw in summer of 2022. That price high area is in the $7.60 vicinity. The odds get quite slim for this to occur.

A LOT of friendly news would be needed, including:

That is a lot of stars that need to align perfectly to achieve that higher price objective.

Keep these factors and potential price objectives in the coming weeks and months as you get ready to market your corn. My point is that it will take a dramatic amount of fresh, friendly market news to push corn futures prices substantially higher.

Set realistic targets

The January USDA report was supportive enough to keep corn prices from crashing lower, but not friendly enough to justify a dramatic price leap higher in the short term.

Keep in mind, while there is a friendly tone for the corn market for this upcoming year, it is NOT as friendly as it was last year at this time. The value of the U.S. dollar is higher than it was a year ago, the higher interest rates and fight against inflation is not a friendly factor, and the war in Ukraine is already priced into the market.

While the May 2023 charts currently look supportive for the short term, that doesn’t mean that prices have to rally higher. Please have a plan in place in case the market fundamentals start to shift to negative and prices start to shift lower. Store and ignore is not necessarily the best marketing plan in the months ahead.

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

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