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Another limit move on corn after next week’s USDA report should not be a surprise.

Brian Splitt, Technical analyst

June 25, 2021

6 Min Read
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Front month corn futures have settled limit bid on the first two quarterly reports this year, January 12th and March 31st. Given the importance of the data we will receive next Wednesday June 30th, another limit move should not surprise.

The USDA is currently operating with the tightest new crop balance sheets for corn and soybeans that we have seen in nearly a decade. Implied usage based on the difference between March 1 stocks and June 1 stocks will be used to update old-crop balance sheets in July’s WASDE report July 12th.

While July corn trading $1.00 over Sep, and $1.15 over Dec, certainly implies old crop stocks are indeed very tight, USDA has a habit of waiting until the September stocks report to come clean on just how tight. By that time, new crop will be on deck, and it might not matter if things were tighter than we thought.

While the stocks portion of the report will immediately add or subtract bushels from old crop supply, the acreage numbers have the potential to make a big splash heading into 4th of July weekend. Using USDA’s trend-line yield of 179.5 bpa, and their assumption that 91.7% of corn acres planted will be harvested, every million acres equates to 165 million bushels of production. While it is difficult to think we will raise a trend-line yield, which is roughly 3 bushels per acre above the current 176.5 bpa record national yield, we must also realize that USDA is not likely to adjust yield until the August WASDE report August 12th.

What the trade expects

Most industry professionals are looking for additional corn acres next week with an average estimate of 93.8 million acres and high / low of 95.8 and 92 million acres, respectively. The swing in terms of production between the high and low acreage estimates equates to 627 million bushels; that alone is over half the current assumed old crop carry-in of 1.1 billion bushels. Remember, even the low acreage estimate is 900,000 acres more than USDA’s current number of 91.1 million acres, or 148.5 million bushels worth of additional production.

Let’s create a few potential outcomes from this report, keeping USDA’s current 1.362 bb new crop corn carryout number in mind:


  • The lowest acreage estimate with no other changes to the balance sheet would move carryout to 1.51 bb.


  • The average estimate with no other changes to the balance sheet would move carryout to 1.807 bb.


  • The highest acreage estimate with no other changes to the balance sheet would move carryout to 2.136 bb.


  • A 100 mb swing either way in old crop stocks would not be out of the ordinary. Unless we lose more than 150 mb of old crop corn through the stocks data, it is likely that the July WASDE will show a higher new crop carryout than the June WASDE.

Weather watch

Weather during the month of July then becomes paramount. Even the most bearish acreage number might not be bearish for long if trade feels as though yield won’t reach trend. When we think about where the extra corn acres came from in the first place, trend-line yield seems, at the very least, questionable.

Last year’s 172.27 bpa yield on 95.8 million acres would bring that potential 2.136bb carryout right back down to 1.501 mb, a measly 140 mb above USDA’s current number. Last year’s 172.27 bpa yield on 92 million acres drops carryout to 900 mb.

This isn’t so easy, is it?

Don’t even get me started on the possibility that USDA’s harvested percentage could be a half or full percentage point too high. Recent flooding in Missouri would lend credence to that thought process. Drop the harvested percentage to last year’s 90.7% on that big 95.8-million-acre number with last year’s 172.27 bpa yield and we’re right back to 1.336 bb.

Can you imagine the swings in futures values if the market goes from thinking carryout could be above 2 bb, just to find out a month later that it’s back below 1.4 bb?

I haven’t even addressed new crop demand, which we feel could be understated if China continues to require corn imports into 2023. But, USDA is unlikely to adjust export demand higher until it slaps them in the face; look how long it took the USDA to acknowledge China’s current buying spree.

If this blog read bearish at the beginning, and then slowly turned bullish again towards the end, well that was by design. It looks as though the market over the next several weeks could evolve in much the same fashion, a bearish gut check with a slow turn toward realizing things aren’t as bearish as they appeared. How will your marketing plan accommodate the potential short-term bearishness on bushels you might need to have marketed this fall? What if we did plant a huge number of acres and July weather is accommodating?

The possibilities are nearly endless and you’re not going to figure it out before the market does. Risk management wins again.


As always, feel free to contact me directly at 815-665-0463 or anyone on the AgMarket.Net team at 844-4AGMRKT. We’re here to help.

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. AgMarket.Net is the Farm Division of John Stewart and Associates (JSA) based out of St Joe, MO and all futures and options trades are cleared through ADMIS in Chicago IL. This material has been prepared by an agent of JSA or a third party and is, or is in the nature of, a solicitation. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading infromation and advice is based on information taken from 3rd party sources that are believed to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. The services provided by JSA may not be available in all jurisdictions. It is possible that the country in which you are a resident prohibits us from opening and maintaining an account for you.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 

About the Author(s)

Brian Splitt

Technical analyst, AgMarket.Net

Brian began his career in the financial services industry with expertise in insurance products, stocks, bonds, mutual funds and annuities. Brian studied technical analysis and migrated to commodities where he has built a successful career. As a technical analyst with AgMarket.Net, he utilizes prior price or volume action or trends to predict future price moves and break down agricultural balance sheets. Brian is a decorated combat veteran of Operation Iraqi Freedom as well as a member of a Gold Star Family.

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