Corn futures settled higher on Friday, finding support from data showing that U.S. corn use, a proxy for demand, rose more than supply — prompting prices to give up early losses that had pulled them to their lowest level since 2020.
In its monthly World Agricultural Supply and Demand Estimates report, the U.S. Department of Agriculture said Friday that with U.S. corn use “rising slightly” more than supply, the forecast for stocks of corn at the end of the 2024-25 marketing year was lowered by 5 million bushels from the June forecast, to 2.097 billion bushels.
That statement was “enough to halt, at least temporarily, the bear market in corn prices,” Sal Gilbertie, chief investment officer at Teucrium Trading, told MarketWatch.
“It looks like short sellers began to actively cover their positions upon the release of today’s WASDE, which occurs just as corn in the U.S. begins to enter the critical pollination stage of development,” he said.
Total U.S. corn use was estimated at 14.905 billion bushels, up from 14.805 billion in the June report, USDA data showed.
On Friday, corn for December delivery
CZ24,
C00,
rose 4 cents, or 1%, to $4.14 ¾ per bushel in Chicago.
“Corn in the U.S. has started to ‘enter the critical pollination stage of development.’ ”
December corn spiked to its highest level since July 8 after the USDA report, noted Darin Newsom, senior market analyst at Barchart, who described the move as a “knee-jerk reaction to ending stocks being lowered.”
He said the December contract has both technical and fundamental support in the $4.00 to $4.20 area.
Corn prices were trading lower before the report’s release, pressured by a “cooler, wetter extended weather forecast,” said Newsom.
Prices touched an intraday low of $4.03, the lowest intraday price since November 2020, according to Dow Jones Market Data. Based on the most active contracts, prices marked a 2.2% loss for this week.
Overall, prices have been declining because “there is plenty of corn,” said Gilbertie, estimating 51 days of excess supply equating to a 14% stock/use ratio, which is “very healthy.”
The USDA forecast 2024-25 U.S. production at 15.1 billion bushels, up 240 million bushels from the June forecast of 14.86 billion bushels. The USDA cited greater planted and harvested area from the June acreage report.
Based on the June 28 acreage report, the USDA increased its corn-planted area by 1.5 million acres, with a similar increase of 1.3 million acres in expected harvested area, said Newsom.