Corn Heads into the Weekend with Losses

Corn futures closed weaker, with September and December contracts experiencing weekly losses, as speculative funds significantly increased their net short position to 249,007 contracts while commercials moved to a net long stance. Export commitments for the 2023/24 crop are lagging USDA's forecast and the five-year average, despite stronger Census export data. The market remains focused on yield prospects following USDA's record projection and upcoming industry crop tours.

Analysis

Corn futures saw contracts pull off their lows prior to midday, but finished out the day weaker, down 2 to 5 cents on the day. The September contracts lost 6 ¼ cents on the week, with December down 2 ½ cents. Commitment of Traders data showed spec funds in corn futures and options adding 6,462 contracts to their net short position as of August 13. They were net short a total of 249,007 contracts by that date. Commercials were back to a net long position, at 9,633 contracts, a 21,090 contract move on the week. Yield prospects still remain the topic of conversation after USDAs record projection from Monday. The market will be keeping an eye on several industry crop tours, whether digital, virtual, or in person, that started this last week or are expected to start next week. The weekly Export Sales report saw total commitments for the 2023/24 crop push to 55.817 MMT. That is 98% of USDA’s forecast total for the marketing year, with the 5-year average at 103% of that projection. Accumulated shipments have totaled 50.744 MMT, which is 89% of the projection, vs. the typical 96%. Actual Census data does show exports well ahead of the FAS data. Sep 24 Corn closed at $3.70 1/2, down 4 1/2 cents, Nearby Cash was $3.58 5/8, down 5 cents, Dec 24 Corn closed at $3.92 1/2, down 4 1/2 cents, Mar 25 Corn closed at $4.11, down 4 3/4 cents, New Crop Cash was $3.54 3/4, down 3 3/4 cents, On the date of publication, Alan Brugler did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Corn futures exhibited weakness, with contracts finishing down 2 to 5 cents and key contracts like September and December posting weekly losses of 6 ¼ cents and 2 ½ cents, respectively. This bearish sentiment is underscored by the latest Commitment of Traders data, which shows speculative funds expanding their net short position by 6,462 contracts to a substantial 249,007 contracts. In a notable divergence, commercial participants reversed their positioning, moving to a net long of 9,633 contracts, a swing of over 21,000 contracts that suggests hedgers may perceive value at current price levels. Fundamentally, the market is weighing a potentially record-breaking yield projection from the USDA against lagging export data. Total commitments for the 2023/24 marketing year stand at 98% of the USDA's forecast, trailing the five-year average of 103%, while accumulated shipments are at 89% versus a typical pace of 96%. The market's immediate focus is on upcoming industry crop tours, which will serve as a critical test of the USDA's optimistic supply outlook.

Key Decisions for Investors

• The stark divergence between large speculative net shorts and the shift to a net long position by commercials could signal a market bottom, creating the potential for a short squeeze if upcoming crop tour data contradicts the USDA's high-yield projections.
• Investors should monitor weekly export sales reports closely, as the current lag in commitments and shipments represents a significant fundamental headwind that is capping price rallies.
• Given the focus on supply-side data, it is prudent to treat upcoming crop tour results as a major potential volatility catalyst and consider using options to hedge existing positions or await clearer data before initiating new ones.