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Commentary
In today's WASDE report, USDA slashed corn yield estimates by 3.8 bushels per acre to 179.3 bushels per acre from the average trade guess of 182.7 and 183.1 last month. Wow! This number was so far below any crop scout, investment house, or analyst prediction it makes one wonder. Simply put it’s one of the biggest misses ever for corn on a pre report trade guess for the January report. I can hear farmers in the following areas say, “I told you so”. The biggest corn yield losses occurred in Kansas down 6 percent, Indiana down 5 percent, Minnesota down 4 percent, Ohio down 4 percent, with Nebraska and Wisconsin down 3 percent. Lower yield meant lower production as that falls below 15 billion bushels to 14.867 billion. Regarding demand, total corn use shifted 75 million bushels. That is due to cuts in feed and residual use (50 million bushels) and exports (25 million bushels). Supply fell more than use, so USDA ultimately lowered corn stocks by 198 million bushels to a somewhat tight 1.540 billion bushels on the carry-out. At 2.29, the ratio of November soybeans to December corn is the smallest for the date since 2013. The scenario still favors planting more corn than beans for now, but lower carry-outs for both crops tighten balance sheets and raise more questions than answer questions. The path of least resistance should be higher near term in my view due to that reason for corn. Weather issues in South America take on much more meaning now after today’s data dump in my opinion and I eagerly await how we open next week. This would be especially true if forecasts showing hotter and dryer weather persisting in South America. deeper into January I have no new trade recommendations into next week. Technical levels to watch for March 25 corn come in as follows for next week. We closed 2024 at 458. That puts 5 percent higher on year at 4.82, which is where the 100-week moving average sits. That area (see chart) is first resistance. A close above and the market could challenge trend line resistances at 4.94 and 5.02. Ten percent higher on year is 5.03. Support is first at 4.66, then key support at 456/58. A close under and we challenge the prior week low at 449. A close under here and the market could push all the way down to 5 percent lower on year at 435.
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