The tight corn, soybean supply picture could tighten further, analyst says

Technically, open interest continues to rise.

December corn closed lower, on Wednesday, after the early rally to a new contract high.

The key reversal is seen as a bearish technical development.

Open interest continues to gain, which is a positive technical factor, as funds remain active buyers.

Near-term market fundamentals

Traders see the short-term weather situation in Brazil as somewhat negative. Its soybean crop is getting in the ground there, so there is a little less concern for second-crop corn.

The USDA supply/demand reports this week were bullish, and traders see further tightening in world ending stocks if Brazilian or Argentine corn production is revised lower.

The official Brazil corn production estimate is already down 5.0 million tonnes from the USDA estimate. If La Niña keeps southern Brazil and parts of Argentina drier than normal, world ending stocks could tighten more.

And, if China imports 22 million tonnes of corn instead of the current USDA estimate of 13 million, U.S. exports could be increased by 354.0 million bushels from the current estimate and ending stocks lower. 

The preliminary USDA estimate for U.S. planted area for 2021/22 is 90 million acres vs. 91 million this year and 89.7 million last year. This data was released earlier this month before the USDA report was released.

The beginning stocks number for 2021/22 was 2.167 billion bushels with ending stocks at 2.257 billion bushels. If we adjust the data to reflect Tuesday’s Supply/Demand report, the new beginning stocks for the 2021/22 season would be 1.702 billion.

If we use all the rest of the production and demand data from the USDA, the ending stocks forecast for 2021/22 would fall to 1.792 billion bushels.

If we adjust yield down by 3% from trend, then ending stocks would drop to 1.340 billion bushels. If exports are revised higher for this year, beginning stocks will drop for the 2021/22 season and ending stocks will tighten further. 

Market Ideas


It will take a move above yesterday’s high to negate the key reversal. Short-term resistance for December corn is at $4.22½, with support at $4.10½ and $4.06½. Close in resistance for May corn is at $4.33½, with $4.22½ and $4.17¾ as support. 

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For daily updates on cattle, hogs, corn, wheat, and the soy complex, visit hightowerreport.com.


*** This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. Any information or recommendation contained herein: (i) is not based on, or tailored to, the commodity interest or cash market positions or other circumstances or characterizations of particular investors or traders; (ii) is not customized or personalized for any such investor or trader; and (iii) does not take into consideration, among other things, risk tolerance, net worth, or available risk capital. Any use or reliance upon the information or recommendations is at the sole discretion and election of the subscriber. The risk of loss in trading futures contracts or commodity options can be substantial, and traders should carefully consider the inherent risks of such trading in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of The Hightower Report is strictly prohibited.

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