Technically Speaking

Corn Futures Prices Collapse as Basis Holds Firm?

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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Managed futures funds are heavily net short corn and took the December contract to a new three-month low Friday, June 21. DTN's national index of cash corn prices, however, has not broken below support yet, a more sober reflection of this year's production hurdles and active demand (DTN ProphetX chart).

During the week ended Friday, June 21, December corn fell 17 cents to $4.53 1/4, a new three-month low that showed bearish specs clearly in charge of a market that still has lots of unanswered questions regarding production in 2024. As of June 10, managed futures funds were net short 219,992 contracts of corn, a position that not only contradicts commercial positions, but also the other specs in the market. The confidence of bearish funds has also shown no concern about a strong possibility USDA's Acreage report on June 28 will have to be updated in August as a series of heavy rains led to flooding issues across the northwestern Corn Belt that turned even worse this weekend. With more rain in the forecast, we can't say the threat to corn production is over yet.

At the same time, demand for corn has been active at these lower prices and DTN's national corn basis has consistently strengthened since harvest. As of Friday, DTN's cash average was 14 cents below the July contract, the fourth strongest in 10 years for this time of year. With total corn export sales commitments already above USDA's export estimate, there is a good chance USDA's 2.150-billion-bushel (bb) export estimate will have to be raised. Ethanol production is running 4% higher than this time a year ago and counties heavy with livestock show strong demand.

DTN's National Corn Index ended at $4.21 a bushel Friday, reflecting selling pressure from the futures market, but still holding slightly above its 100-day average and not showing the same technical surrender we see in the futures market -- at least not yet.


Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at .

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