Corn: Significant Damage Possible with 104 and Dry Argentina this week

The market looks poised for a further advance over the near-term as major yield damage is possible in the next week. Slow export sales news helped to pressure the market early, but Argentina crop concerns were enough to provide underlying support. There is plenty of rain in the 8-14 day forecast models for southern Brazil and Argentina, but the next seven days still looks very dry, and traders are now talking about significant heat which could cause significant deterioration to the crop before the rain hits. Since mid-December, a large part of Argentina's main growing area has experienced dry conditions and temperatures are now beginning to increase. A wide area of maximum temperatures near 40 degrees Celsius (104 degrees Fahrenheit) could significantly stress Argentine corn and soybean crops. This could cause permanent yield damage for pollinating crops. Traders now see 1/2 to 2 inches of rain late next week which could ease crop concerns.

This comment is part of our Morning Commentary. Morning Commentary is released between 5:30AM and 7:45AM (CT) Monday through Friday.
Take a Free Trial of our Daily Comments, Weekly Market Letter and more! Subscribe today or Learn More

For the USDA supply/demand report, traders see corn ending stocks near 1.483 billion bushels, 1.359-1.600 range, as compared with 1.493 billion in the December update. Corn production is expected near 15.078 billion bushels, 14.941-15.190 range, as compared with 15.062 billion bushels in the December update. World corn ending stocks are expected near 303.6 million tons, 295-307 range, as compared with 305.5 million tons in the December update. For the December 1 grain stocks report, corn stocks are expected near 11.607 billion bushels, 11.200-11.951 range, as compared with 11.294 billion bushels in the December 2020 update. The weekly export sales report showed that for the week ending December 30, net corn sales came in at just 256,084 tonnes as compared with trade expectations for near 500,000-1.2 million tonnes. Cumulative sales have reached 64.6% of the USDA forecast for the 2021/2022 marketing year versus a 5 year average of 54.1%. The Buenos Aires Grains Exchange sees Argentina's corn plantings as of January 6th at 77.3% complete as compared with 70.7% the previous week.

TODAY'S MARKET IDEAS

Short-term technical support for March Corn comes in at 601 1/4 and 597 1/2, with 614 1/4 and 630 1/4 as next upside targets.