This past Wednesday, the Jul-19 corn futures contract pushed to a three-year high before showing resistance around $4.38. The market rally began on May 13, when futures opened at a 2019 low of $3.35 and have only declined in two trading days since.
In reaction to new crop concerns, many money managers turned on their corn net short positions, yet 116,729 net short contracts were still being held as of May 21. The Wall Street Journal reported that the undoing of short bets contributed to the futures rally, and the amount of remaining net short positions could continue to push prices higher. Moreover, Reuters estimated corn futures fund purchases topping 45,000 contracts four different days during the rally stretch, including a record 48,000 on May 30. Corn funds have been fast approaching a net long position.
The price momentum swing in mid-May is due in large part to rain throughout the Corn Belt and flooding along major Midwestern rivers. High levels of precipitation have put planting progress at its slowest pace on record, prompting questions about new-crop acreage and yield. Moving forward this season, growers will have to evaluate late-season planting against the planting of short-season varieties (which have lower yields)—and some acres may not be plantable at all.
Looking ahead, meteorologists believe the Corn Belt is due for dryer conditions in the next six to ten days, but some rain may still fall across the region, particularly south of Iowa, and flooding will likely continue along the major Midwestern rivers during that time.
This morning, the market has seen a slight decline, which could partly reflect the recent announcement of a 5 percent tariff on Mexican imports from President Trump.