Last week brought a market correction to corn futures, culminating with Friday’s significant sell down. Mar-21 corn futures closed the week just above the psychological level of $5 per bushel. Fundamentally, arguably the only bearish news last week was better weather in South America, but the read across multiple commodity categories would suggest the culprit was major speculative liquidation.
Weather has improved in South America, giving life to the idea that production could come in better than expectations—particularly for Brazil’s safrinha crop. Acreage may still be impacted, but yields will likely recover for the mid-season crop with more favorable weather.
Demand rationing will be a key question moving forward after the sharp rise in futures values—and will help determine how much higher prices can go before demand comes under pressure. Some early signs suggest some rationing is taking place already.