The corn market reversed course on Friday after a bullish WASDE Thursday, with futures trading lower by double-digits. Jul-21 corn futures—at least thus far—haven’t been able to push past recently established highs, arguably creating a scenario for short-term technical weakness. The July and December 2021 contracts closed the week near $6.84 and $6.10 per bushel, respectively.
Thursday’s WASDE highlighted how tenuous the current market situation is as the corn balance sheet continues to grow tighter. This time of year always brings the market’s focus to weather, but this year’s shortness of stocks and timing of production in Brazil have amped up sensitivity to weather’s impact on production.
News of rain in the driest U.S regions over the coming weeks may lead to short-term market reactions, but much of the Corn Belt remains short on moisture. Also garnering attention for its perilous indication, the drought monitor is looking a lot like 2012. The bottom line is consistent moisture will be needed 1) to offset potential yield losses in the hardest hit and driest regions of the country and 2) to offset potential lower yields in marginal crop land.