Looking to the Futures

Corn futures (/ZC, currently set for December delivery) reached 530.00 this morning. That was the highest print since May 2023. When adjusting for contract changes, it represented the highest trade since last June. Updated yield forecasts have conspired with economic and geopolitical events to drive prices up this month.

The change in expected yields came from the Pro Farmer Crop Tour, an annual survey of over two thousand corn and soybean fields conducted in mid-August. The Tour estimate was for a yield of 173.2 bushels per acre (bu/ac), down 5.2% year over year, and total production of 15.344 billion bushels. That supported a gap up from Friday’s close at 508.25 (already a recent high) to an open at 510.25 Sunday night and a further runup to 524.25 Monday morning. It was the second report in the past two weeks that was followed by a big upside move. The most recent USDA WASDE report, released August 12, estimated the yield at 180.7 bu/ac, down 2.3 from the July report and down 5.8 bu/ac or 3.1% from last year. On the other hand, the total production estimate was raised 0.8% to 16.013 billion bushels. Despite that caveat, the report coincided with a 20-cent move on the day.

Looking further into the data, the Tour report is a more boots-on-the-ground census, examining conditions on a single stalk. It showed a lower number of ears and a smaller ear size or “grain length” from last year. That supported the lower estimates versus the USDA survey, which uses drone and satellite imagery. The WASDE report was also bullish in its analysis, stating, “This month’s 2026/27 U.S. corn outlook is for lower supplies, unchanged domestic use, larger exports, and smaller ending stocks.” Crop conditions were also down week-over-week and year-over-year in the most recent Crop Progress report. Corn rated good to excellent was 57%, down 3% from the prior week and 14% from last year.

Weather has been a problem for this year’s corn crop, or rather two separate problems. In the Western Corn Belt, drought and higher overnight temperatures last month caused pollination issues. In the Eastern Corn Belt, excessive rain this month has worsened conditions and caused concern for disease to emerge closer to harvest. Central Illinois, Indiana and Ohio have all seen the wettest August to date in over 130 years.

On the economic front, the dollar index is down 2.5 points over the past month. Weaker-than-expected GDP and lower inflation were followed by soft employment data. Then last week, Treasury Secretary Scott Bessent announced that the Treasury would double the size of its bond buyback program. That pushed long-term treasury yields lower, but still above recent levels. On the short end of the curve, the CME FedWatch Tool now has chances of a rate hike at the October meeting as more likely than not.

Overseas, an escalation in attacks on civilian shipping in the Black Sea has reduced exports from Ukraine. The ports around Odesa handle around 90% of the country’s agricultural exports, and road and rail lack the capacity to take up the slack. As a result, corn shipment volume is running at around 80% below normal this month. Looking ahead, the Ukraine Agriculture Ministry lowered its export estimate by 54% to 29.6mmt.

Corn was trading in a range between 470 and 510 from last August through May. It then broke to the downside before rebounding at the end of June. The most recent rally and the sharpest sustained move over the past year started two weeks ago and pushed the contract to a new high. The rally pulled the RSI above 70 to overbought levels. The MACD has been positive for the past week plus. The 20-day SMA just made a bullish cross above the 200-day while the 50-day is bringing up the rear, held down by the late June lows.

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