Corn Falls Below $5 as Fund Selling Continues

Corn futures closed at $4.97 3/4 on Friday, down 30 1/2 cents from last week's close and below the $5 mark for the first time in recent history.

According to Dave Chatterton of Strategic Farm Marketing, this bearish market is a result of disappointment over China's lack of details on its $17 billion agricultural purchases and the USDA's larger-than-expected quarterly stocks report.

The USDA found an additional 173 million bushels of corn in its quarterly stocks report, which analysts are trying to incorporate into their balance sheets. This, combined with funds' long positions exceeding 400,000 contracts, led to a mass exodus of positions from the market.

Chatterton believes that prices may need to fall further before demand can be stimulated and supply chain issues are addressed. He notes that the market is still optimistic about lower yields and thinks the USDA needs to revise its national yield average downward.