Corn Prices Surge Amid USDA Yield Estimate Cut
The price of December corn has surged over 30 cents after the USDA reduced its yield estimate and increased exports last week. The current crop ratings continue to decline, with only 60% of U.S. corn in good to excellent condition, two points below the five-year average.
No. 1 corn state Iowa remains at an impressive 78% good to excellent rating, but other main states are lagging behind. Managed funds have gone long over 210K contracts, and it's unlikely they will liquidate anytime soon due to ongoing crop uncertainties and potential escalations in the Black Sea.
As demand remains robust and energy prices pose headwinds, December corn may not move below pre-August WASDDE lows of $4.57. A pullback to around $4.75 seems more likely in the near term for both corn and wheat amid overbought levels and no immediate supply crunch.
Given these market conditions, producers may want to consider locking in a price for their crops by buying March 27 $5.00 puts and selling the corresponding call spread at even money.