Grain Markets Extend Rally, Corn Hits Three-Year Highs on Yield Concerns

Grain markets continued their upward trend on Wednesday, with corn futures hitting three-year highs and new contract highs in the December contract. The old crop September is above $5, a level not seen since October 2023.

DuWayne Bosse of Bolt Marketing attributes the buying to technical signals and concerns about lower yields and a tightening U.S. and global balance sheet for corn. He notes that funds are trend followers and have been correct in their past predictions, currently holding over 250,000 contracts long but not yet at record levels.

The Pro Farmer yield estimate of 173.2 bu. per acre on corn, combined with a 3% drop in U.S. crop ratings to 57% good to excellent, has fueled the rally. North Dakota's rating saw a significant 7% cut to only 26% good to excellent due to drought and hot night time temperatures in July.

Bosse believes the market is pricing in a yield under 180 bu., which is bullish enough for the corn market to ration demand. Funds are adding to their long positions, with some inflationary buying by index funds who see grains as a hedge against inflation and higher energy prices.