Corn futures continued their decline for a fifth consecutive day, with prices dropping as much as 1.8% intraday, marking their sharpest fall in almost three weeks. This pullback is attributed to traders locking in profits after a powerful August rally that saw speculative positioning in corn reach a four-year high. Wheat and soybeans also experienced pressure as investors divested from the broader US grain complex.
The recent rally in agricultural commodities was fueled by geopolitical tensions, such as attacks on Black Sea ports, and adverse weather conditions in key growing regions, which raised concerns about global grain supplies and crop output. Hedge funds and other speculative investors had significantly increased their net bullish positions in corn, benefiting from the upward trend in prices.
Ahead of the USDA's September WASDE report, managed money held a 52-week bullish extreme in soybeans and Chicago wheat, alongside its largest corn long position. Commercial hedgers, conversely, were at or near their most bearish readings of the year for all three grains. Despite a strong week for new-crop corn export sales, which nearly doubled to 1.99 million metric tons, Friday saw a selling session with corn down 3.25 cents, soybeans off 12.25 cents, and wheat down 20 cents, indicating profit-taking rather than a deterioration in demand. The September corn contract settled at $5.12, essentially unchanged on the week.
Analysts noted that while funds were record long in corn and closing in on a record in soybeans, this positioning alone might not drive further price increases. StoneX commodity broker Craig Turner emphasized the need for a strong cash market, driven by demand inelasticity, to push prices higher, citing patterns from 2008 and 2012. Cory Bratland of AgMarket.net suggested the market has already factored in a lower corn yield, potentially around 179 bushels per acre, down from USDA's August estimate of 180.7 bushels per acre.
The large speculative long position, which grew from 166,770 contracts to 431,062 over four weeks, raised concerns among producers about potential market reactions to the upcoming WASDE report. The fact that significant new buying of 54,549 contracts did not lead to a price increase in September corn suggested that fresh capital was doing less work in moving the market. With the WASDE report expected to be a major driver, analysts advised producers to consider selling unpriced bushels before the report's release.
