Corn traders continue to debate total U.S. production, how many acres will actually be planted in South America and if there will be any negative impact on their crop created by a lingering La Niña weather pattern?
U.S. demand remains extremely strong, but with most inside the trade wondering just how long the wave of export demand will last? There's also the continued question lingering overhead about how high prices can really go, as we prepare to swim in a corn supply that's in excess of +2.2 billion bushels, while at the same time being forced to digest a glut of domestic wheat?
As a producer, that's what has kept me nervous about longer-term price appreciation and why I've added a bit more protection on the October rally. I should mention, there have been headlines circulating out of China that their government wants to start reducing some of their corn acres and increase soybean acres.
There's also talk that Chinese officials are wanting to help better incentivize domestic corn processors, which would encourage their end-users to chew through more bushels. Perhaps with more producers here in the U.S. also talking about fewer corn acres next year, along with the Chinese government making some changes, the global balance sheet might actually get a bit tighter down the road.
Informa released some early estimates Thursday that forecast U.S. planted corn acres next year will be down from 94.490 million to 90.971 million, which is almost a -4% reduction. I don't disagree at all, but unfortunately this is such a long ways off on the radar-screen, there's not much nearby market influence...just something to think about longer-term.
As for now, I continue to keep all eyes on South American weather, the direction of the U.S. dollar, crude oil prices and the overall mentality of the extremely powerful macro crowd. From a technical perspective I continue to see three major hurdles looming nearby at the $3.60, $3.70 and $3.80 level.