Corn futures have surged massively this Thursday after the US slashed its corn and soybean production outlook for 2021. Dry soils have cut the potential for a bumper harvest in critical western growing areas, the US Agriculture Department said in its monthly report on World Agricultural Supply and Demand Estimates.
The new outlook shows that corn production would only hit 14.75 billion bushels, whereas analysts had predicted a production figure of 15.004 billion bushels. The outlook provided by the Agriculture Department was a reduction from its previous perspective of 15.165 billion bushels provided in July 2021.
The reduction in outlook by the USDA has sent corn futures prices up nearly 5% on the day. This is the largest gain in corn futures prices since 28 June.
Corn Futures Price Outlook
Thursday’s surge takes corn futures prices out of the range, which had 563.65 as the ceiling and 543.20 as the floor. If the active daily candle closes at current levels, the break of the 563.65 and 574.66 would be complete, and the pathway towards 601.40 (15 April high and 26 May low) would be open. Above this level, the corn futures price of 631.29 serves as the additional barrier to the upside in the near term.
On the flip side, bears would need to see a breakdown of 543.20 to open the door towards 525.90. However, this move would only become possible if demand wanes and the 574.66 ceiling retains its integrity. This outlook does not look very likely. At best, a correction would provide a dip-buying opportunity for bulls.
Corn Futures Price: Daily Chart
Follow Eno on Twitter.