Corn Prices Higher After USDA's Bullish Reports, Soybeans Flat: Where Do the Markets go Now?

Corn ends higher after bullish numbers in the USDA Reports including the 90-million-acre corn estimate. 

Garrett Toay, AgTrader Talk, says, "Yes, absolutely it was a bullish report.  Corn acres came in about 1.7 million acres below the trade guess, corn stocks came in about 100 million bushels less.  I think the market reaction was just we were a little bit too cheap coming into the report.  Down at $4.25 we had sold off coming into this report, one of the larger selloffs we've seen on record.  So, these new shorts are kind of covering in here." 

So where do prices go from here? 

Toay says in reality with these acres and a 177 bushel per acre yield, and flat demand the corn market is still looking at a 2.1-billion-bushel carryout next year.  "So, the carryout is still going to be fairly burdensome," he says.  

However, May and Dec corn closed above their 50-day moving averages and so that opens up some upside potential technically.  "You've got resistance at $4.50 and then you've got resistance at around $4.60-$4.63, I think that's where things kind of stall out," he says. 

Since corn hasn't been above $4.50 for over a month he thinks that farmers will use that opportunity to get caught up on sales.  The quarterly stocks report also showed farmers are holding over 5 billion bushels of corn in on farm storage and so there is a large amount of corn to move.  

Soybeans end slightly lower as acreage was in line with trade guesses but quarterly stocks were above the mark by around 20 million bushels. However, Toay says he thought the report was going to be a lot more bearish.  "That was our fear coming into the report, that with a tight margin year and the lower input costs, that would entice even more farmers to plant soybeans," he says. 

Soybeans closed about the 50-day moving average, however, and so that and a higher monthly close are actually technically constructive for the soybean market.  Toay thinks the soybean market will now turn its attention back to South America's weather and crop size.   

Wheat ended with winter wheat classes higher, spring wheat lower.  However, wheat had higher weekly closes for a second week and is still price competitive from a global standpoint.  So Toay thinks this is a good signal for a low in the market.  

Cattle futures recovered the last day of the month despite some lower cash. Is all the bearish news from the Cattle on Feed Report and HPAI news worked it? Toay thinks the market is close and the futures discount to cash is likely supportive.