Cast adrift highly speculative grain markets, corn prices have rallied to a three-year “February” high in Chicago futures markets.
The best gain was at $4.281/2 a bushel in early February 28, the highest comeback month-on-month since November 2023. This was also the best second month of the year rebound since February 2020.
Analysts now expect the price floor to hit the breaking point of $4.30 a bushel as traders exploit the price rebound. This frantic short-covering may eventually attract a new oversupplied market from stored grain and prompt an eventual price slump.
The 2023 American corn still has a 2024 carryover of 60% in stocks. Naturally, this implies ample supplies that could distress price at any time, but technical buying has overrode this factor for now.
The grain’s price had earlier sunk on February 23 and 26 to new lows, driven by ample stocks.
Highly Speculative February
All the same, the rebound by corn in the futures markets is not extremely impressive in an otherwise highly speculative month.
Despite scoring a late-month comeback, February 2024 has also seen corn trade below the $4 mark a bushel. Before May futures recovered at $4.28/bushel on February 28, March corn futures had dipped to $3.993/4 on February 23.
But just when everyone was expecting no more comeback, bounty hunters bought the extra supplies and shortened the market. This in turn bounced the price by 5 U.S. cents above its previous February 14 high of $4.23 a bushel.
Now, experts await to see how late month speculation can last before the markets overflow with grain and slump prices.
American Corn Rallies Despite Brazil Harvest
It is also remarkable how American corn prices have rebounded just when grain giant, Brazil, has had a bountiful harvest.
In combination with United States’ 15.23 billion bushels of corn, Brazil’s unexpected record production may lead to an oversupplied global market.
As a result, there is expectation that the U.S. Department of Agriculture (USDA) will revise the corn positions on February 29. This will probably include the Brazilian competition. The revision could add pressure on corn prices even at the start of spring planting season.
The last USDA crop and grain report on February 21 showed fairly stable corn prices.