Corn price forecast with the WASDE report in focus

Corn price movements are subtle ahead of October’s WASDE report. Analysts expect a rather bearish outlook.

WASDE report

In September’s WASDE report, corn outlook for the 2021/22 season was characterized by increased supplies and larger ending stocks. The US Department of Agriculture adjusted its production forecast by 246 million bushels amid an increase in the harvested yield and area. At the same time, it predicted that the ending stocks will increase by 8.8 million tonnes.  

In October’s report, analysts expect a rather bearish outlook. On the one hand, supplies for the 2020/21 will likely be the fifth-tightest on record. However, corn stocks for the 2021/22 season are expected to surge. As such, analysts will be keeping an eye on the weather patterns in South America and the US.

The demand side is also expected to substantiate the bearish narrative. In the past report, the forecasted increase in ending stocks was partly due to the country’s bumper corn harvest. This led to a decline in US corn exports to the Middle Kingdom in July & August. Compared to a similar timeframe in 2020, the weekly loadings of US corn are down by 32% year-to-date.

With reference to ethanol production, the ongoing rise in consumer fuel demand will likely be one of the few bullish elements in the expected corn outlook. Nonetheless, adjustments on corn demand outlook will probably be minor.

Even with the expected bearish outlook, analysts expect the stock-to-use ratio to rise from the current forecast of 9.5% to 9.7% in the 2021/22 season. Corn supplies are the ninth tightest they’ve been in record. As such, corn price is expected to rebound after the kneejerk reaction to the WASDE report.   

Technical outlook

Corn price is on sideways trading ahead of the October WASDE report. At the time of writing, the agricultural commodity was down by 0.09% at 532’4 in the Chicago Board of Trade (CBOT). Notably, 530’0 has been a crucial support level since early July.

On a four-hour chart, it is trading slightly below the 25 and 50-day exponential moving averages. The two EMAs have converged at 534’0. Based on its current price movements, the outlook is rather neutral.

In the near term, corn price will likely trade within a tight range as it continues to find support at 530’0. On the upside, resistance is expected along the 25-day EMA at 534’0. As a reaction to the WASDE report later in Tuesday’s session, the price may drop to 524’4. On the flip side, a bullish report may boost it to 537’4.