Corn prices languish at 3-year low as WASDE report points to oversupply

Corn prices continued their bearish trend this week after the US Department of Agriculture (USDA) warned of more supplies and weak demand. According to TradingView, corn price crashed to a three-year low of $4.68 while the Teucrium Corn Fund (CORN) slipped to $21.90. The two have fallen by over 27% from the highest point in 2022.

Corn supply is rising

Agricultural commodities are having a mixed performance this year. Some soft commodities like orange juice, sugar, cocoa, and palm oil have surged to historic highs, helped by lower supplies and climate issues. 

Others like corn, soybeans, and wheat have tumbled hard this year even as the crisis in Ukraine and hot weather in Europe continued. This underperformance is mostly because of the rising supplies in key countries like the US and Brazil.

The USDA published its WASDE report on Thursday. The report showed that corn production will jump to 15.2 billion bushels this year, a 170 million increase from the previous estimate.

Yield per acre is also expected to increase to 174.9 bushels, helped by good weather. The volume of exports is expected to rise by 50 million bushels to 2.1 billion. Globally, countries like the United States, Russia, Ukraine, and India are expected to see higher supplies. 

This increase will be offset by a sharp decline in countries like Turkey, Argentina, and the European Union. Argentina is going through a challenging period as its economy collapses. As a result, it has moved from being a corn exporter to an importer.

The European Union, is going through a major challenge because of climate change. Most of its countries went through a major heatwave a few months ago, leading to lower yields. 

The US is also going through these challenges as the important Mississippi River dries up. This is an important river that is used to transport soybeans and corn from mid-America to ports.

Corn prices forecast

Corn chart by TradingView

The daily chart shows that the price of corn has been in a strong downtrend in the past few months. It has crashed from an all-time high of $8.30 to a low of $4.70. This week, it moved slightly below the key support at $4.6934, the lowest point in October. 

Corn also dropped below the important support level at $5.13, the lowest swing on September 10th of last year. It remains below the 50-day and 100-day Exponential Moving Averages (EMA).

The Relative Strength Index (RSI) dropped below the important point at 40. Therefore, the outlook of corn is bearish, with the next important level to watch being at $4.