Weekly Corn Market Update 10/11/24
December 2024 (Dec24) corn futures (the benchmark for 2024 corn production) finished the week lower by 9.00 cents (~2.12%), settling at $4.1575/bushel. This week's price action occurred in a 12.75-cent (~3.00%) range. All of this week's trading occurred within the unremarkable range we published last week.
Our corn demand index (CDI) rose 1.27% this week, outperforming Dec24 corn futures again. The war in Ukraine, executive branch policy, tensions with China, Federal Reserve interest rate policy, the Dollar, instability in the Middle East, the upcoming US presidential election, and the potential for tariffs remain concerns. On Friday, the USDA released its monthly World Agricultural Supply and Demand Estimates (WASDE) for October.
Dec24 corn futures remain well below a long-term downtrend channel capped by a trendline connecting the highs of April 20th, 2022, and June 21st, 2023, and initially supported by a trendline connecting the lows of July 22nd, 2022, and May 18th, 2023. We see technical levels below the market at about $4.14, $4.04, $3.99, $3.90, and $3.85/bushel. We see technical levels above the market at about $4.25, $4.41, $4.57, $4.73, $4.86, $5.01, $5.14, $5.25, $5.44, $5.76, $5.90, and $6.02/bushel. Most daily and weekly momentum indicators are in neutral territory. Carry spreads from Dec24 to Mar25, May25, and Jul25 finished wider this week.
Our at-the-money model volatilities for the 2024 crop finished mixed this week after the USDA released its October WASDE report on Friday. The lone gainer was Jul25, fractionally. Near-term expirations finished significantly lower. See the charts below for more details. One compares our closing at-the-money model volatilities for this week and last. The other compares our current model volatilities with the forward volatilities they imply between consecutive expirations.
For next week's trading in Dec24 corn futures, we consider trade in the $4.0600-$4.2550 per bushel range unremarkable. Notable moves extend to the $3.8350-$4.4725 per bushel range. Price action beyond that would be extreme.
The fall crop insurance price continued its discovery period this week. With 39.13% of the observations recorded, the average sits at 4.2406/bushel.
#AgTwitter & #oatt - cast your vote in this week's poll, then click over to read our Weekly #Corn #Market Update: https://t.co/BvC48Z7fb3
— Quartzite James (@QuartziteRMLLC) October 11, 2024
We think these scenarios have roughly equal probability next week. Where do you think #cbot Dec24 corn #futures will settle next week?
Thanks for taking the time to read. We look forward to your questions and feedback. Thanks again.
Weekly Price Levels and Corn Demand Index
As a reminder, the Quartzite Risk Management Corn Demand Index references the weekly change in April 2025 futures for Crude Oil, Live Cattle and Lean Hogs. We weigh the percentage change in those contracts and compute the index's percentage change. Crude Oil accounts for 50% of the index, and Live Cattle and Lean Hogs each make up 25%. To create the chart, we started the index at the Dec24 corn futures settlement on 11/10/23; then added or subtracted the index's weekly percentage change. We want to add a few warnings. First, there are only a handful of data points - not much to go on. Second, the index references relatively illiquid markets - making any strategy based on it challenging to execute. Third, we expect divergences to increase as we get into the growing season when the corn market will likely look more toward supply for its direction.
In short, we would not attempt to trade on this information without much more data, nor would we recommend anyone else does.
