Corn price forecast: US harvest seen rising as acreage jumps

Corn price crashed hard as concerns about supply continued. After soaring to $6.83 in June, corn prices tumbled to a low of $5.20, the lowest level in over two years. This decline means that corn and the Teucrium corn ETF (CORN) have dropped by over 15% this year.

Corn’s robust supplies

Corn prices dropped as investors brace for more corn supplies this year, helped by the favorable weather in key countries like the United States and Brazil.

A report by the US Department of Agriculture boosted the expected corn acreage of the year. The department expects that the acreage of corn will be 94.1 million, an increase of 2 million acres from its previous estimate. If the weather remains supportive, it means that the country’s crop will be the highest in recent years.

Ukraine, a major agricultural country, is also expected to have higher production this year. While the war in Ukraine is continuing, early data shows that many farmers in the country have planted this year.

Brazil is also seeing favorable weather, which could lead to more production. The only major laggard is Argentina, one of the biggest agricultural countries in the world. Argentina is going through a major economic crisis that has pushed its currency to a record low.

A key risk for corn is the El Nino weather event. In a note this week, the UN confirmed that the El Nino had already started. El Nino is a weather event that leads to significantly higher rainfall in some places and dry weather in other places. 

Corn price forecast

Corn chart by TradingView

Turning to the daily chart, we see that corn prices have been in a strong bearish trend in the past few months. It has crossed several important levels recently, including $5.81 (July 2022 low) and $5.6324 (May 18th low). 

Corn has moved below all moving averages and the lower side of the descending channel shown in black. Therefore, at this stage, the prices will likely remain under pressure for a while. More downside will be confirmed if the price moves below October’s low of $5.1923.

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