Corn prices immediately collapsed last night as soon as trading opened, following a bearish USDA report Thursday saying stocks were higher than anticipated.

This morning, the freefall is continuing.

May prices were down as much as 5.58 percent. Here's the chart:



Morgan Stanley commodities guru Adam Longson says the decline could and should have been even worse if not for CME circuit breakers.

However, he puts forward a reason why bulls shouldn't flee: export demand.

Export parity should still cushion falling old-crop corn prices. While we would not be surprised to see old-crop corn prices sell off further, the US balance will remain tight until the new harvest — with Thursday’s miss masking the fact that Mar 1 stocks were still down 10% YoY. A pullback in US prices below $6.40/bu would leave US exports competitive again against Argentina, resulting in an unsustainable up-tick in US demand.

We'd also note that a recent NOAA report says weather should be returning to normal in large swaths of corn country after last year's devastating drought.