Corn Prices Under Pressure Amidst Expanding Acreage and Steady Demand

Corn prices increased due to short covering and technical buying, while early corn harvests began with favorable weather conditions in the Midwest. Strong demand for corn in ethanol production offset slower export rates. Ethanol production in the U.S. rose to 1.039 million barrels per day, with stocks reaching their lowest levels since December 2021. Meanwhile, the market was monitoring Brazil's second crop harvest and conditions for planting in South America.

The 2023/24 U.S. corn outlook anticipates a slight increase in supplies and ending stocks. The starting stocks for 2023/24 have decreased due to trade adjustments and shifts in corn usage for ethanol in 2022/23. Corn production for 2023/24 is expected to see a rise primarily because of a larger harvested area compensating for a reduction in yield. The national average yield per acre is projected to decrease slightly. Overall, the total use of corn in the U.S. remains stable, resulting in an increase in ending stocks. The season-average corn price for producers remains at $4.90 per bushel.

Globally, the outlook for foreign coarse grain in 2023/24 indicates a reduction in production, a slight decrease in trade, and an increase in stocks compared to the previous month. Foreign corn production remains mostly consistent, with Ukraine expecting improved yield outcomes while the European Union is experiencing a decline. Foreign corn ending stocks have increased, particularly in Brazil, Mexico, Ukraine, and China, while Argentina has witnessed a decline. Worldwide corn ending stocks have seen a significant increase.

In Brazil, corn production for 2023-24 is estimated to be substantial, with exports projected to be noteworthy. Argentina also anticipates higher production and exports for the same period. Ukraine's starting stocks for 2023-24 are projected to be at a certain level, with ending stocks increased. China's 2023-24 production and import projections remain stable, despite crop losses caused by recurring typhoons and disruptions in supply chains.

The USDA's increase in harvested corn area surprised the market, resulting in a boost in corn output, although yields decreased slightly. The increased acreage solidified a 10-year high in corn plantings and raised corn production to just above the highest trade estimates.

As a result, the market initially reacted to the USDA's reports with lower corn prices, but it later saw gains during the week. Corn's bearish trend is reinforced by breaking support lines on the chart. Stochastic indicators suggest a continued decline unless corn breaches a certain resistance level at 509.50.

Data for Technical Analysis (5H) CFD US Corn Futures - Dec 23 (ZCZ3)

Resistance : 482.48, 482.84, 483.41

Support : 481.34, 480.98, 480.41              

5H Outlook

Source: Investing.com                                     

Buy/Long 1 If the support at the price range 479.34 - 481.34 is touched, but the support at 481.34 cannot be broken, the TP may be set around 482.70 and the SL around 478.00, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 482.48 - 484.48, TP may be set around 485.20 and SL around 480.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 482.48 - 484.48 is touched, but the resistance at 482.48 cannot be broken, the TP may be set around 481.20 and the SL around 486.00, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 479.34 - 481.34, TP may be set around 476.68 and SL around 484.00, or up to the risk appetite.       

Pivot Points Sep 14, 2023 02:45AM GMT