Brazil's Corn Production Forecast Dips; Global Corn Markets Face Headwinds

In the realm of corn production, Brazil's forecast faces a downward revision, primarily due to weather-related challenges. The National Supply Company of Brazil (CONAB) reduced its estimate for the first crop of corn, anticipating a yield of 24.385 million tons, reflecting a 3.7% decline from the previous month and a substantial 10.9% decrease compared to the previous year. Despite maintaining the second crop estimate at 91.235 million tons, the overall corn production projection for Brazil stands at 117.604 million tons, indicating an 0.8% decrease from the previous month and a parallel 10.9% drop from the preceding year. The adverse weather conditions in Brazil, encompassing planting delays and developmental challenges arising from hot, dry conditions in central regions and excessive moisture in the south, prompted these reductions.

Despite these challenges, Brazil is expected to maintain its position as the world's largest exporter of corn in the upcoming marketing year. The aggressive marketing strategies in Brazil have already impacted U.S. market share, particularly concerning corn exports to China.

Meanwhile, the U.S. Energy Information Administration reported a surge in domestic ethanol stocks, reaching a 38-week high at 24.371 million barrels. Ethanol production averaged 1.062 million barrels per day, marking an increase of 13,000 barrels from the prior week and 119,000 barrels higher than the corresponding period in the previous year.

In the United States, agricultural economists from the University of Illinois highlighted a challenging year ahead for corn growers due to lower market prices. They emphasized the need for cost-cutting measures, suggesting a reevaluation of fertilizer application rates and potential adjustments in land rental rates.

As per crop budget updates, the economists estimated a season average of $4.50 per bushel for corn, representing significant downward revisions from earlier projections. The USDA projects a 3.6% reduction in corn plantings for the upcoming year.

Argentina's farming heartland is expected to experience minimal rainfall in the coming days, facilitating progress in corn planting. Dry conditions are favorable for planting, a crucial factor as Argentina ranks among the top global exporters of soybean oil, meal, and corn.

In the international market, Taiwan's MFIG purchasing group acquired approximately 65,000 metric tons of animal feed corn in a tender, likely sourced from Argentina.

Corn futures are currently facing a downward trend, reaching three-year lows and potentially indicating further declines if they remain below specific resistance levels. On Wednesday, despite initial attempts to decrease, midday reports show mixed trends in corn prices.

Data for Technical Analysis (5H) CFD US Corn Futures - Mar 24 (ZCH4)

Resistance : 460.73, 461.25, 462.11

Support : 459.01, 458.49, 457.63        

5H Outlook                       

Source: Investing.com                            

Buy/Long 1 If the support at the price range 458.91 - 459.01 is touched, but the support at 459.01 cannot be broken, the TP may be set around 461.36 and the SL around 458.86, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 460.73 - 460.83, TP may be set around 462.50 and SL around 458.96, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 460.73 - 460.83 is touched, but the resistance at 460.73 cannot be broken, the TP may be set around 459.01 and the SL around 460.88, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 458.91 - 459.01, TP may be set around 457.40 and SL around 460.68, or up to the risk appetite.       

Pivot Points Jan 11, 2024 02:31AM GMT