Corn Prices Decline Amid Challenges Ahead for Farmers and Futures

Corn prices experienced a decline due to fund and technical selling, resulting in March establishing a new contract low. The market is closely monitoring weather conditions in Argentina and Brazil, which currently appear favorable.

The U.S. corn outlook for the 2023/24 season indicates lower food, seed, and industrial use, leading to larger ending stocks. Global coarse grain production is forecasted lower, with reductions in foreign corn production, particularly in Brazil, Mexico, and Serbia. Trade changes for 2023/24 include higher projected corn exports for Ukraine and Pakistan but reductions for Brazil, India, and Serbia. Argentina's exports for the marketing year beginning in March 2023 are raised, while Brazil's are lowered.

In the face of falling corn prices on the Chicago Board of Trade (CBOT), the USDA projects a decline in grain acreage for the 2024-25 season, slightly dropping by 1 percent from the previous year, with Illinois witnessing decreased production costs. The corn production forecast for the upcoming year anticipates a 2 percent yield decline. Projections indicate a $4.40 per bushel average corn price, reflecting a 40-cent decrease from the previous year.

Argentina's Rosario grains exchange has revised its estimates for the country's 2023/24 corn harvest due to a heat wave, emphasizing the importance of timely rainfall for crop recovery. Ukrainian farmers are reevaluating their 2024 planting plans after suffering significant losses from last year's low corn prices. Limited funding hinders their ability to switch to more profitable soybeans. In war-affected southern regions, barley has begun spring sowing, with a decision on whether to plant corn pending. Farmers often face challenges abandoning corn abruptly due to insufficient funds for quality seeds and necessary technology for alternative crops.

U.S. corn futures hit three-year lows, influenced by plentiful domestic grain supplies, strong South American crop prospects, and reports of potential disruptions to ethanol use. The anticipated unveiling of new rules by the Biden Administration may impact ethanol use. The market remains oversold, and corn futures are approaching record short positions.

In the technical analysis, March corn futures rallied, but the Bulls face challenges, and breaking a certain level could resume the main bearish track. The expected trading range is between support at 425.00 and resistance at 440.00, with a bullish trend suggested for the period.

Data for Technical Analysis (1H) CFD US Corn Futures - Mar 24 (ZCH4)

Resistance : 409.49, 409.65, 409.93

Support : 408.93, 408.77, 408.49                         

1H Outlook

Source: Investing.com                                 

Buy/Long 1 If the support at the price range 408.43 - 408.93 is touched, but the support at 408.93 cannot be broken, the TP may be set around 409.52 and the SL around 408.18, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 409.49 - 409.99, TP may be set around 410.20 and SL around 408.68, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 409.49 - 409.99 is touched, but the resistance at 409.49 cannot be broken, the TP may be set around 408.80 and the SL around 410.24, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 408.43 - 408.93, TP may be set around 408.10 and SL around 409.74, or up to the risk appetite.       

Pivot Points Feb 22, 2024 02:57AM GMT