Corn Prices Fall on Brazilian Estimates, Chinese Import Uncertainty

Corn prices dropped due to profit-taking and technical selling. The USDA reported that the U.S. corn crop was 49% planted, in line with expectations but behind the five-year average of 54%. Brazil's CONAB estimates the total corn crop is up 0.6% from April but down 15.4% from last year, not fully accounting for the hot, dry conditions affecting the second crop. Mexico purchased 405,000 tons of U.S. corn, split between the 2023/24 and 2024/25 marketing years. The U.S. Energy Information Administration will release weekly ethanol production and stock data on Wednesday. The USDA will release new projections on June 12, followed by CONAB's update on June 13.

For the 2024/25 U.S. corn outlook, larger supplies, increased domestic use and exports, and higher ending stocks are anticipated. The crop is projected to be down 3% from last year, with a yield of 181 bushels per acre based on a weather-adjusted trend. Total corn supplies are forecast to be the highest since 2017/18. U.S. corn use is expected to rise by just under 1%. The U.S. is projected to be the largest global corn exporter for the second consecutive year. Ending stocks are expected to rise, reaching the highest level since 2018/19, with a season-average farm price projected at $4.40 per bushel, down 25 cents from 2023/24.

Globally, the 2024/25 coarse grain outlook predicts record production and use but slightly lower ending stocks. World corn production is forecast to decrease, with significant declines in the U.S., Ukraine, and Argentina, partly offset by larger crops in Brazil, the EU, China, South Africa, and Mexico. World corn use is expected to rise less than 1%. Corn imports are forecast to decline by just under 1%, with increases in Mexico, Saudi Arabia, Vietnam, Egypt, and Iran. Global ending stocks are projected to fall, with slight decreases in major exporting countries despite higher stocks in the U.S.

CONAB has slightly increased its projections for Brazilian corn production due to revised planted area totals. However, overall production is expected to be lower than last year due to weather issues. Brazil's corn crop is estimated at 111.636 million tons, below USDA projections and down from last year by 15.4%.

The global and domestic corn markets are seeing a rise in prices due to crop problems in South America, according to Pusk, part of the All-Ukrainian Agrarian Council (AAC). Argentina faced droughts and pest issues, while Brazil experienced excessive rainfall, reducing global corn supplies and driving prices up. Buyers expect key exporters to reduce production in the new season, and rising wheat prices are also contributing to higher corn prices. Ukraine's corn exports are projected to reach 3 million tons in May, with 1.25 million tons already exported by May 13.

Two months ago, the U.S. Department of Agriculture (USDA) stopped using Chinese customs data to estimate China's soybean imports. This disparity has now extended to corn, with USDA and China differing significantly in their 2024-25 corn import forecasts. USDA predicts China will import 23 million metric tons, unchanged from 2023-24, while China's agricultural ministry estimates just 13 million tons, a five-year low. This difference could impact U.S. corn exports, recently displaced by Brazilian supply.

The 10 million-ton gap in the 2024-25 forecast equals about 18% of anticipated U.S. corn exports. China recently accounted for up to 31% of U.S. corn exports but only 7% in early 2023-24. USDA projects a 2% increase in 2024-25 U.S. corn exports, potentially including some for China. Brazilian corn exports to China have surged, potentially causing data discrepancies. USDA expects China's domestic grain prices to stay higher than the world market, making foreign corn cheaper. China projects a record 2024-25 corn crop at 297 million tons, reducing import needs.

Chicago Board of Trade (CBOT) corn futures fell on Tuesday due to increased Brazilian crop estimates and U.S. planting progress meeting expectations. Corn prices are struggling to maintain levels above $474.70, indicating potential further declines, with targets around $461.90. However, if prices breach and hold above $474.70, they could rise to $490.40. The expected trading range is between $460.00 support and $476.00 resistance, with a bearish trend forecast.

Data for Technical Analysis (30Min) CFD US Corn Futures - Jul 24 (ZCN4)

Resistance : 469.83, 469.95, 470.15

Support : 469.43, 469.31, 469.11          

30Min Outlook

Source: TradingView                                                

Buy/Long 1 If the support at the price range 468.93 - 469.43 is touched, but the support at 469.43 cannot be broken, the TP may be set around 469.88 and the SL around 468.68, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 469.83 - 470.33, TP may be set around 471.20 and SL around 469.18, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 469.83 - 470.33 is touched, but the resistance at 469.83 cannot be broken, the TP may be set around 469.36 and the SL around 470.58, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 468.93 - 469.43, TP may be set around 467.50 and SL around 470.08, or up to the risk appetite.       

Pivot Points May 15, 2024 08:07AM GMT