Corn Prices Surge to Multi-Month Highs Amid U.S. Harvest, and Port Strikes

Corn prices increased due to technical and fund buying, reaching multi-month highs. U.S. harvest activity and port strikes from Maine to Texas are under watch, as strikes may delay container shipments. Damage from storms and heavy rainfall in parts of the southeastern Corn Belt is expected, and Argentina and Brazil's planting conditions are being monitored.

On Tuesday, 195,000 tons of new crop U.S. corn was sold to unknown buyers. The USDA’s next supply, demand, and production report is due October 11, and Brazil’s CONAB will release its outlook on the 15th. Ethanol production in August used 472.697 million bushels of corn, down 2% from July but up 7% year-on-year, with DDGS production slightly lower than the previous month but 10% higher than last year.

For the 2024/25 U.S. corn outlook, supplies are expected to shrink, and ending stocks to decline slightly. Beginning stocks for 2024/25 are reduced by 55 million bushels due to higher exports and increased corn use for ethanol in 2023/24. Production is forecast at 15.2 billion bushels, up slightly from the previous month, while yield is projected at 183.6 bushels per acre. Total U.S. corn usage remains steady at 15 billion bushels. As supply decreases and demand stays unchanged, ending stocks fall by 16 million bushels to 2.1 billion. The average price for corn is lowered by 10 cents to $4.10 per bushel.

Globally, coarse grain production for 2024/25 is forecast to decline by 1.8 million tons, with lower foreign production, stable trade, and reduced stocks. EU corn production is down, but increases are expected in Tanzania and Canada. Global corn trade changes include higher exports from Tanzania and Canada, while Russia, the EU, and Serbia see declines. Corn imports rise for the EU, Mexico, India, and Thailand but decrease for China, Canada, and Iran. Global corn ending stocks are reduced by 1.8 million tons to 308.4 million.

European traders announced that Algeria’s state agency ONAB issued a tender for up to 320,000 tons of animal feed corn, sourced exclusively from Argentina or Brazil. The tender deadline is October 3, with shipments scheduled between October and mid-November. Additionally, a separate tender last week sought up to 240,000 tons of feed corn from the same regions.

Corn futures continued their upward momentum midweek, with prices increasing by 2¾ to 3¼ cents in nearby contracts, supported by stronger cash prices. Ethanol production for the week ending September 27 reached 1.015 million barrels per day, up 21,000 barrels from the prior week, while stocks declined by 65,000 barrels. The Grain Crushing report showed 472.7 million bushels of corn were used in ethanol production during August, down 2.3% from July but up 7% from last year. StoneX slightly lowered Brazil’s corn production estimate to 24.87 million metric tons (MMT) but raised the U.S. yield estimate to 184 bushels per acre, pushing U.S. production up to 15.222 billion bushels.

Managed money began unwinding record short positions in mid-July, which helped stop the price decline and sparked the current rally. Since August's low of $3.85 per bushel, corn prices have risen, and managed money has repurchased 182,000 contracts, contributing to the upward trend. Seasonal patterns suggest corn prices typically bottom in late September or early October, with potential for a stronger rally if managed money continues adding long positions. Historical data from Moore Research Center indicates a tendency for March corn futures to close higher in late October compared to September.

Corn futures broke through key resistance levels, boosting prices overnight and into early trading. The next price targets are between $441 and $443, with a failure to maintain above $426½ potentially neutralizing the short-term outlook. As the rally progresses, the bullish trend is expected to continue, with support at $430 and resistance at $445. Traders are advised to monitor the market closely, especially considering the historical tendency for a harvest low around this time of year.

Data for Technical Analysis (1D) CFD US Corn Futures - Dec 24 (ZCZ4)

Resistance : 433.80, 435.16, 437.38

Support : 429.36, 428.00, 425.78                                   

1D Outlook

Source: TradingView             

Buy/Long 1 If the support at the price range 423.36 - 429.36 is touched, but the support at 429.36 cannot be broken, the TP may be set around 434.56 and the SL around 423.36, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 433.80 – 439.80, TP may be set around 444.00 and SL around 426.36, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 433.80 – 439.80 is touched, but the resistance at 433.80 cannot be broken, the TP may be set around 428.76 and the SL around 442.80, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 423.36 - 429.36, TP may be set around 419.00 and SL around 436.80, or up to the risk appetite.       

Pivot Points Oct 3, 2024 03:22AM GMT

Sources: Barchart, Economies.com