U.S. Corn Exports Surge Amid Strong Harvest, Brazil Faces Increased Competition

Corn markets showed mixed activity, supported by favorable U.S. harvest conditions and improved planting conditions in South America following recent rainfall. The surge in U.S. corn exports continues, driven by price advantages over competitors like Argentina, Brazil, and Ukraine. Unknown buyers have secured another 100,000 tons of U.S. corn for 2024/25 delivery. Ethanol production in the U.S. rose to 1.081 million barrels per day, although exports dipped slightly compared to the previous week.

The U.S. corn outlook for 2024/25 indicates smaller beginning stocks but increased production and exports. Forecasted production stands at 15.2 billion bushels, though ending stocks are projected to fall due to increased demand. On the global stage, coarse grain production is expected to drop, particularly in Ukraine, Russia, and the Philippines, while India's production is set to rise. U.S. corn exports are expected to capture a larger share of the global market, especially with declining competition from Ukraine and Russia.

The U.S., benefiting from the largest corn harvest in its history, is set to dominate the global market, particularly in exports to Mexico and the European Union. As U.S. corn remains the cheapest option, Brazil’s export momentum is unlikely to pick up, further straining its domestic market. The U.S. corn harvest progress remains strong, with 65% of the crop harvested. Brazil’s corn exports for October are expected to reach 6.24 million metric tons (MMT), slightly higher than previous estimates but down from last year’s 8.45 MMT.

Brazil, after a record-breaking year in 2023, is facing increased competition in the international market, particularly from Argentina, which has recovered from droughts. Brazil’s 2024 corn exports are forecast to drop significantly. China, once a major buyer of Brazilian corn, is now focusing on domestic self-sufficiency, reducing its demand for imports. With an expected surplus of corn, Brazil faces challenges with storage capacity, which could lead to downward pressure on domestic prices.

On Wednesday, Chicago corn futures rose, supported by strong export demand that offset the pressure from a rapid U.S. harvest and a strong U.S. dollar. The USDA confirmed an export sale of 100,000 metric tons of U.S. corn to undisclosed buyers. Corn futures settled up 2.5 cents at $4.19 per bushel. Ethanol production increased by 39,000 barrels per day, totaling 1.081 million barrels per day, while ethanol stocks dropped by 52,000 barrels. Export data, expected to be released on Thursday, is projected to show strong sales between 2.2 and 3.3 MMT for 2024/25 shipments. Additionally, gasoline supply increased, indicating higher ethanol demand.

Corn prices broke through the $416.30 level and continued to rise, approaching $425.30. This upward movement suggests potential gains in the near term, with a possible target of $434.30 if prices exceed the $425.30 level. The trend is supported by moving above the EMA50, reinforcing the bullish outlook, as long as prices don't drop below $416.30. The expected price range for this period is between $418.00 as support and $430.00 as resistance.

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

Resistance : 419.89, 421.25, 423.47

Support : 415.45, 414.09, 411.87                                

1D Outlook

Source: TradingView       

Buy/Long 1 If the support at the price range 410.45 - 415.45 is touched, but the support at 415.45 cannot be broken, the TP may be set around 421.24 and the SL around 407.95, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 419.89 – 424.89, TP may be set around 432.00 and SL around 412.95, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 419.89 – 424.89 is touched, but the resistance at 419.89 cannot be broken, the TP may be set around 415.44 and the SL around 427.39, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 410.45 - 415.45, TP may be set around 400.50 and SL around 422.39, or up to the risk appetite.       

Pivot Points Oct 24, 2024 04:01AM GMT

Sources: Valor International, Economies.com