Corn Prices Drop Amid Strong Dollar, and Global Demand Concerns

Corn prices declined due to fund and technical selling as the U.S. harvest nears completion. Buyers in Mexico and unidentified locations recently purchased over 690,000 tons of U.S. corn. Ethanol demand is steady, but there are concerns about long-term production with a biofuel-critical EPA head now in office. Brazil may increase its corn planting, but domestic ethanol demand could reduce export volumes, likely benefiting U.S. exports.

The USDA revised its 2024/25 U.S. corn forecast lower, predicting 15.1 billion bushels in production, down due to a yield reduction. As a result, corn ending stocks are now projected at 1.9 billion bushels. Global production for coarse grains, including corn, is expected to decrease slightly due to declines in several regions, though Uganda, Malawi, and others show increases. China's corn imports are projected to drop, while Mexico, Turkey, and other countries increase their import needs.

The U.S. experienced its second driest October on record, impacting yields and causing crop stress in soybean and corn-producing regions. Many areas had below-average rainfall, and October temperatures were unusually high, especially in Texas and the southern states. Dry conditions negatively impacted corn and soybean pod and ear weights, likely contributing to yield decreases.

Brazil’s corn exports are lower due to rising domestic demand from the ethanol industry, which supports U.S. corn export prices. Market brokers predict the U.S. will retain its position as the top corn exporter, with Argentina second, as Brazil’s exports decline.

Brazilian corn acreage is expected to drop from 55 million to 52 million acres this year, contrasting with higher U.S. yields. Meanwhile, the Korea Feed Association purchased nearly 70,000 tons of feed corn, likely from the U.S. or South America, for February 2025 delivery, but another tender remains unfulfilled, while Argentina’s corn production forecast was slightly lowered.

Corn futures declined due to concerns about China’s economic stimulus package, raising doubts about demand from this major buyer. Although a strong dollar can make U.S. crops less competitive internationally, corn prices saw some minimal support from private sales to Mexico and unknown buyers. Spot basis bids for corn in the Midwest held steady as futures dipped, with export demand helping to limit losses.

Data for Technical Analysis (30Min) CFD US Corn Futures - Dec 24 (ZCZ4)

Resistance : 427.57, 427.69, 427.89

Support : 427.17, 427.05, 426.85               

30Min Outlook 

Source: TradingView                                 

Buy/Long 1 If the support at the price range 426.57 - 427.17 is touched, but the support at 427.17 cannot be broken, the TP may be set around 427.64 and the SL around 426.27, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 427.57 – 428.10, TP may be set around 428.40 and SL around 426.87, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 427.57 – 428.10 is touched, but the resistance at 427.57 cannot be broken, the TP may be set around 427.12 and the SL around 428.40, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 426.57 - 427.17, TP may be set around 426.00 and SL around 427.87, or up to the risk appetite.       

Pivot Points Nov 14, 2024 02:55AM GMT