U.S. Corn Prices Rise on Weather Concerns and Strong Ethanol Demand

The U.S. corn market showed modest gains in low-volume trading, driven by weather concerns in South America, particularly Brazil and Argentina, where forecasts for drier conditions could hinder crop development. Market participants are closely watching the USDA’s January 10th supply and demand report and Brazil’s CONAB update on January 14th for further insights into global production trends.

In the 2024/25 U.S. corn outlook, ethanol demand rose by 50 million bushels to 5.5 billion, fueled by the highest ethanol usage in the September–November quarter since 2017. Exports were also lifted by 150 million bushels to 2.5 billion, reflecting strong global demand for competitively priced U.S. corn. These changes reduced ending stocks by 200 million bushels to 1.7 billion, though the average farm price held steady at $4.10 per bushel.

Globally, coarse grain production dipped by 0.6 million tons to 1.499 billion, as declines in the EU, Mexico, and Indonesia offset gains in Ukraine. Corn imports increased in Bangladesh, the EU, Iran, and Mexico but fell for China, while global ending stocks declined to 296.4 million tons, down 7.7 million from previous estimates.

The U.S. maintains its competitive edge as the world’s cheapest corn supplier, prompting buyers to stockpile supplies ahead of potential tariff adjustments. However, Mexico’s attempt to ban genetically modified (GM) corn and glyphosate raised trade tensions. A USMCA dispute panel ruled Mexico’s ban violated the agreement, emphasizing the lack of scientific justification. The ruling forces Mexico to revise its policies within 45 days while reaffirming the U.S. commitment to science-based trade practices. The decision safeguards access to Mexico, which purchases about 25% of U.S. corn exports annually, but reignites debates over balancing trade obligations with cultural and environmental priorities.

The decision also highlights the agricultural sector’s reliance on biotechnology to address food security and environmental challenges amid shifting climate conditions. Mexico’s emphasis on preserving native corn varieties reflects deeper cultural and ecological priorities, complicating negotiations under trade agreements like USMCA. Moving forward, Mexico may pursue investments in sustainable agriculture and non-GM alternatives to balance domestic goals with international obligations.

In the short term, U.S. corn markets remain stable, with ethanol production holding above 1.1 million barrels per day and exports maintaining momentum. Futures closed slightly higher, while prices averaged $4.19 per bushel. Holiday-related schedule adjustments will push key export and production reports later in the week. With ongoing demand, steady ethanol output, and trade access reaffirmed, U.S. corn remains positioned as a vital player in global markets despite ongoing policy debates.

Data for Technical Analysis (1D) CFD US Corn Futures - Mar 25 (ZCH5)

Resistance : 448.56, 448.85, 449.33

Support : 447.60, 447.31, 446.83                     

1D Outlook

Source: TradingView                          

Buy/Long 1 If the support at the price range 446.10 - 447.60 is touched, but the support at 447.60 cannot be broken, the TP may be set around 448.91 and the SL around 445.35, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 448.56 – 450.06, TP may be set around 451.00 and SL around 446.85, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 448.56 – 450.06 is touched, but the resistance at 448.56 cannot be broken, the TP may be set around 447.60 and the SL around 450.81, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 446.10 - 447.60, TP may be set around 445.10 and SL around 449.31, or up to the risk appetite.       

Pivot Points Dec 25, 2024 09:47PM GMT