Corn Futures Rise Amid Weather Concerns and Tight Supply Outlook
Corn futures have been steady to moderately higher, driven by concerns about South American weather, particularly in Argentina, where hot and dry conditions are stressing crops. Traders are closely monitoring the weather ahead of Brazil's second corn planting, which is crucial to the country's export prospects. Despite this, demand remains robust, though ethanol margins are a concern for production. Recent data from the U.S. Energy Information Administration showed mixed results, with a slight decline in production but an increase in ethanol stocks.
The USDA has revised the 2024/25 U.S. corn outlook, forecasting lower production, reduced exports, and smaller ending stocks. This is mainly due to a decrease in yield estimates, although harvested area slightly increased. Global production of coarse grains is also expected to fall, but foreign corn production in countries like China and Russia is forecast to rise.
Futures prices for corn have been rising, with Chicago Board of Trade (CBOT) prices nearing a one-year high, as traders react to the USDA’s tighter supply outlook and concerns over Argentine crop weather. This comes amid strong demand and reports indicating the U.S. corn crop is smaller than previously estimated. However, Argentina’s production may face further challenges, with forecasts suggesting that dry weather could continue, although rains are expected to offer temporary relief. U.S. farmers are also adjusting to a revised outlook, with expectations for a larger corn acreage in 2025, which could affect future price trends.
The latest USDA reports indicate a 1% increase in the total use of U.S. corn for 2024/25, despite the smaller crop size. This is unusual, as lower production typically leads to reduced use estimates. This rise in use suggests that ending stocks will likely be tighter than anticipated, adding support to bullish corn market expectations. With lower yields and tight supply conditions, U.S. corn stocks are projected to be the lowest since 2020, signaling a potentially volatile market moving forward. However, some uncertainty remains regarding U.S. exports and the impact of global production, particularly in Argentina and Brazil. Additionally, the strong performance of ethanol production could provide further support to corn prices.
Corn prices continue to rise, approaching the target of $487.30. Stochastic indicators have shifted from negative momentum, entering oversold territory, which may help sustain the bullish trend towards this target. In the short term, the market is expected to remain bullish, with prices potentially hitting $487.00 per bushel if upward momentum continues. However, if prices drop below the $474.60 support level, the bullish movement could halt, triggering a bearish correction. The expected trading range for this period is between $475.00 support and $487.00 resistance. Traders should closely monitor weather forecasts and global production trends, as any break below $475.00 could prompt a shift in the market.
Data for Technical Analysis (1H) CFD US Corn Futures - Mar 25 (ZCH5)
Resistance : 478.26, 478.38, 478.58
Support : 477.86, 477.74, 477.54
1H Outlook
Source: TradingView
Buy/Long 1 If the support at the price range 477.06 - 477.86 is touched, but the support at 477.86 cannot be broken, the TP may be set around 478.26 and the SL around 476.66, or up to the risk appetite.
Buy/Long 2 If the resistance can be broken at the price range of 478.26 – 479.06, TP may be set around 479.60 and SL around 477.46, or up to the risk appetite.
Sell/Short 1 If the resistance at the price range 478.26 – 479.06 is touched, but the resistance at 478.26 cannot be broken, the TP may be set around 477.72 and the SL around 479.46, or up to the risk appetite.
Sell/Short 2 If the support can be broken at the price range of 477.06 - 477.86, TP may be set around 476.80 and SL around 478.66, or up to the risk appetite.
Pivot Points Jan 16, 2025 04:05AM GMT
Name
|
S3
|
S2
|
S1
|
Pivot Points
|
R1
|
R2
|
R3
|
---|---|---|---|---|---|---|---|
Classic | 477.2 | 477.54 | 477.72 | 478.06 | 478.24 | 478.58 | 478.76 |
Fibonacci | 477.54 | 477.74 | 477.86 | 478.06 | 478.26 | 478.38 | 478.58 |
Camarilla | 477.76 | 477.8 | 477.85 | 478.06 | 477.95 | 478 | 478.04 |
Woodie's | 477.12 | 477.5 | 477.64 | 478.02 | 478.16 | 478.54 | 478.68 |
DeMark's | - | - | 477.63 | 478.01 | 478.15 | - | - |
Sources: Reuters, Economies.com