Corn Prices Rally on Short Covering, Trade Shifts, and Bullish Momentum

Corn prices have been rising due to short covering and technical buying, while global trade dynamics and weather conditions in South America continue to influence the market. The temporary suspension of new tariffs on Mexico should help maintain steady U.S. corn exports, with Canada remaining the largest buyer of U.S. ethanol despite low corn imports. Meanwhile, China's purchases of U.S. corn have been minimal this marketing year. In South America, rainfall in Argentina may support late-planted corn. Additionally, South Korea recently purchased 132,000 tons of U.S. corn for the 2024/25 marketing year, reinforcing its position as a major Asian buyer after Japan. The U.S. Energy Information Administration is set to release its weekly ethanol production and stock data, which could further influence market trends.

Investor sentiment has also shifted significantly, with speculators taking a notably bullish stance on Chicago Board of Trade (CBOT) corn futures. As of January 28, money managers increased their net long positions to the highest level since May 2022, despite a slight price decline, while U.S. corn demand remains strong and South American weather poses potential supply concerns. The U.S.'s escalating trade tensions with Mexico, Canada, and China also pose risks, as these three nations account for half of U.S. agricultural exports.

Following the initial fallout from tariff-related uncertainty, bullish sentiment in the corn market has resurfaced. Nearby contracts saw gains of 5 to 8.5 cents, while new crop December futures rose by 3.25 cents. The national average cash corn price climbed 9 cents to $4.54 1/4 per bushel. The latest NASS Grain Crushing report showed that ethanol production in December totaled 473.179 million bushels of corn, slightly higher than the previous month but down from the prior year.

Corn futures continued their upward trend on Tuesday as concerns over potential U.S. tariffs on Mexico and Canada eased. The most active CBOT corn contract rose 0.3% to $4.90-1/4 per bushel, extending gains from the previous session.

Technically, corn prices have rebounded sharply, returning to a bullish trajectory. The next key resistance level is at $504.00, with a break above this level opening the path toward $516.00-$520.00. Support is seen at $491.00, while the EMA50 continues to provide upward momentum. The expected trading range for the near term is between $493.00 support and $510.00 resistance, with further gains contingent on price stability above $491.00.

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

Resistance : 496.71, 498.99, 502.70

Support : 489.29, 487.01, 483.30               

1D Outlook                  

Source: TradingView              

Buy/Long 1 If the support at the price range 483.29 - 489.29 is touched, but the support at 489.29 cannot be broken, the TP may be set around 498.6 and the SL around 480.29, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 496.71 – 502.71, TP may be set around 507.60 and SL around 486.29, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 496.71 – 502.71 is touched, but the resistance at 496.71 cannot be broken, the TP may be set around 488.90 and the SL around 505.71, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 483.29 - 489.29, TP may be set around 477.20 and SL around 499.71, or up to the risk appetite.       

Pivot Points Feb 5, 2025 02:37AM GMT