Corn Futures Volatile Amid Acreage Expansion, Global Supply Risks

Corn prices declined due to technical and fund-driven selling, while market attention remained on South American weather conditions. The USDA is projected to announce an increase in U.S. corn acreage at its upcoming Ag Outlook Forum, with analysts predicting an expansion to approximately 93.5 million acres, up from 90.6 million acres last year. This shift is expected to impact soybean acreage and influence fund activity in the grain markets. 

Despite minimal trade with China, overall demand has remained resilient. Strong U.S. export activity has helped lower ending stocks early in the 2024/25 marketing year, though tariffs are expected to dampen global demand. Mexico, the top U.S. corn buyer, has secured 17.2 million metric tons of U.S. corn for 2024-25, representing 70% of the USDA’s forecast for Mexican imports. However, potential trade disputes loom as the U.S. considers tariffs on Mexican and Canadian imports, set to take effect on April 2.  

Global corn production for 2024/25 is projected to decline by 1.8 million tons, primarily due to adverse weather conditions in Argentina and Brazil. Heat and dryness have reduced Argentine yield expectations, while delayed second-crop planting has lowered projections in Brazil. In response, global exports from Brazil, Ukraine, and South Africa have been reduced, with imports declining for China but increasing for Vietnam and Chile. 

The latest U.S. corn supply and demand estimates remain unchanged from the previous month, though the season-average farm price was raised to $4.35 per bushel. Global ending stocks are now estimated at 290.3 million tons, reflecting a 3.0 million-ton decrease. 

Ethanol stocks surged to a near five-year high at 27.571 million barrels, with production and exports showing mixed trends. Corn usage for fuel ethanol in December slightly increased from the prior month but was down 2% year-over-year. Ethanol production declined slightly by 3,000 barrels per day, reaching 1.081 million barrels per day for the week ending February 21. 

In international trade, South Korean buyers secured 65,000 tons of U.S. corn for animal feed through a private transaction. A separate purchase of 68,000 metric tons of U.S. corn was completed in an overnight tender. Meanwhile, Mexico’s Congress has passed a constitutional reform banning the planting of genetically modified (GM) corn, escalating trade tensions with the U.S. Although Mexico has lifted import restrictions on GM corn for various uses, the new legislation reinforces a ban on planting GM varieties, citing concerns over biosecurity and cultural heritage. This move may trigger retaliatory actions from the U.S., as Mexico imports roughly $5 billion worth of U.S. GM corn annually, primarily for livestock feed. 

Chicago corn futures remained under pressure due to improved crop weather in Argentina, renewed concerns over U.S. tariffs, and broader financial market movements, including fluctuations in crude oil and the U.S. dollar. They also faced selling pressure as investors adjusted positions ahead of the USDA’s Outlook Forum, resulting in corn futures being expected to remain under downward pressure in the near term.

Data for Technical Analysis (1H) CFD US Corn Futures - May 25 (ZCK5)

Resistance : 495.34, 495.65, 496.17

Support : 494.30, 493.99, 493.47                   

1H Outlook    

Source: TradingView                 

Buy/Long 1 If the support at the price range 493.50 - 494.30 is touched, but the support at 494.30 cannot be broken, the TP may be set around 495.39 and the SL around 493.10, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 495.34 – 496.14, TP may be set around 497.80 and SL around 493.90, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 495.34 – 496.14 is touched, but the resistance at 495.34 cannot be broken, the TP may be set around 494.04 and the SL around 496.54, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 493.50 - 494.30, TP may be set around 492.50 and SL around 495.74, or up to the risk appetite.       

Pivot Points Feb 27, 2025 03:43AM GMT