Commodity Futures Trading

[DiscoverGold]

Have Corn Prices Found Support?
By: Charles Schwab | February 15, 2023

Corn futures traded higher to start the month with weekly USDA data showing an increase in exports week over week. The outlook on Argentina corn crop has been reduced on drought concerns. Brazilian second crop planting could be pushed due to increased rain fall. Ukrainian grain production has dropped dramatically from last year. Hightower projections could indicate a surplus during the new crop season if the usage ratio is consistent with previous years.

Last week's USDA Export Inspections report indicated 511,506 MT of corn was shipped in the week ending 02/09. That was an increase from the previous week's 494,000 MT but significantly lower than the 1.46 MMT during the same week last year. The export total for the season is 13.06 MMT through 02/19, nearly 35% below the export total based on last year's pace.

Weather forecasts show a drought throughout Argentina over the next 10 days which has led USDA's Ag Attache to reduce the outlook for the Argentina corn crop to 45 MMT. 35-40% of the early planted corn has shown serious damage based on the lack of rain despite a solid rainfall in late January.

Too much rain in Brazil could lead to late plantings of their second corn crop. As of February 4th, plantings of the second crop reached 10% compared to 22% of the crop from the same time last year.

Early estimates for Ukrainian corn production are well below totals from last year which could lead to a tight global supply. Total production for the 2023/24 planting season is expected to come in near 18 million tonnes, down from 27 million during last years season, and 42.13 million tonnes in the 2021/2022 planting season.

Based on Hightower projections, a decrease in global production could lead to a substantially higher reliance on US corn crops, meaning a new crop stock could rise to its highest levels in nearly 35 years.

Technicals

Looking at the daily chart for the Corn Futures March 2023, CH23, contract we can see the 20-Day Simple Moving Average recently crossed the 200-Day SMA price point with heavier than average volume on up days. The 50-Day SMA price point had been acting as the support level and it will be interesting to see If the contract finds support at the 200-Day SMA moving forward.

Trading Central’s Daily Technical Analysis has support levels found at 681.00 and 678.75 and resistance levels at 689.25 and 690.72.

According to the CFTC Commitment of Traders report released January 24th managed money traders have increased their long position by +8,967 contracts and increased their short position by +4,326 contracts. Managed money traders are net long 203,506 contracts.

The Relative Strength Index at 57.94% indicates slightly more buyers than sellers but the contract has not moved into overbought territory.




Contract Specifications

Corn Futures March 2023 (CH23)



Read Full Story »»»

DiscoverGold