Corn Prices React to Geopolitical Tensions Amidst Record-Breaking Harvest

Corn prices declined due to fund and technical selling. The market is closely monitoring the weather, as most areas have received beneficial rainfall, but some regions experienced localized flooding. Strong ethanol margins have helped offset the impact of slow exports. The U.S. Energy Information Administration reported a decrease in production compared to the prior weeks, but it remains higher than last year. Ethanol stocks also decreased, while ethanol exports saw a significant increase, reaching the highest volume since April 2022.

Brazil's second crop corn harvest is progressing well and is expected to be record-breaking, giving Brazil an advantage in the global corn market, especially with Ukraine absent as a key corn source for China.

Algerian state agency ONAB issued a tender to purchase up to 120,000 metric tons of animal feed corn from Argentina or Brazil, with the deadline for price offers set on August 3rd. The desired corn shipment is planned in three 40,000 metric ton consignments between August 10th and August 31st.

Front month corn futures experienced a slight decline, with the December contract falling below the $5 mark earlier in the session but recovering slightly. Russia announced its intention to impose an 8% tariff on exported fertilizer over the next 18 months. Following the news of Russian drone attacks on a Ukrainian port facility on the Danube River, corn prices surged, as these attacks are part of an ongoing effort to disrupt Ukraine's grain exports from ports on the Danube and the Black Sea.

The conflict between Russia and Ukraine has escalated, with Russian forces targeting ports and export infrastructure along the Danube River to cut off Ukraine's grain shipments. The Black Sea Grain Initiative, which allowed grain shipments from Ukraine, ended without an extension after Moscow claimed its demands were not met. This has further complicated the grain trade between the two countries, with both sides threatening to target each other's vessels in the Black Sea. Consequently, there is an anticipation that corn prices will experience a positive trajectory throughout the current year.

Data for Technical Analysis (5H) CFD US Corn Futures - Dec 23 (ZCZ3)

Resistance : 499.95, 500.74, 502.03

Support : 497.37, 496.58, 495.29                             

5H Outlook

Source: Investing.com                          

Buy/Long 1 If the support at the price range 496.37 - 497.37 is touched, but the support at 497.37 cannot be broken, the TP may be set around 500.57 and the SL around 495.87, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 499.95 - 500.95, TP may be set around 502.03 and SL around 496.87, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 499.95 - 500.95 is touched, but the resistance at 499.95 cannot be broken, the TP may be set around 497.20 and the SL around 501.45, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 496.37 - 497.37, TP may be set around 495.29 and SL around 500.45, or up to the risk appetite.       

Pivot Points Aug 03, 2023 04:25AM GMT

Sources: Brownfield Ag News, Moneyweb