Commodity Market: Corn (December 7, 2023)

Create at 6 months ago (Dec 07, 2023 10:21)

Corn Prices Rebound After Sliding to Lowest Since December 2020

The morning corn trade witnessed futures slightly higher, influenced by ethanol data, after corn prices faced pressure from favorable weather forecasts in South America, easing concerns about drought impacting crop yields. Corn prices have fallen to their lowest since December 2020, at $4.5 per bushel, due to abundant supply from increased acreage in Brazil and the U.S., coupled with sluggish global demand influenced by reduced livestock numbers worldwide.

Despite lower ethanol prices, supportive ethanol margins were sustained. The U.S. Energy Information Administration reported a 19-week high in ethanol production, averaging 1.076 million barrels per day, a weekly increase of 65,000 barrels but a year-on-year decrease of 1,000 barrels.

There were rumors of China canceling vessels of previously purchased Brazilian corn. Despite challenges in Panama Canal logistics, the current cost-effectiveness favors U.S. Free On Board (FOB) corn. Trade estimates anticipated a minimal change in Friday's December WASDE reports, with a tighter U.S. corn carryout by 2.8 mbu and a world carryout reduction of 1.6 MMT. SLC Agricola, a publicly traded farming company in Brazil, reported a 7.5% decrease in winter corn area in Brazil due to challenges with the summer soybean crop.

The University of Illinois Farm Policy News noted a three-year low in corn prices, attributed to increased supplies from Brazil and the U.S. and decreased demand following the rise in prices. The Financial Times highlighted Russia's invasion of Ukraine and drought in South America, which initially spiked prices but led to a three percent contraction in corn demand between 2022 and 2023. Additional corn acres in the U.S. and higher yields contributed to the price drop.

Traders are anticipating revised crop estimates from the Brazilian government agency Conab on Thursday, along with monthly supply/demand reports from the USDA scheduled for release on Friday. According to analysts surveyed by Reuters, there is an expectation that the USDA will decrease its projections for Brazil's corn crops in the 2023/24 season. This could result in corn prices fluctuating within the lower range consistently throughout this timeframe.

Data for Technical Analysis (5H) CFD US Corn Futures - Mar 24 (ZCH4)

Resistance : 485.65, 486.31, 487.38

Support : 483.51, 482.85, 481.78               

5H Outlook

Corn Prices Source:                                           

Buy/Long 1 If the support at the price range 480.51 - 483.51 is touched, but the support at 483.51 cannot be broken, the TP may be set around 485.65 and the SL around 479.00, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 485.65 - 488.65, TP may be set around 490.00 and SL around 482.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 485.65 - 488.65 is touched, but the resistance at 485.65 cannot be broken, the TP may be set around 482.76 and the SL around 490.15, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 480.51 - 483.51, TP may be set around 477.50 and SL around 487.15, or up to the risk appetite.       

Pivot Points Dec 7, 2023 02:42AM GMT

Pivot Points
Classic 479.96 481.78 482.76 484.58 485.56 487.38 488.36
Fibonacci 481.78 482.85 483.51 484.58 485.65 486.31 487.38
Camarilla 482.98 483.24 483.49 484.58 484.01 484.26 484.52
Woodie's 479.56 481.58 482.36 484.38 485.16 487.18 487.96
DeMark's - - 482.28 484.34 485.07 - -

Sources: BarchartMarket Screener

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