Lower Ending Stocks & Tight Supplies Push Corn Prices Higher  

Source: Africa Studio, Shutterstock

Summary

  • Corn prices are continuously trading in the northward direction for the past 9 months.
  • Prices broke the downward sloping trendline in January 2021 and since then the upside momentum strong.
  • Global Corn ending stocks lowered to 283.85 Million Tons, according to the data published by USDA in its April estimates as compared to 287.67 Million Tons in previous March estimates.
  • Corn prices might find resistance at USc 606 – USc 658 per bushel.

CBOT Corn Composite Commodity Futures prices have been on a sharp rally for the past 9 months. Maize on CBOT rose by USc 33 per bushel to USc 597 per bushel for May 2021 contract due to increased demand. The lower ending stocks estimates for 2020-21 by USDA in its recent report are likely to support the corn prices in near future.

Corn Global Production & Consumption Scenario

The USDA decreased its global Maize ending stock estimate by 3.82 Million Tons to 283.85 Million Tons compared to 287.67 Million Tons for 2020-21, in reaction to this, the Corn prices reacted positively. USDA also revised the ending stock estimates for the US at 34.34 million tons, Argentina at 2.12 million tons for 2020-21, compared to the previous month’s estimates, while for Russia and Ukraine, it remained unchanged at 0.74 million tons and 0.89 million tons respectively.

Corn field at harvest time, Image Source: © Fotokostic | Megapixl.com

Read: Sugar Prices Ripe to Jump out of Bear Grip?

CBOT Corn Price Action Summary

Corn prices are trading in a primary upward trend. Prices broke a downward trendline resistance level of USc 484 in January 2021 and post that sustaining above the breakout level for the past 4 months. Prices seem to have come out from a negative zone as it is trading above the 21-period SMA and providing support to the commodity.

Corn CBOT Commodity Future Continuation 1 (Cc1) Quarterly Chart (Source: Refinitiv, Thomson Reuters)

The momentum indicator RSI (14-period) is trading at~66 levels which is supportive for an upward direction. The key immediate support levels appear to be at USc 520 followed by USc 472, while key resistance levels appear to be at USc 606 followed by USc 658. The volume is showing an upward trend, which indicates higher participation from the investors in the recent rally. The price is trading above its Parabolic SAR indicator, acting as a support zone.

Let have a look at the CBOT Corn Monthly Price Seasonality Chart

Data Source: Refinitiv Eikon, Thomson Reuters; Analysis: Kalkine Group

CBOT Corn’s 5-year monthly price seasonality depicts that prices take a dip post March. and the momentum lasts till May every year. However, this year the prices have not shown any downward correction in March and April to date which is indicating that the prices are not following the historical price seasonality pattern. Lower carryover stocks of corn coupled with the higher demand is unbalancing the supply and demand situation in the current marketing year. 

Corn prices are continuously moving upwards thanks to lower ending stocks estimates by USDA.


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