The corn market faces the potential for extremely tight ending stocks for the new crop season, and dry conditions in parts of Brazil and in parts of the U.S. during the planting season have helped spark recent buying.
End users are likely to be active buyers on minor breaks.
Corn traded sharply higher on the session yesterday, pushing December corn to a new contract high. July corn closed sharply higher as well, and it achieved a new contract high close.
China bought 6.727 million tonnes of corn in the first quarter, which was up more than fivefold from the previous year. South Korea purchased 65,000 tonnes of optional origin corn in a private deal.
BRF, Brazil’s largest poultry producer, bought two cargoes of corn from Argentina as an alternative to keep its cost competitive. Prices of corn in Brazil have more than doubled in 12 months, as usage for livestock feed, exports, and ethanol production has been expanding rapidly.
Brazil’s second-corn crop is under a high weather risk, as most of it has been planted late; Parana state is already suffering from drier-than-normal conditions. Brazilian production of ethanol from corn jumped to 58% in the 2020/21 season, and traders expect an annual increase of around 25% for the new season. Ethanol plants using corn as a feedstock produced 2.57 billion liters in 2020/21, about 9% of total ethanol production in the country.
For today’s weekly EIA update on U.S. ethanol output, traders are looking forproduction to come in around 980,000 barrels per day, up from 975,000 last week. Ethanol stocks are expected to be near 20.719 million barrels vs. 20.642 million in last week’s report.
Market Ideas
The ending stocks outlook is extremely tight, and this should help attract end-user buying on minor corrections. December corn price support comes in at $4.99 and $4.92¼, with $5.47 as the next upside target. July corn support is at $5.54¾, with $5.99 as the next target.
For daily updates on cattle, hogs, corn, wheat, and the soy complex, visit hightowerreport.com.
The Link LonkApril 14, 2021 at 09:39PM
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