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– March Corn’23 (ZCH23) – For the week the 100 and 200 day moving averages converge. The market found support earlier in the week around 635.00 basis March’23 (ZCH’23). The tight trading range means we would need to see follow through buying to bolster the bullish reversal. The upper trendline (upper black line) forms wider contracting triangle and is still in tact. For now, this and the 50 day moving average (664.20) should act as areas of resistance.
– Support found @ 635.00, 624.00 and 612.00 (23.6 % Fib level).
– New crop Corn futures finished the week with marginal declines, March’23 traded within a very narrow 14.60 range between 635.00 and 649.60. Futures volume was very light with just 213,673 contracts traded on average across the board of futures.
– The CFTC commitment of traders revealed the money managers (MM) had reduced their net long position to its lowest net long position since 2020. The 71,500 contracts net difference during the week ending 6th December was the largest net bear move from the MM since August 2019. Futures fell over 5% as a result!
– U.S. Sales of Soy and Corn were higher week on week. For corn, sales came in at 691,600 mt, up from 602,700mt. Mexico were the leading buyer 333,100mt, China 204,900mt and Costa Rica 122,300mt. Exports jumped to 900,100mt.
– Looking at the data from the Energy Information Administration (EIA) data U.S. Ethanol production and stockpiles also surged. Production of the biofuel increased to an average 1.077 million barrels a day. Ethanol production is now also at 23.257 million barrels which is the highest level since August 26th.
– Money Managers Net Position – Combined net position in U.S grain and oilseed futures & options through December 6th 2022. This includes Corn, Soybeans, Wheat, Soymeal, Soyoil, Wheat and MGEX Wheat.
– Outside of corn export demand there were little changes to the U.S. domestic figures. The December WASDE revealed a drop of 75 million bales to corn export demand which now stands at 2.075 billion bushels (bb).
– This reduction meant U.S. ending stocks for corn increased to 1.257 billion bushels. World Corn ending stocks were lower than expected at 298.4 million mt. This is largely the result of a drop in Ukraine’s crop production figures by 4.5 million mt. The drop in production more than offset the 2million mt rise in exports. It is expected 65% of the 22/23 crop will be exported.
– Ukraine Corn Production & Exports- 35% drop in Ukraine’s production and exports from last years record crops. Production was reduced to 27 million mt.
– Whilst Corn found some support from a technical position, the bounce was also driven by concerns around the crop weather in South America. Temperatures in Argentina reached over 40 degrees (105 Fahrenheit) last week with continued high temperatures into the weekend. Significant portions of the country’s corn and soy have been impacted.
– Whilst the official start of summer is still two weeks away the state of Rio Grande do Sul in Southern Brazil is also looking at extremely high temperatures. Friends and growers on the ground have reported sweltering temperatures. The Corn crop is most at risk due to its stage of pollination and filling grains.
– The USDA decided to make very little changes to the South American production and yield estimates (table below). This despite the reports of drought in Argentina and the ongoing dryness in certain areas of Brazil. We would suspect Argentina figures will need to be revised at a later date.
– USDA South American Crop production – The USDA decided to leave yields and production estimates unchanged in the December WASDE despite the Argentina drought issues.
– China’s most-active hog futures contract fell to its lowest level since the contract launched, amid concerns over weak demand ahead of the Lunar New Year holiday which is normally a peak period for meat consumption in China.
– In other news relating to demand and looking at the data from the Energy Information Administration (EIA) data U.S. Ethanol production and stockpiles also surged. Production of the biofuel increased to an average 1.077 million barrels a day. Ethanol production is now also at 23.257 million barrels which is the highest level since August 26th.
– The link below is an interactive link to a USDA WASDE report breakdown courtesy of IAG.
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