Weekly Analysis

Corn report – 17/03/2023

Funds continue to build back their net long position as futures finish the week strongly!




– May Corn’23 (ZCK23) – Corn futures continue to trade within the upward sloping channel that formed on the 12th March. The bottom of the market looks set at 606.60 basis K’23.
– The market has continued to find strong support at 640.00 despite failing to break 670.00. Nevertheless the move on Friday means we are poised to have another attempt this week. Expect the market to find support at the 100 & 200 day moving averages which have converged around 656.00 This is reinforced by the 50% Fibonnacci Retracement at 655.20.
– Last week, May’23 contract traded within a 27.80 cent range between 640.20 and 668.00. The market continues to respect both support and resistance at 640.00 and 670.00 something which was highlighted in our previous report. There was a pick up in futures volume with an average of 376,177 contracts traded across the board.
– The latest U.S. export sales data showed a slow down in sales, net sales of 527,000 for 2022/23 for the week ending April 6th 2023. This figure was disappointing in that it was 68% below the 4-week average. Mexico and Japan were the largest buyers at 291,000 and 166,800 mt respectively. Net sales were skewed by South Korean cancellations of 130,000 mt.
– The CFTC COT report showed the managed money had extended their net longs by 5,600 taking their overall position to 27,112 contracts. The other reportables also extended their position to 45,787 whilst non reportables increased their shorts to -61,212. The overall position between the three groups is now 11,687 contracts net long.
– Data from the Energy Information Administration (EIA) Ethanol production falls to three month lows to an average of 959,000 barrels per day. Ethanol stockpiles for the week ending April 7th 2023 were relatively unchanged 25.128 million barrels.

– Weekly CFTC Data – As of 11th April 2023, the Managed Money had increased their net long position by 5,600 contracts to 27,112. The other reportables also extended longs whilst non reportables increased their short.
– The US Climate prediction center released their latest ENSO probabilities on Thursday. You can see from the bar chart below they are placing more confidence (60%) in the El Niño shift moving into May – July period. A critical period for crop development.

– NOAA Climate Prediction center (CPC) ENSO probabilities – Latest predictions from the CPC place a 60% chance of El Niño conditions in the May – July period. This showing a sharp increase in confidence from last month at 40%.
– The U.S. Drought monitor shows exceptional / extreme drought persisting or forming in the high plains region. This covers states Kansas, Nebraska and South & North Dakota, zooming in on the high plains we see the main issues forming in Kansas and Nebraska but the situation in South Dakota must be closely watched.
– According to the National Weather service the 8- 14 day weather models (24th – 30th April’23) will provide some relief to these areas in the form of lower temperatures and above normal precipitation.

– U.S. Drought monitor – Updates show the High Plains region is suffering from severe drought. The concern is if this spreads into the Dakotas and major producing states such as Iowa and Illinois.
– In their latest report, CONAB confirmed a record production estimate for Soybeans (153.6 mmt) following upward revisions to average yields and increased planted acreage. For Corn, production will also be a mammoth 124.9 mmt despite the delayed planting of the Safrinha crop in certain areas.
– Brazil is now projected to be the worlds third largest corn producer behind the U.S. and China. However, this marketing year will see it step into first place for corn exports. USDA estimate exports at 50million mt.
– In other news, Ukrainian Exports slowed down last week as it is reported that the export inspections have severely halted. Russia are accused of intentionally slowing inspections to curb shipments which has a huge impact on the global food security.


The promising technical picture outweighs the blip in export sales last week. We need to see some follow through buying through strong resistance to bolster a bullish view on the market. The potential catalyst for this market is the funds who have so far been quietly building back their net long position as the fundamental story unfolds. Geopolitical events remain but the weather market narrative becomes a key component during this period. A confluence of macroeconomic data continues to threaten markets but we suggest a friendlier picture for grains is forming. For now, we would suggest being a cautious long with any dips areas of support seen as a potential buying opportunities.

Written by:

Harry Bennett

Harry Bennett

Harry started as a commodity consultant in November 2017, having previously worked for a wealth management firm in Hong Kong. Harry first entered the financial services sector upon graduating from his Civil Engineering degree in 2015. Whilst still early in his career, Harry’s passion and ambition to develop his knowledge within the sector are clear. Harry is currently studying all aspects of the commodity markets, and his spare time is spent on the golf course or socialising with family and friends.

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