Glacier FarmMedia | MarketsFarm — Corn futures at the Chicago Board of Trade have climbed steadily higher over the past two months, although the uptrend could soon run into resistance as the grain nears overbought territory and farmers will be looking to make some sales.
Analyst Sean Lusk, of Walsh Trading in Chicago, said back-to-back bullish supply/demand reports from the United States Department of Agriculture in December and January accounted for much of the recent strength in corn futures, accounting for a 75-cent per bushel rally since the beginning of December.
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Ahead of the 2024 growing season, early calls had been for 2024-25 U.S. corn ending stocks of about 2.1 billion bushels, but after downgrades to yields and solid export demand the January USDA estimates forecast ending stocks at about 500 million bushels below that original estimate. In addition to the bullish stocks projection, dryness cutting into production prospects in Argentina and a slow start to seeding of Brazil’s second corn crop were also providing support, said Lusk noting that fund traders continued to add to their long net long position in corn on any dips.
However, the funds will eventually be looking to book profits on that large net long position, while producers will also need to sell eventually.
“Nothing goes up forever, and we’ll see if we get a correction,” said Lusk.
The March corn contract settled just below US$5.00 per bushel on Jan. 29, with the next upside target after that at US$5.13 and then at US$5.25, according to Lusk. He placed support at around US$4.80.
Soybeans have lagged corn to the upside, with large South American crop prospects overhanging the market. Lusk placed support in the March soybean contract at US$10.38 per bushel, with US$10.80 the nearby resistance.
Uncertainty over U.S. import tariffs that could be imposed as early as Feb. 1 was overhanging the soybean and corn markets, although Lusk said any major concerns over the tariffs or possible retaliation had yet to show up in the futures.
