Trading | May 5, 2021

Looking to the Futures

Dry in Brazil, US Corn Planting Ahead of Average

Key Points

  • Long Term Demand Seen Growing Through Infrastructure Spending and Green Initiatives

Fundamentals

Brazil, the world’s third largest corn producer, is experiencing lower than average rainfall pointing to a smaller than average harvest. The lack of precipitation since early April has delayed planting of the second crop, which sparks concerns regarding weather risks during the key development and growth time.  The second crop provides the bulk of Brazil’s corn supply, so concerns about a decline in output may lead to lower exports later in the year.

Domestically the outlook for corn production is more favorable.  The USDA weekly Crop Progress report detailed better than expected planting rates.  As of May 2nd, 48% of this year’s crop had been planted, well above the average planting rate of 36% for early May and a significant increase of just 17% planted reported the prior week.  Farmers in top producing states have been busy in the fields, as reports of large increases in week over week planting were reported: Iowa 72% (20%), Illinois 53% (23%), Nebraska 55% (6%), Minnesota 71% (18%), Indiana 31% (14%), Kansas 39% (20%), South Dakota 34% (4%), Missouri 41% (20%), and Wisconsin 30% (6%) all show notable progress. Even with the large gain in fields planted in the last week, the percentage of corn emerged is in line with past percentages.  This week corn emerged reported at 7%, just shy of the 9% percent for the same reporting period last year. 

Technicals

Looking at the chart for Corn July 2021, CN21, we can see several high-volume days over the latter half of April. Prices have been rising steadily over the last month. 14-day Relative Strength Index is currently at 76.54% and has been in overbought territory for over a week. Moving averages have been on the increase since mid-April with the 20-day SMA at 623.325, 50-day SMA at 572.525, and 200-day SMA at 483.583.

Trading Central’s Daily Technical Analysis has support levels at 680.00 and 674.25 with resistance levels at 715.25 and 721.00.

20-Day SMA       623.46

50-Day SMA       572.58

200-Day SMA    483.59

14-Day RSI          77.18%

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