Price action: July corn futures fell 19 1/4 cents to $7.81 1/2, while December futures fell 20 1/2 cents to $7.40 1/4, both closing lows so far this week.
Fundamental analysis: Corn futures fell sharply, erasing gains posted early this week, as spillover from a selloff in the wheat market and prospects for a resumption of grain shipments out of Ukraine sparked active profit-taking. U.N. chief Antonio Guterres was expected to disclose talks with Russia, Ukraine, Turkey, the U.S. and European Union aimed at restoring Ukraine grain shipments and reviving fertilizer exports from Russia and Belarus. A sharp drop in U.S. stocks and crude oil amid escalating concern record fuel prices could lead to recession also contributed to pressure across commodity markets.
Potential demand concerns are emerging, including disappointing weekly USDA export sales last week and a drop in ethanol production. U.S. ethanol production averaged 991,000 barrels per day (bpd) during the week ended May 13, unchanged from the previous week but down 4% from the corresponding week last year. That marked first weekly year-over-year decline in ethanol production since the week ended Sept. 3, 2021. Still, fundamentals lean bullish amid broader concern over shrinking global grain supplies and delayed U.S. planting reducing yield potential.
Tomorrow’s weekly USDA export sales report is expected to show net U.S. corn sales at 150,000 to 450,000 MT for 2021-22 and 500,000 to 900,000 MT for 2022-23.
Technical analysis: Corn futures retain a bullish chart posture but upside momentum stalled over the past two sessions and prices may extend a sideways near-term pattern, assuming July futures can hold above some key initial support levels, including the 40-day moving average at $7.74 and this month’s low at $7.69. Initial resistance comes in around the 10-day moving average at $7.88 1/4 and Monday’s high at $8.10 1/4.
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