Corn
Price action: March corn futures rose 7 1/4 cents to $5.98 1/4, the contract’s highest settlement since $6.16 on June 11. Deferred contracts rose 5 to 8 cents.
Fundamental analysis: Corn futures closed at the highest levels in over six months on support from rallying soybeans and wheat, and concerns persistent dryness in parts of South America will trim crop potential. Southern Brazil and neighboring areas of Paraguay will continue to receive below-average precipitation for the next two weeks as La Nina prevails, World Weather Inc. said today. Rainfall will be lighter and more sporadic than usual, World Weather said, and crop stress is expected to expand in western parts of Brazil’s Parana state and in southern Mato Grosso do Sul. Crop stress likely will extend elsewhere in Brazil, specifically western Rio Grande do Sul.
Ongoing dryness is prompting some crop watchers to dial back expectations for South America’s production. Crop Consultant Dr. Michael Cordonnier cut most of his South American crop forecasts, citing expanding dryness as a building concern across southern Brazil, northern and eastern Argentina and Paraguay. Cordonnier lowered his Brazil corn crop estimate by 1 MMT to 115 MMT, while leaving his Argentina corn crop forecast unchanged at 53 MMT.
Technical analysis: Bulls hold a near-term technical advantage with prices in a nine-week uptrend on the daily bar chart. March corn today reached $5.99, the highest intraday price since $5.99 3/4 on Aug. 12. The lead contract faces stiff resistance around $6.00, but a push above that level could have bulls targeting the July high at $6.16 1/2. For market bears, the next downside target is closing March futures below support at $5.62 1/2. Support in March corn is seen at the 20-day moving average around $5.86 and at a trendline drawn from the October low, around $5.82.
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