Price action: Corn futures followed wheat futures sharply lower Tuesday, with the nearby May contract tumbling 22 1/4 cents to $7.26 1/4 and new-crop December falling 11 3/4 cents to $6.52 3/4.
Fundamental analysis: Talk that a cease-fire may be looming in the Russia/Ukraine conflict undercut the commodity markets badly today, as indicated by nearby crude oil futures dipping below $100 per barrel and soft red winter wheat futures plunging 85 cents per bushel at their lows. Corn joined the wheat and soy complexes in diving in response to the news, although the yellow-grain market’s reaction clearly was not as bearish. Confirmation of today’s talk could spur additional selling tomorrow, but the looming USDA reports could mitigate major moves as traders adjust their positions.
Many in the industry, especially those interested in new-crop prospects, will focus on the USDA’s Prospective Plantings Report. A Reuters survey indicates traders are expecting 2022 U.S. corn plantings to come in around 92 million acres, down from 93.4 million last year. This reflects ideas that soaring input costs will shift acres toward soybeans. USDA will also release its quarterly Grain Stocks at that same time (11:00 am, Thursday 3/31). That report may impact the market more than do the plantings numbers, since it holds substantial implications concerning winter demand for corn, as well as the size of domestic stockpiles available to the industry over the next six months. The Reuters survey puts the average of industry estimates at 7.877 billion bushels. The wide range of estimates at 457 million bushels suggests significant potential for a sharp futures reaction.
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Technical analysis: Although the late rebound from daily lows enabled a midrange close in May corn futures, the size of today’s drop gives bearish traders the short-term technical advantage. Indeed, today’s settlement price marked the contract’s lowest close since March 2. Look for initial support at today’s low of $7.13 ½, then at the contract’s 40-day moving average of $7.00 1/4. Having that pivotal moving average coinciding with the psychologically important $7.00 level could represent solid support. Conversely, a drop below that level would have bears targeting the contact’s Feb. 25 low of $6.55 1/4. Resistance at today’s high of $7.47 1/2 could prove formidable, since it’s reinforced by the contract’s 20- and 10-day moving averages near $7.47 and $7.49, respectively. A move above that area would open the door to a fresh test of the contract high at $7.82 3/4.
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