Price Movements

Corn futures on the Chicago Mercantile Exchange (CME) closed lower on Thursday as the U.S. harvest advanced rapidly and export demand remained weak. The December corn contract fell by 3.5 cents per bushel, closing at 475.25 ct/bu (equivalent to 0.167 EUR/kg).

Fundamentals

The U.S. has harvested 23% of its corn crop, surpassing the five-year average. Meanwhile, export demand has underperformed, adding to the downward pressure on prices. However, weather conditions in Brazil's key corn-growing regions could significantly impact future price developments.

Key Factors

• Harvest Progress in the U.S.: The rapid pace of the U.S. corn harvest continues to weigh on prices, with reports from the Corn Belt indicating solid yields.
• Weak Export Demand: USDA data showed another disappointing export figure, with only 625,000 tons of corn shipped last week, falling short of market expectations.
• Weather in Brazil as a Price Driver: In Brazil, particularly in the central state of Mato Grosso, extreme heat and dry conditions are expected over the next seven days, with temperatures soaring up to 40°C (104°F). The lack of rain raises concerns about the second corn crop (Safrinha) potentially suffering significant damage. In Paraná, conditions are slightly more favorable but still include only minor showers, not enough to alleviate the ongoing dryness.

Importance of Weather for Price Development

The weather conditions in Brazil could emerge as a decisive factor for future price movements. Mato Grosso, the country’s largest corn-producing region, plays a crucial role in the global corn supply. Should the dry spell persist, significant yield losses may occur, tightening global supply and potentially offsetting the current U.S. surplus. This could drive prices higher in the short to medium term.

Technical Analysis

After breaking through resistance at 480 ct/bu (0.169 EUR/kg), prices have slipped toward support at 470 ct/bu (0.165 EUR/kg). If this support level fails, the next target could be 465 ct/bu (0.163 EUR/kg).

Outlook

While corn prices are currently under pressure due to the U.S. harvest, the weather in Brazil could drive a reversal in market sentiment. The dry conditions in Mato Grosso pose a considerable risk to the Safrinha corn crop, which is critical for the global corn market. Traders should closely monitor the weather developments in Brazil, as even minor yield losses could trigger a significant rally in prices. Export demand, particularly from China and Mexico, remains another key factor to watch in the coming weeks.

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