Corn futures continue to trade in firm sideways trading range as fresh fundamental news continues to be lackluster. May 2023 corn futures have solid support near the $6.60 area while overhead resistance is near the $6.85 price point.

Unless something “exciting” happens regarding fundamentals, corn prices may continue to remain trapped in a back-and-forth price trading pattern in the short term.

On the bullish side, well known is how tight old crop ending stocks are for U.S. corn. This is why the market price for old crop corn is well supported at overall historic higher levels. This is also why basis levels across the Midwest continue to be historically strong.

On the bearish side, overall demand has slightly lessened over the past few months in the wake of high prices. Lower exports and slightly lower corn use for ethanol have been recently reported by the USDA, which is keeping a lid on any price rally for now.

My overall bias to corn prices is still friendly until the spring crop gets planted. Yet between now and May, what fundamental news might finally move this market out of this short-term sideways trade pattern?

The next few weeks may finally supply news. Here is what I’m watching.

The war

Approaching the one-year anniversary of the war in Ukraine, the world will be watching any potential signs of war escalation by Russia. With the U.S. markets closed on Monday, Feb. 20 for President's Day, any weekend war flare ups will not be able to be traded until Tuesday, Feb. 21.

Also happening early next week, in conjunction with the war anniversary, the White House officially announced that President Biden will visit Poland Feb. 20-22. Biden is expected to reaffirm his support for Ukraine, as well as to meet with the leaders of nations on NATO's eastern flank. Remember, any signs of Russia attacking a NATO country means that all 30 member nations of NATO get involved.

There is still uncertainty over the future of the Ukraine export corridor deal, which expires March 19. Putin continues to warn that the deal may not be extended unless Russian sanctions are eliminated.

Recent news suggests that there are over 100 vessels in Bosphorus, an internationally significant waterway located in Istanbul in northwestern Turkey, waiting to be inspected. Of those vessels, 35 have been waiting 35-56 days to be inspected. Delays in inspections of Black Sea vessels and escalation of Ukraine war could slow the pace of Ukraine and Russia grain exports and trigger more demand for U.S. corn to be exported to the world.

USDA Outlook Forum, February 23-24

An annual event, the USDA Outlook forum is not an official report, but more of an outlook opportunity to hear initial ideas of upcoming demand for U.S. grains in the coming year and the outlook for global supply.

The USDA will throw out a preliminary acreage estimate for 2023, yet this is not an official number as the Prospective Plantings report occurs on March 31. My hunch is that the USDA will likely use this opportunity to continue to "kick the can” down the road regarding supply and demand as it is too soon to rock the boat in any fashion.

South American weather

Second crop corn in Brazil is being planted. The second crop corn, accounts for 70% of their total corn production. This is the corn that is then harvested in late July/early August and gets exported to the world. (Remember, China just inked a deal with Brazil for corn to be shipped to China to make up for the reduction of corn coming out of Ukraine.)

Currently, the second crop corn is slow to get planted due to heavy rain. The slower this crop gets planted, the more at risk it becomes to adverse weather during pollination. And remember, the world needs them to have a record crop, or global supplies and ending stocks will continue to get tighter!

Geographically, where you want to weather watch is Mato Grosso, which grows approximately 40% of the Safrinha crop, and also Parana, which is Brazil’s second largest Safrinha producer, growing just over 20% of second crop corn supplies.

Funds

Every Friday the Commodity Futures Trading Commission issues a report which tracks the buying and selling action of big money fund traders in the market. We are currently in the dark. The computers that the CFTC uses to acquire weekly fund tracking information were hacked.

We have not had a Commitment of Traders report for two weeks. The reason this is significant is because watching the fund activity helps the agriculture industry track whether investors are flocking their money into commodities (often times making prices go higher) or exiting existing purchased commodity trades (which often leads to prices falling).

The next few weeks will either be quiet for markets or extremely volatile depending on the above factors and how they play out. Many of you have corn in the bin to price. Use this information to help with your pricing opportunities.

Reach Naomi Blohm at 800-334-9779, on Twitter: @naomiblohm, and at [email protected].

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