Corn price analysis as Argentina production retreats

Corn price has rebounded in the past few days as investors reacted to the latest WASDE report and the recent dam collapse in Ukraine. The price was trading at $6.20, a few points above the year-to-date low of $5.62.

WASDE report

Corn and other agricultural commodities drifted upwards this month after a major dam collapse happened in Ukraine, one of the leading producers in the world. This collapse had two main implications. First, the collapse means that the war in Ukraine could continue for a longer period. 

Second, it also means that the two sides could cancel the recently-signed grain deal. The deal allows Ukraine to export grains across the Black Sea. This is important because Ukraine is the third-biggest exporters in the world after the United States and Argentina.

Corn price has also drifted upwards as Argentina’s economy collapsed. As I wrote in this article, the Argentina peso has become worthless as inflation has surged. To lower the current inflation, the government has even made plans to import grains from countries like Brazil. 

The other important corn news came out last week when the US Department of Agriculture (USDA) published the WASDE report. This is an important report that explores the supply and demand dynamics of key commodities.

The WASDE report showed that corn production is expected to be about 3.8 million tons higher this year. In all, the world will produce over 1.5 billion tons of corn this year, with most of this increase coming from Ukraine and Brazil. As noted, Argentina’s production is expected to drop this year.

Watch here: https://www.youtube.com/embed/Tq_j-0vdJtk?feature=oembed

Several countries are also expected to have higher corn production this year. For example, a report published in March showed that Kenya will produce about 3.2 million tons of corn this year, up from last year’s 2.9 million.

Corn price forecast

Corn chart by TradingView

The daily chart shows that corn prices have been in a bullish trend in the past few days. It has moved above the important resistance point at $5.8258, the lowest point on July 22nd. The price has moved above the 50-day exponential moving average (EMA). It has also moved above the key resistance point at $6.085, the lowest point on March 10.

The Relative Strength Index (RSI) has moved above the neutral point of 50. Therefore, there is a likelihood that corn price will resume the bearish trend as sellers target the next support level at $5.8258. A move above the resistance point at $6.75 (April 18, 2023) will invalidate the bearish view.

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