Strong Resistance Pushed Corn Prices Lower


Dec. 4 2020, Updated 10:53 a.m. ET

Corn price channel

March corn futures prices were trading near the crucial resistance level of 370 cents per bushel on January 21, 2016. Prices fell after three consecutive days of rising by over 3% on the day. The resistance at 370 cents pushed corn prices. Producers want to have prices in the range of 360 to 400 cents per bushel for healthy profits. Prices could take downward movement further amid slower export sales cues. The volume of the contract increased by 27.9% while the open interest fell by 0.83% on January 21, 2016. Prices fell below the critical 50-day moving average of 367 cents on the day.

The chart indicates that corn could play in the bracket of 355 and 375 cents per bushel in the short run.

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Price drivers

The US EIA’s report of lower production and higher stocks showed low demand from the ethanol front for corn. With lower export sales cues from analyst projections, corn prices fell on January 21. Argentinian Agriculture Ministry’s projection of the rising corn planting area supported output and negatively affected US corn futures, threatening higher competition in the exports market. The US dollar appreciated by 0.3% on January 21, 2016, and adversely affected futures prices, as the higher US dollar is unfavorable for exports.

Stock review

The fall in corn prices is unfavorable for the corn trading and producing companies, as it reduces the inventory value of the businesses. Bunge (BG) dropped by 0.37%, its seventh consecutive drop. In contrast, CHS (CHSCP) and Ingredion (INGR) rose by 0.97% and 0.17%, respectively, after a rise on the previous day. Tyson Foods (TSN) rose by 2.1% on January 21. The company’s price has risen 2.7% in the past two days. The PowerShares DB Agriculture Fund (DBA) also rose by 1.1%.


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