As the Russia-Ukraine war threatens to halt shipments and sowing, corn prices have risen toward $8. Cold weather raises concerns about a slow start to U.S. planting.
Vladimir Putin, the Russian president, has no plans to end the invasion this week. Ukraine could lose about 40% of its next corn crop due to the conflict along the Black Sea. This week, Chicago futures rallied to their highest close since 2012.
Despite the initial planting pace being below the five-year average, buyers are likely to turn to the U.S. for supplies. Also, weighing Winter weather may hinder early planting due to cold and wet conditions.
Price action
- In the event of severe weather, the $8 level will act as a speed bump rather than a roadblock.
- Corn futures for July delivery jumped up to $7.81 1/2 a bushel by as much as 0.5%. Meanwhile, wheat futures rose by 0.8% to $11.30 a bushel.
- Despite threats from Ukraine, Brazil, and the United States, Recent price action suggests the corn market is overbought.
- With an RSI of 83 and slow stochastics near 95 and 93, technical indicators are very overbought, especially the December contract. Corn’s support and resistance levels are $7.60 and $7.51, with $7.74-3/4 and $8.00-1/4 as resistance.
Macros
- Fundamentally, despite contract highs in December Corn for the fourth straight session, there is no sign of a peak.
- Due to the war, importers face eye-watering costs due to the latest purchase by Egypt, the top wheat buyer. After Russia’s invasion of Ukraine, prices on a tender Wednesday surged by 44%. Although at a high price, Egypt’s large volume of reserves indicates its urgency.
