Brazil Corn Production Lower
Brazil corn production for 2015/16 is estimated at 77.5 million metric tons compared to 81.0 million last month. The harvested area estimate of 16.0 million hectares is unchanged from last month but up 1.3 percent from last year’s 15.8 million hectares.
Yield is estimated at 4.84 metric tons per hectare, 10 percent below last year’s record level and 1.6 percent below the 5-year average. Dry weather was largely responsible for the decrease in production of the second crop throughout the country, especially in the Central West Region, one of the largest producing regions.
In Goiás, dry weather has prevented much of the late-planted second crop (planted after February) from reaching its potential, with many fields likely to be abandoned. Rains have continued in the south and should help to alleviate some of the losses in the northeast.
Corn Technical Analysis
Corn prices have been subdue since 2012. Corn prices have had a two year strong support at around 347 and are now trading at resistance level. The resistance level is between 417 and 451.
Corn supply and demand have been stable for years. The current surge in prices up to the resistance level its due to weather conditions, not only in Brazil but also in Ukraine. Both Brazil and Ukraine are in the top 5 corn producers.
Will Corn Prices Continue to Rise?
The probable answer is no. Other producer countries might produce enough to cover Brazil and Ukraine deficit. Unless other countries corn production is disrupted, there won’t be any further increase in price.
Corn prices are more likely to settle around current resistance level and form a new support line.
Wait for further supply disruption before committing to a long position.