Corn price closed Friday’s session at an 8-year high amid rising demand from China. For those looking to invest in commodities, the unfavorable weather in Brazil is further supporting prices.
China’s Buying Spree
China is working towards lowering its reliance on grain imports. In 2022, its global corn purchases are expected to drop to 15 million tonnes. While that will be a major cut, it will remain the second-highest figure on record.
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As of now, the Middle Kingdom’s buying spree has pushed corn price to its highest level since June 2013. This is after the US indicated that China is expected to purchase an all-time high grain bulk from various markets globally. On Wednesday, USDA’s office in Beijing stated that the country’s corn imports for the ongoing season is at 28 million tonnes. This is the largest amount on record, which spans for six decades. China’s large appetite for grains has been fuelled by the ongoing recovery of its hog herd from the deadly African swine fever.
Brazil’s Unfavourable Weather
Corn price is further finding support in the dry weather conditions in Brazil. The Latin American country, and a major corn exporter in the world, has had the season’s second corn crop suffer from insufficient rainfall. This has added to supply concerns in the corn market. Subsequently, some cattle farmers have turned to wheat as an alternative feed. Notably, wheat futures have also soared to end Friday’s session at a 7-year high of $712.84.
Corn Price Technical Outlook
At $657.50, corn price is trading at its highest level since June 2013. Since the beginning of this month, the price has surged by about 16.62%. On a four-hour chart, it is trading above the 14 and 28-day exponential moving averages. Besides, with an RSI of 78.30, it is in the overbought territory.
Corn price is likely to pull back to 650 before moving higher. Below that point, the next targets will be 640 and 626.68. on the flip side, it could move higher to 660 before having a corrective pullback. Subsequently, the bulls will gain enough energy to push to 670.