Corn Futures Rally 15% on China Export Surge and Weather Concerns

Corn futures experienced their strongest rally in six months, climbing 15% to $4.23 per bushel as a perfect storm of factors converged to tighten global supply expectations.

The surge caught many traders off guard, with March contracts breaking through key resistance levels in heavy volume. This rally represents the most significant move in corn prices since the drought-driven spike of summer 2023.

Three Key Drivers Behind the Rally

1. Chinese Import Acceleration

China purchased 2.1 million tons of U.S. corn last week, marking the largest weekly purchase since 2021. This dramatic increase in demand comes as China rebuilds its pig herd and expands its poultry operations.

Key factors driving Chinese demand:

• African Swine Fever recovery leading to increased feed demand
• Trade relations stabilization encouraging U.S. purchases
• Domestic Chinese corn prices trading at premium to U.S. exports
• Strategic stockpile rebuilding ahead of potential supply disruptions

2. South American Drought Concerns

Argentina and southern Brazil are experiencing their worst drought in a decade, threatening 45 million tons of corn production. The situation is particularly dire in Argentina's key growing regions:

• Buenos Aires Province: 60% of corn crop rated poor to very poor
• Cordoba: Rainfall 70% below normal for the past 60 days
• Santa Fe: Farmers abandoning 1.2 million acres due to drought stress

Brazil's safrinha (second crop) corn, which typically accounts for 75% of the country's total production, is also at risk if rainfall patterns don't improve by February.

3. Strong U.S. Export Pace

Weekly export inspections are running 23% ahead of last year's pace, with total commitments now at 35.2 million tons—well above USDA's projected 50 million ton export target for the marketing year.

Technical Analysis

From a technical perspective, March corn futures have broken through several key resistance levels:

• $4.15: 200-day moving average breakthrough with strong volume
• $4.20: Previous swing high from November 2023
• $4.25: Next major resistance level to watch

The RSI reading of 68 suggests the market is approaching overbought territory, but momentum remains strongly positive. Volume has been consistently above the 10-day average, confirming the move.

Market Outlook

Looking ahead, several factors could sustain this bullish momentum:

• Weather Monitoring: South American weather patterns over the next 30 days will be critical
• Chinese Demand: Continued strong purchases could push prices to $4.50+
• U.S. Planting Intentions: March USDA report could show reduced corn acres
• Energy Prices: Higher oil prices supporting ethanol demand for corn

Risk Factors

However, traders should be aware of potential headwinds:

• USDA's quarterly stocks report on March 31 could show larger supplies than expected
• Brazilian weather improvement could pressure prices
• Economic slowdown reducing overall commodity demand
• Potential for profit-taking as prices approach $4.50

The current rally reflects genuine supply and demand fundamentals rather than speculative buying. With tight global stocks and strong demand, corn prices could remain elevated through spring planting season.