Corn Losses Continuing on Tuesday Morning, with Ratings Improvement

Corn futures are declining, with July contracts hitting new lows since October, driven by strong crop progress and condition ratings. The US corn crop is 97% planted and rated 71% good/excellent, boosting the Brugler500 index. Weekly export inspections showed shipments of 1.656 MT, up from the previous week and year, with Mexico, Taiwan, and South Korea as top destinations, while several private export tenders out of South Korea saw 269,000 MT of corn purchased overnight.

Analysis

Corn futures are experiencing downward pressure, with July contracts reaching their lowest levels since October, declining an additional 1 to 2 cents on Tuesday after closing Monday with losses of 9 to 11 ¼ cents across most active months. This bearish sentiment, reflected by a moderately negative sentiment score of -0.4 for the commodity, is primarily attributed to favorable U.S. crop conditions. The NASS Crop Progress report indicates 97% of the corn crop is planted, aligning with the 5-year average, and emergence is at 90%, slightly ahead of the 88% average. Crucially, crop condition ratings improved, with 71% rated good/excellent, a 3-percentage-point increase, pushing the Brugler500 index up 3 points to 378. Despite the price weakness, export data shows resilience; weekly export inspections totaled 1.656 million metric tons (MMT), up 0.9% from the prior week and 23.55% above the same week last year. Year-to-date marketing year shipments stand at 50.302 MMT, a significant 28.54% increase year-over-year. Recent demand includes South Korea purchasing 269,000 MT of corn. Open interest dynamics show a decrease of 3,980 contracts overall, with a notable reduction of 36,874 contracts in July, while September and December contracts saw increases of 15,356 and 10,373 contracts respectively, suggesting a roll-forward of positions. The front-month CmdtyView national average cash corn price fell 8 3/4 cents to $4.09 1/2, and new crop cash was down 11 cents to $3.94 1/2.

Key Decisions for Investors

• Given the strong U.S. crop progress and condition ratings exerting downward pressure on prices, investors should anticipate continued near-term weakness in corn futures, particularly for front-month contracts like July.
• Monitor ongoing export inspection data and new sale announcements closely, as the robust year-over-year increase in shipments and recent large tenders could provide a floor to prices or signal strengthening global demand that may counteract supply-side pressures.
• The significant shift in open interest from July to deferred contracts (September and December) warrants attention; consider the evolving term structure and potential for spread trading opportunities or strategic positioning in later-dated contracts if fundamentals shift.
• For those with exposure to corn, such as through the Teucrium Corn Fund (CORN) which shows a per-ticker sentiment of -0.6, a cautious stance is advisable; this may involve reviewing position sizes or considering hedging strategies to mitigate downside risk from further price declines driven by favorable crop outlooks.