Corn Rallying into Wednesday

Corn futures are trading higher, driven by a rebound in ethanol production to 1.036 million bpd and a draw in ethanol stocks of 501,000 barrels. Expectations for Thursday's Export Sales report range from 0.7 to 1.6 MMT for old crop and 50,000 MT to 500,000 MT for new crop. Additionally, Argentina's corn export tax reduction is set to expire at the end of June, reverting to 12% on July 1.

Analysis

The corn market is demonstrating positive momentum, with futures contracts advancing 6 to 8 cents and the front-month national average cash price increasing by 7 cents to $4.34 3/4. This upward trend is supported by favorable domestic demand indicators from the Energy Information Administration, which reported a 43,000 barrel-per-day rebound in ethanol production to 1.036 million bpd and a 501,000-barrel decrease in ethanol stocks for the week ending May 16. Market focus is now on the upcoming Export Sales report, with expectations for old crop sales ranging from 0.7 to 1.6 MMT and new crop sales from 50,000 to 500,000 MT. Internationally, Argentina's decision to increase its corn export tax to 12% from 9.5% effective July 1 could benefit U.S. export competitiveness. However, this is counterbalanced by a significantly higher Brazilian second corn crop estimate of 112.9 MMT from private firm Agroconsult, compared to CONAB's 99.8 MMT, which could exert downward pressure on global prices if realized.

Key Decisions for Investors

• Investors should closely watch Thursday's Export Sales report, as figures at the higher end of the 0.7 to 1.6 MMT old crop range could reinforce current price strength.
• Consider the bullish potential of Argentina's increased export tax from July 1 against the bearish risk posed by Agroconsult's substantially higher Brazilian crop forecast.
• Continue to monitor weekly EIA ethanol statistics, as sustained high production (currently 1.036 million bpd) and stock draws (down 501,000 barrels) are key indicators of strong domestic corn demand.