A Thursday Fade?  Corn Fractionally Lower at Midday After Wednesday Rally

Corn futures are experiencing slight weakness, primarily driven by significantly lower-than-expected old crop export sales, which registered a marketing year low of 97,600 MT for the week ending July 10, well below trade expectations of 500,000 MT to 1.2 MMT. This bearish demand signal overshadowed a modest increase in average daily ethanol production to 1.087 million bpd and a decrease in ethanol stocks, suggesting a soft overall demand picture for corn despite some domestic usage improvements.

Analysis

The corn market is exhibiting bearish pressure, primarily driven by a significant shortfall in demand from the export sector. Old crop corn export sales for the week ending July 10 were a marketing year low at just 97,600 metric tons (MT), drastically missing trade expectations of 500,000 MT to 1.2 MMT. This weak demand signal is currently overshadowing mixed data from the domestic ethanol market. While average daily ethanol production saw a minor increase of 2,000 barrels per day (bpd) to 1.087 million bpd and ethanol stocks declined by 324,000 barrels, these positives were tempered by slipping ethanol exports and lower refiner inputs. Market technicals, such as the minimal net change of only 76 contracts in open interest, suggest a rotation of ownership rather than new directional conviction. Consequently, futures prices are reflecting this negative sentiment with modest declines, indicating that weak export sales are the dominant market driver at present.

Key Decisions for Investors

• Given the substantial miss in old crop export sales, investors should be cautious of near-term price weakness as the market digests this bearish demand signal.
• Monitor upcoming weekly export sales data closely, as a continuation of this trend would confirm a bearish outlook, while a sharp rebound could signal a reversal.
• The conflicting signals between poor export demand and a drawdown in domestic ethanol stocks may present an opportunity for range-bound strategies until a clearer demand trend emerges.