Corn Bulls Sputter to Start the Week

Corn futures declined Monday amid bear spreading, with the national average cash price down 6 1/2 cents to $4.13 1/4. Despite U.S. planting and emergence rates matching or exceeding historical averages and condition ratings improving slightly, a wet forecast pressured prices. April ethanol production used 425.8 million bushels of corn, a 6% decrease from March but a 0.77% increase year-over-year, while export inspections rose 11.26% from the previous week and 11.03% year-over-year, with Mexico, Japan, and South Korea as top destinations; AgRural and StoneX also increased their Brazilian corn production estimates.

Analysis

Corn futures concluded Monday with declines ranging from 2 to 5 ¾ cents, indicative of persistent bear spreading, while the national average cash corn price fell 6 1/2 cents to $4.13 1/4. This price weakness occurred despite U.S. crop progress tracking well, with 93% planted (aligning with the 5-year average) and 78% emerged (1 percentage point ahead of normal), alongside a marginal improvement in crop conditions to 69% good/excellent. A primary bearish influence is the forecast for significant rainfall across the U.S. Corn Belt, which could negatively affect crop development. On the demand front, April corn consumption for ethanol, noted at 425.8 million bushels, decreased 6% from March but represented a 0.77% increase year-over-year and marked a 6-year high for April. Cumulative marketing year ethanol usage stands at 3.634 billion bushels, up 20 million bushels from the prior year. Conversely, export inspections showed strength, increasing 11.26% week-over-week to 1.576 million metric tons, with marketing year shipments up 28.54% year-over-year. However, upward revisions to Brazilian corn production forecasts by AgRural (to 128.5 MMT) and StoneX (to 134 MMT) are contributing to supply-side pressure.

Key Decisions for Investors

• Investors should closely monitor the development of the U.S. corn crop under the forecasted wet conditions, as this is a significant factor influencing current bearish sentiment.
• Evaluate the balance between strong export demand and robust year-over-year ethanol consumption against potential supply increases from both the U.S. and Brazil when assessing market direction.
• Given the prevailing bear spreading and downward price action, consider a cautious short-term outlook, while remaining attentive to demand indicators that could provide future price support.