Corn Sticking Close to Unchanged on Friday Morning

Corn futures are trading slightly lower following Thursday's losses of 2 to 4 cents across most contracts, with preliminary open interest down 7,663 contracts. Recent USDA reports indicate private export sales to Mexico (104,000 MT) and unknown destinations (101,096 MT) for 2024/25 shipment, while the EIA reported an increase in ethanol production to 1.056 million bpd, an 8-week high, coupled with a decrease in ethanol stocks; traders are now awaiting export sales data, expecting 0.75 to 1.4 MMT in corn business for 2024/25.

Analysis

The corn market is exhibiting signs of weakness, with futures contracts registering losses of 2 to 4 cents on Thursday and extending these slight declines into early Friday trading. This price action correlates with a reduction in preliminary open interest by 7,663 contracts, highlighted by a significant 12,075 contract drop in July futures, while September contracts saw an increase of 5,792, suggesting potential position rolling or liquidation. The CmdtyView national average cash corn price also softened, declining by 3 ½ cents to $4.21 1/4. Despite this bearish price momentum, underlying demand indicators present a more nuanced picture. The USDA announced private export sales totaling 205,096 MT for the 2024/25 season (104,000 MT to Mexico and 101,096 MT to unknown destinations). Concurrently, the EIA's latest report revealed a surge in ethanol production, which rose by 20,000 barrels per day to an 8-week high of 1.056 million bpd for the week of May 23. Ethanol stocks conversely fell by 663,000 barrels to 24.281 million barrels, and refiner inputs of ethanol increased. Notably, implied gasoline demand reached 9.452 million barrels per day, its highest level since October. Market participants are now keenly awaiting the Export Sales data, with expectations for 2024/25 corn business pegged between 0.75 and 1.4 MMT for the week ending May 22. The overall market sentiment is mixed (-0.05), with specific sentiment for corn (CORN ticker) at -0.25, reflecting the current price pressure despite some positive fundamental drivers from export activity and the ethanol complex.

Key Decisions for Investors

• For investors with direct corn exposure, such as through instruments tracking corn futures (e.g., Teucrium Corn Fund, CORN, with a -0.25 sentiment), the prevailing price weakness (Jul 25 Corn closed at $4.47, down 4 cents) and declining open interest warrant a cautious approach, pending clearer signals of a bottom or trend reversal.
• Traders should closely monitor the forthcoming Export Sales figures; numbers aligning with or exceeding the anticipated 0.75 to 1.4 MMT range for 2024/25, combined with the recent private sales of over 205,000 MT, could provide a near-term bullish impetus for corn prices.
• The robust ethanol production at an 8-week high (1.056 million bpd) and strong implied gasoline demand (9.452 million bpd, highest since October), which supports sentiment for assets like the United States Gasoline Fund, LP (UGA, sentiment 0.4), suggest underlying strength in corn demand from the energy sector, though this has yet to materially lift corn prices against broader market pressures.