Corn Continues Fall on Wednesday

Corn futures extended losses by 3 to 5.5 cents Wednesday, driven by net new selling and a 5 3/4 cent decline in cash prices to $3.59 1/4. This occurs as weekly EIA data showed a 15,000 bpd drop in ethanol production, yet stocks still drew down by 960,000 barrels despite lower exports, while a South Korean importer secured 68,000 MT of corn. Separately, President Trump threatened 25-50% tariffs on India from August 27 if it continues to import Russian oil, signaling escalating geopolitical trade tensions.

Analysis

Corn futures are exhibiting clear bearish momentum, evidenced by a 3 to 5 ½ cent drop in contracts and a significant increase in preliminary open interest of 24,510 contracts, indicating a wave of net new selling. This price pressure is corroborated by a 5 3/4 cent decline in the national average cash price to $3.59 1/4. The fundamental picture from the weekly EIA report is similarly negative for demand, with ethanol production falling by 15,000 barrels per day (bpd) and exports dropping sharply by 38,000 bpd. While ethanol stocks did see a draw of 960,000 barrels, this was insufficient to offset the bearish sentiment from lower production and weak export figures. Furthermore, international demand appears tepid, as a South Korean importer purchased only 68,000 metric tons (MT) in a tender originally seeking 140,000 MT. Compounding the market uncertainty is the introduction of geopolitical risk, with the US threatening 25% to 50% tariffs on India, signaling a potential for broader trade disruptions that could impact commodity flows.

Key Decisions for Investors

• Given the surge in net new selling and falling prices across futures and cash markets, maintaining a bearish or cautious stance on corn is warranted until key technical support levels are established.
• Investors should closely monitor subsequent EIA reports for directional clarity, as the conflicting signals of lower ethanol production versus a stock drawdown create uncertainty for a primary demand driver.
• The introduction of US-India tariff threats adds a layer of geopolitical risk that could trigger wider commodity market volatility, requiring traders to factor in potential supply chain disruptions.
• Pay close attention to the outcomes of future international corn tenders, as the partial fulfillment of the South Korean purchase suggests that global demand may be weakening at current price points.