Corn Failing to See Buying on Friday Morning

Corn futures are slightly down this morning after closing fractionally higher yesterday, influenced by a wet weather forecast in the Corn Belt. Weekly export sales hit a 9-week low at 791,327 MT, with Japan as the top buyer, while the USDA's WASDE report increased the US export projection by 50 million bushels, lowering old crop US ending stocks to 1.365 billion bushels and new crop carryout to 1.75 bbu; South American crop estimates remained unchanged.

Analysis

Corn prices are exhibiting minor weakness, with futures slipping fractionally by up to 2 cents on Friday morning (e.g., Jul 25 corn, which closed Thursday at $4.38 1/2, up 1 1/2 cents, is currently down 2 cents), following a session where most contracts closed with fractional to 1 ½ cent gains. This current downward pressure is partly attributed to a wet forecast across the Corn Belt for the upcoming week, limiting upside potential for new crop contracts. Thursday's trading saw preliminary open interest decline by 1,061 contracts, with a notable reduction of 36,490 contracts in the July position, signaling a continued shift away from the front month, while the CmdtyView national average cash corn price improved by 1 1/2 cents to $4.15. On the demand side, weekly export sales for old crop corn reached a 9-week low at 791,327 metric tons for the week of June 5, with Japan (376,200 MT) as the primary buyer, and concurrently, new crop sales saw net reductions of 29,550 MT. In contrast to these demand signals, the USDA's monthly WASDE report presented a tighter outlook for US stocks, increasing the US export projection by 50 million bushels. This revision consequently lowered old crop US ending stocks by the same amount to 1.365 billion bushels—below the average trade expectation of a 23 million bushel cut—and reduced new crop carryout to 1.75 billion bushels. Globally, the WASDE report also projects tighter supplies, with 2024/25 world ending stocks revised down by 2.25 MMT to 285.04 MMT, and new crop world stocks down 2.6 MMT to 275.24 MMT. However, the USDA maintained its South American crop estimates for Argentina (50 MMT) and Brazil (130 MMT) unchanged, diverging from CONAB's data, which reported a 1.38 MMT increase in Brazil's corn crop estimate to 128.25 MMT due to a larger second crop projection. Separately, crude oil prices surged $5.65/barrel following geopolitical events in the Middle East, a factor that can exert broader influence on commodity markets.

Key Decisions for Investors

• Investors should closely monitor Corn Belt weather forecasts, as the current wet conditions are capping new crop price upside and will significantly influence near-term supply sentiment.
• Given the 9-week low in weekly export sales juxtaposed with the USDA's increased US export projection, scrutinize upcoming export reports to confirm demand strength or potential overestimation by the USDA.
• The USDA's reduction of US old crop ending stocks to 1.365 billion bushels and new crop carryout to 1.75 billion bushels heightens market sensitivity; therefore, assess potential price impacts from any further global supply disruptions or unexpected shifts in demand.
• Track forthcoming updates from both WASDE and CONAB on South American crop estimates, particularly for Brazil, as the current divergence creates uncertainty that could materially affect global supply expectations and price volatility.