Corn Fractionally Mixed at Midday

Corn futures are trading mixed ahead of Thursday's USDA report, with ethanol production reaching a record 1.12 million barrels per day, according to the EIA. Ethanol stocks saw a draw, while exports and refiner inputs experienced slight increases. The market anticipates the USDA report to show a decrease in old crop US ending stocks and an updated new crop estimate, with analysts expecting a slight decrease from last month's figures; Brazil's production total is estimated to increase, while Argentina's is expected to remain steady.

Analysis

Corn futures are exhibiting light and fractionally mixed trading activity as market participants adopt a cautious stance, squaring up positions ahead of the pivotal USDA report scheduled for Thursday. The front month CmdtyView national average Cash Corn price has seen a marginal increase of 1/2 cent to $4.16 3/4, with July 25 Corn futures also up 1/2 cent at $4.39 1/4, while September 25 Corn futures are down 1/4 cent. A significant supportive element for corn demand stems from the energy sector, with the weekly EIA report indicating record ethanol production at 1.12 million barrels per day in the week of June 6, an increase of 15,000 bpd from the prior week. This robust output contributed to a substantial draw in ethanol stocks by 706,000 barrels, bringing them to 23.734 million barrels, while ethanol exports rose slightly to 151,000 barrels per day and refiner inputs of ethanol increased by 3,000 barrels per day to 905,000 bpd. Market focus is sharply on the upcoming USDA data, with trade expectations for weekly export sales of 2024/25 corn ranging between 0.7 to 1.2 MMT for the week ending June 5. Analysts anticipate the USDA will report a decrease in old crop US ending stocks by 23 million bushels to 1.392 billion bushels. Furthermore, the updated new crop estimate is projected by a Bloomberg survey to average 1.789 billion bushels, down 11 million bushels from last month's figure. On the international front, Brazil's corn production estimate is anticipated to increase by 1.8 MMT to 131.8 MMT, whereas Argentina's output is expected to remain steady at 49.9 MMT. Reinforcing global demand, a Taiwanese importer recently purchased 65,000 MT of corn, expected to be sourced from Brazil. The prevailing market sentiment is moderately positive, yet current trading patterns reflect prudence ahead of comprehensive supply and demand updates.

Key Decisions for Investors

• Investors should closely monitor Thursday's USDA report, as the anticipated reduction in old crop US ending stocks to 1.392 billion bushels and the revised new crop production estimate, averaging 1.789 billion bushels, will be primary catalysts for price movements in corn futures.
• The record high ethanol production of 1.12 million barrels per day, coupled with a significant draw in ethanol inventories, indicates robust domestic demand for corn, providing a fundamental support factor that warrants ongoing assessment.
• Given the mixed signals from futures pricing, the imminent release of critical USDA data, and evolving international supply dynamics such as Brazil's expected production increase to 131.8 MMT, maintaining a cautious investment stance is prudent, with strategic positioning contingent upon the specifics of the report and subsequent export sales figures.