Corn Holding onto Gains As Traders Square Up Ahead of Extended Weekend

Corn prices generally trended higher, with midday gains of 2-5 cents and cash corn up. While weekly old crop export sales of 532,745 MT were a marketing year low and below expectations, new crop sales surged to a marketing year high of 940,159 MT, significantly exceeding forecasts and boosting forward sales 28.6% year-over-year to 4.5 MMT. This strong new crop demand, complemented by a 156,000 MT private export sale and record monthly ethanol exports, indicates robust future demand despite some near-term softness in old crop figures.

Analysis

Corn markets are exhibiting bullish momentum, with prices climbing 2 to 5 cents at midday, supported by a mix of fundamental signals. The primary driver appears to be robust forward demand, evidenced by new crop export sales for the week ending June 26 hitting a marketing year high of 940,159 MT, which surpassed the top end of analyst expectations (500k-900k MT). This brings total forward sales to 4.5 MMT, a significant 28.6% above the same period last year. This strong outlook is further corroborated by a fresh private export sale of 156,000 MT for the 2024/25 season and record-high May ethanol exports of 184.67 million gallons. This forward-looking strength is currently overshadowing near-term softness, where old crop sales posted a marketing year low of 532,745 MT, falling short of the 0.4 to 1 MMT forecast. While May's total corn exports of 7.29 MMT were up 22.14% year-over-year, they did decline 6.4% from April, indicating some moderation. Weather remains a key variable, with forecasts of beneficial rains of 1-2 inches for the Western Corn Belt potentially impacting supply outlooks.

Key Decisions for Investors

• Investors should prioritize the strong new crop sales data and record ethanol exports as key indicators of medium-term demand, potentially outweighing the bearish signal from the marketing year low in old crop sales.
• Monitor weather developments closely, as the forecasted rains in the Western Corn Belt could increase yield potential and temper the current price rally.
• Given the divergence between lagging nearby demand and strong forward demand, consider strategies that capitalize on the spread between old crop (July) and new crop (December) futures.
• Note the upcoming market closure for the holiday, which could reduce liquidity and increase the risk of a price gap upon reopening based on overnight news.