Corn Extending Recovery to Wednesday Morning

Corn futures are trading higher, recovering from recent lows, with July contracts up 5 cents to $4.38 3/4. Analysts anticipate Thursday's USDA report will show a reduction in old crop US ending stocks by 23 million bushels, while new crop estimates are expected to decrease by 11 million bushels. Crop conditions are generally favorable, with 71% rated good/excellent, though planting in some eastern states lags, and Brazil's corn export forecast for June has been revised upward.

Analysis

Corn futures are demonstrating a nascent recovery, with Wednesday morning gains of 3 to 5 cents adding to Tuesday's 2 to 5 cent rise across most contracts; the July contract notably rebounded from its lowest price since last autumn. This price uptick coincided with a 21,396 contract reduction in preliminary open interest, influenced by the Goldman roll period which saw a net shift from July (-43,006 contracts) to September (+10,871 contracts). Market focus is now on Thursday's USDA report, where analysts expect a 23 million bushel decrease in old crop US ending stocks to 1.392 billion bushels, and an 11 million bushel reduction in the new crop estimate to 1.789 billion bushels. While these anticipated U.S. supply reductions are potentially price-supportive, overall U.S. crop conditions have improved, with national good/excellent ratings up 3 percentage points to 71% and the Brugler500 index rising 3 points to 378. This improvement overshadows persistent planting delays in some eastern states such as Indiana (-3% behind normal) and Ohio (-5% behind normal). Internationally, Brazil's increasing export capacity, evidenced by ANEC's upward revision of June corn export estimates by nearly 88,000 MT to 923,401 MT and a recent 65,000 MT sale to Taiwan, presents a headwind to U.S. price strength.

Key Decisions for Investors

• Investors should closely watch Thursday's USDA report, as confirmation of anticipated U.S. stock reductions to 1.392 billion bushels for old crop and 1.789 billion for new crop could offer price support, though strong overall crop conditions (71% G/E) may temper bullish reactions.
• Consider that robust Brazilian exports, with ANEC's June forecast up nearly 88,000 MT, alongside improving U.S. crop health, could limit significant upside for corn futures despite the current price recovery and potential U.S. supply tightness.
• Monitor open interest trends following the Goldman roll, as the recent 21,396 contract decrease, while partially technical, needs observation to confirm whether new buying interest is sustaining the price rally or if profit-taking prevails.