Corn Showing Slight Losses Despite Lower USDA Carryout

Corn futures are trading slightly lower amid a wet weather forecast in the Corn Belt, limiting upside potential for new crop contracts. Weekly export sales of old crop corn totaled 791,327 MT, a nine-week low but within trade estimates, with Japan as the top buyer. The USDA's WASDE report increased the US export projection by 50 million bushels, reducing old crop ending stocks to 1.365 billion bushels and new crop carryout to 1.75 billion bushels; global ending stocks for 2024/25 were also revised downward, while South American crop estimates remained largely unchanged, contrasting with some expectations for increases in Brazil.

Analysis

Corn futures are experiencing minor declines, with contracts like July 25 corn down ¾ cents to $4.36 1/4, primarily attributed to a wet forecast across the U.S. Corn Belt which is tempering enthusiasm for new crop contracts. Recent demand signals present a mixed picture: weekly old crop export sales, at 791,327 metric tons, reached a nine-week low but fell within trade estimates, whereas new crop sales registered net reductions of 29,550 metric tons, falling short of expectations. The USDA's latest WASDE report introduced a more supportive tone on the supply side, increasing the U.S. export projection by 50 million bushels. This revision consequently reduced old crop U.S. ending stocks to 1.365 billion bushels, a larger cut than the average trade guess, and lowered new crop carryout to 1.75 billion bushels. Globally, the WASDE report also indicated tighter supplies, with 2024/25 world ending stocks revised down by 2.25 million metric tons to 285.04 million metric tons. Notably, the USDA maintained its South American crop estimates, keeping Argentina at 50 MMT and Brazil at 130 MMT; the Brazilian figure contrasts with CONAB's recent upward revision of its national crop estimate to 128.25 MMT and was below some market expectations for a USDA increase.

Key Decisions for Investors

• Investors should weigh the immediate bearish pressure from Corn Belt weather and disappointing new crop export sales against the medium-term bullish implications of tighter U.S. and global stock projections from the WASDE report.
• Closely monitor evolving weather patterns in the U.S. Corn Belt, as favorable conditions could further pressure new crop prices, while any adverse developments could quickly reverse sentiment given the tighter supply outlook.
• Pay attention to future adjustments in South American, particularly Brazilian, production estimates from both USDA and CONAB, as alignment or divergence will significantly influence global supply perceptions and price direction.
• Scrutinize upcoming export sales reports, especially for new crop corn, to gauge demand strength in the context of reduced carryout projections.