Corn Joining in on Friday’s Buying

Corn futures are trading higher, with front-month contracts up around 5 cents, driven by anticipated wet weather across key growing regions and supported by gains in crude oil despite overnight Israeli strikes on Iran. Weekly export sales show total corn commitments at 98% of the USDA's updated export forecast, slightly behind the 5-year average, while actual shipments lag the average pace at 76.5% of the USDA estimate. The USDA's recent WASDE report increased the US export projection by 50 million bushels, reducing old crop US ending stocks to 1.365 billion bushels.

Analysis

Corn futures are exhibiting modest gains, with front-month contracts increasing by 2 to 5 cents, a movement characterized in the report as a 'reluctant pop' compared to other grains; the front month CmdtyView national average cash corn price concurrently rose by five cents to $4.20. This upward price pressure is partly attributed to a significant $3.98 per barrel rise in crude oil prices, following reports of Israeli strikes on Iran, and is further supported by forecasts predicting wet conditions across key U.S. agricultural regions, including eastern Kansas, Missouri, the Eastern Corn Belt, and extending to the Western Corn Belt and northern Illinois into next week, which could impact planting schedules and early crop development. On the fundamental side, the USDA's recent WASDE report revised the U.S. export projection upwards by 50 million bushels, consequently reducing old crop U.S. ending stocks to 1.365 billion bushels. While total corn export commitments are substantial at 65.929 million metric tons (MMT), representing 98% of the updated USDA forecast, this pace is slightly behind the 99% five-year average. Furthermore, actual FAS shipments, totaling 51.541 MMT or 76.5% of the USDA estimate, also lag the 78% average shipping pace for this point in the season, presenting a mixed signal despite the overall tighter domestic stock outlook.

Key Decisions for Investors

• Investors should closely monitor upcoming weather patterns in the U.S. Corn Belt, as prolonged wet conditions could provide further support to prices by potentially delaying planting or impacting early crop health.
• Carefully track weekly U.S. corn export sales and shipment data to assess if the actual pace can improve to meet or exceed the USDA's increased export forecast, given that current shipment rates are slightly lagging historical averages.
• Consider the bullish implications of the reduced U.S. old crop ending stocks, now at 1.365 billion bushels, alongside the influence of heightened geopolitical tensions on energy markets, which may indirectly support grain prices, while remaining cognizant of the current export shipment performance.