Corn Getting Spillover Support from Wheat

Corn futures are mixed, with July contracts slightly down ahead of options expiration, while later contracts are up 4-5 cents, supported by a wheat market rally. The EIA reported a decrease in ethanol production to 1.109 million barrels per day and an increase in ethanol stocks to 24.12 million barrels, while ethanol exports rose to 163,000 bpd. Traders anticipate corn bookings between 600,000 MT and 1.2 MMT for 2024/25 in the upcoming Export Sales data.

Analysis

Corn futures exhibit a bifurcated trend, with the front-month July contract experiencing a slight decline of ¼ cent to $4.31 1/4, influenced by impending options expiration on Friday. Conversely, deferred contracts such as September 2025 (up 4 1/2 cents to $4.28 1/4) and December 2025 (up 4 3/4 cents to $4.43 1/2) are trading higher, drawing support from a concurrent rally in the wheat market. The national average cash corn price mirrors the front-month weakness, down 1/4 cent to $4.08. The latest Energy Information Administration (EIA) report indicates a slight pullback in ethanol production from its recent record, decreasing by 11,000 barrels per day (bpd) to 1.109 million bpd. Concurrently, ethanol stocks rose by 386,000 barrels to 24.12 million barrels, while ethanol exports showed strength, increasing by 12,000 bpd to 163,000 bpd, and refiner inputs also saw a modest rise of 5,000 bpd. These mixed signals in the ethanol sector, a key demand driver for corn, contribute to the current market indecision. Market participants are now anticipating the Export Sales data, to be released on Friday due to the Juneteenth holiday, with expectations for 2024/25 corn bookings ranging from 600,000 metric tons (MT) to 1.2 million metric tons (MMT) for the week ending June 12, and new crop business seen at 0-200,000 MT.

Key Decisions for Investors

• Traders should note the divergence between weakening front-month July corn futures, influenced by options expiration, and firmer deferred contracts, which may offer spread trading opportunities or signal underlying support from factors like the wheat market rally.
• Closely monitor Friday's Export Sales report, as deviations from the anticipated 600,000 MT to 1.2 MMT in 2024/25 bookings could introduce near-term volatility and directional cues, especially for new crop prices.
• The recent dip in ethanol production and rise in stocks, despite increased ethanol exports, should be monitored, as persistent weakness in domestic ethanol demand could eventually weigh on corn prices.