Corn Rebounds on Wednesday

Corn futures saw gains of up to 5.25 cents on Wednesday, driven by strong ethanol production, which hit 1.105 million barrels per day, matching mid-March highs, according to EIA data. While ethanol stocks increased slightly, refiner inputs decreased, offset by a jump in ethanol exports to an 8-week high of 150,000 bpd. Market participants are now awaiting Thursday's export sales data, with expectations of 0.775 to 1.4 MMT for old crop and 20,000 to 250,000 MT for new crop.

Analysis

Corn futures registered gains on Wednesday, with deferred contracts exhibiting greater strength; July futures rose by a fractional 1/4 cent to $4.38 3/4, while September futures increased by 4 1/2 cents to $4.28, and December futures climbed 5 1/4 cents to $4.43 3/4, indicative of ongoing bear spreading where the front-month July contract faced relative selling pressure. A key catalyst for the upward movement was robust weekly ethanol production data from the EIA, which showed output increasing by 49,000 barrels per day to 1.105 million barrels per day for the week ending May 30, matching mid-March highs. Although ethanol stocks experienced a slight rise of 159,000 barrels to 24.44 million barrels and refiner inputs of ethanol decreased by 37,000 bpd to 902,000 bpd, these were counterbalanced by a significant surge in ethanol exports, which jumped by 84,000 bpd to an 8-week high of 150,000 bpd. The CmdtyView national average cash corn price also saw a modest increase of 1/4 cent to $4.14 1/4. Market focus now shifts to the upcoming export sales data, with traders anticipating old crop business between 0.775 and 1.4 MMT and new crop sales from 20,000 to 250,000 MT. Furthermore, ANEC's forecast for Brazilian corn exports in June at 835,660 MT, down from 982,812 MT in the same month last year, suggests potentially reduced export competition.

Key Decisions for Investors

• Investors should closely monitor the forthcoming export sales data, as figures aligning with or surpassing the expected 0.775 to 1.4 MMT for old crop could provide further price support.
• Evaluate the strong performance in the ethanol sector, particularly the surge in production and exports, as a significant bullish driver for corn demand, while also acknowledging the slight increase in ethanol inventories and the dip in domestic refiner inputs.
• Consider the implications of ANEC's projection for lower Brazilian corn exports in June, which may lessen international supply competition and benefit U.S. corn export prospects.
• Note the prevailing bear spreading activity, evidenced by the July contract's underperformance relative to gains in deferred contracts such as September and December, which could reflect specific near-term market views or a strategic shift towards later delivery months.