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Corn exports remain strong, with more flash sales this morning. We can suggest some pre buying ahead of potential policy changes. While corn demand for ethanol is ahead of USDA targets, tariffs and large global production are keeping a lid on price recovery, with Friday’s close confirming a fresh downtrend.
Polling shows Harris with a slight lead over Trump, however this spread continues to narrow. Trump’s tariff approach aims to bring back import taxes, particularly on goods from China, to support U.S. industry and reduce reliance on foreign manufacturing. The idea is to encourage American production and pressure countries to ease trade barriers on U.S. exports. However, the idea is that retaliatory tariffs could hurt American ag exports. We have to remember though. China’s role in U.S. corn exports has shifted, with purchases falling from 846 million bushels in 2020 to just 117 million bushels forecasted this year. This is more of a bean story.
We can anticipate another great export week for corn. We started out the week with another round of overnight sales. 124,000 metric tons of corn for delivery to Japan during the 2024/2025 marketing year was reported this morning along with 120,000 metric tons of corn for delivery to unknown destinations during the 2024/2025 marketing year.
For the week of October 11-17, corn export sales totaled 3.6 million tonnes, marking the second-largest total on record for this week, well above trade estimates of 2.2-3.3 million tonnes. Notably, 1.8 million tonnes were booked for 2024/25 delivery, while 579,120 tonnes were marked for 2025/26.
U.S. corn remains competitive with Brazil, as both countries’ prices are about level, though Brazil benefits from its shipping proximity. With the USDA targeting 2.325 billion bushels for exports—a 6% bump over the five-year average—year-to-date sales are ahead by 18%. To reach the annual goal, sales need to sustain a 5% increase above the average pace. Last week sales came in 236% over the five-year average. Overnight sales totaled 1,500,000 metric tonnes last week, suggest we'll come in at least 60% over the 5 year average this week.
Are Mexican buyers simply stocking up ahead of the election? So far, Mexico has booked 9.96 million metric tons of U.S. corn for 2024/25, covering 44.3% of their anticipated imports and outpacing last year's commitment of 38.6% by this time. To reach the USDA’s projection of 22.5 million metric tons, Mexico still needs to purchase another 12.54 million metric tons.
It’s unlikely that a potential Trump victory would drastically shift Mexico's need for U.S. corn. However, Trump's recent proposal of a 200% tariff on Mexican cars, intended to protect U.S. carmakers, could impact trade dynamics. “I’ll put 200 or 500, I don’t care. I’ll put a number where they can’t sell one car,” Trump said in a recent interview, underscoring his focus on limiting foreign competition in the auto sector. Statements like these can sometimes push buyers to secure purchases sooner, possibly adding urgency to Mexico’s buying pace.
This past week, managed money, or trading funds, reduced their net short position in corn by 15,489 contracts, bringing their overall position to -71,499. This move follows a consistent trend over the last five weeks, where trading funds have been gradually covering their shorts. At the end of September, managed money was holding a significantly larger short position of -176,211 contracts, and each week since, they’ve steadily lightened that up. Over this five-week period, we’ve seen trading funds cut more than 100,000 contracts from their net short position. Price action has generally reacted favorably, with corn futures inching up gradually. After remaining under pressure earlier in the season, prices started to stabilize and even posted a gain of 17.25 cents this past week, reflecting a firmer tone in the market as trading funds pulled back on aggressive selling.
Rainfall in Brazil’s primary corn-growing regions was close to normal last week, with actual precipitation levels reaching 1.3 inches compared to the expected 1.5 inches. This provided a solid moisture boost to the first crop corn areas, which cover approximately 47% of total production. However, forecasts show a shift in the coming days, with conditions expected to dry out this week. Looking beyond this dry spell, the 8-14 day forecast suggests a return to more typical rainfall patterns, especially in key corn areas. Overall, no large production concerns near term are being factored in.
Brazil’s center-south corn planting hit 52% for the 2024/25 first crop as of last Thursday, AgRural reports. That’s a 4-point jump from the previous week, just slightly below last year’s pace at 53%.
The USDA attaché has introduced their Argentina's 2024/25 corn crop forecast at 48 million tons. The USDA and RGE have maintained a more optimistic outlook around the 51–52-million-ton range, while BAGE and the USDA attaché show more conservative figures, with BAGE at 47 million tons
Ethanol remains on pace Corn demand for ethanol is on track so far this season. The USDA is projecting 5.450 billion bushels of corn for ethanol production, which is down just -0.4% from last year. We’re still waiting on efficiency data from the new crop, so for now, we’ll stick with that -0.4% reduction as our target for the season.
Last week’s ethanol production hit 1.081 million barrels per day, up +3.9% from the same time last year. Over the past seven weeks of this new marketing year, we’re averaging +2.6% above last year’s pace, which means we’re ahead of the USDA’s goal so far. All signs are pointing to strong corn demand from ethanol, which is great to see early in the season.
Pricing and trends: Friday's close confirmed a new downtrend after a 25-cent rally off the October 17th low to the high on October 24th. Key support remains at $4.00 on the December corn contract. Demand concerns driven by tariffs, high U.S. and South American production, and an overall bearish sentiment continue to keep prices below economic value.
Seasonally, October is usually a strong month for corn, but this year’s price action has diverged from the typical pattern. It’s possible we’ve already seen the October peak, especially with harvest pressure starting to weigh on prices as we head into the last part of the month.
Corn basis in Central Illinois is acting more like we’re in a big supply year, similar to 2016/2017. As of this week, we have seen basis widen out to 40 cents per bushel under, which is wider than the 5-year average of -30 cents for this time of year. This weaker basis fits the pattern we usually see in large supply years, following along with the 2016/17-2019/20 and 2023/24 averages, as shown in the chart.
In these big supply years, we’ve historically seen basis improve by about 14 cents between October and February, so there’s still room for some recovery as we go deeper into the season. However, this year’s basis is clearly not following the path we saw in 2020/2021, when it tightened up much faster. For now, the weaker basis reflects the larger supply we’re dealing with this season.