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Corn market digests USDA expectations, weather, global exports, analyst says

Investors position ahead of Thursday’s USDA S&D update.

December Corn closed moderately higher on Tuesday, with an inside trading day and the highest close since May 11.

The market is filling part of the gap left on Monday. July corn futures closed near the lows of the session for the second day in a row, but managed a slightly higher close on the day.

India has stepped up its corn exports as a rally in global prices to the highest since 2013 has made shipments from India competitive. Indian exporters have signed deals to sell around 400,000 tonnes of corn for shipment in June and July to animal feed producers in Vietnam, Malaysia, Sri Lanka, and Bangladesh.

A warm/dry forecast for the next two weeks, has helped support the corn market, as have strength in the energy markets and a positive tilt to outside markets. Talk of sluggish basis levels at elevators and longs rolling out of July corn futures have offered pressure. 

The six- to 10-day forecast shows above-normal temperatures for the Dakotas, Nebraska, Iowa, and the rest of the northern and western growing areas. Precipitation is expected to be below normal for the western and northern sections of the Corn Belt.

The eight- to 14-day forecast models also show hot and dry conditions for the northern and western sections. 

North Dakota crops are rated 42% good/excellent, down 6% for the week and well below the 10-year average of 77%. South Dakota conditions fell 21% in just one week to 46% vs. 82% last year. Of greater concern soon could be Iowa’s crop conditions. There has been no rain there for at least a week. The crop is currently rated 77% good to excellent vs. 81% last week and 85% last year. If there is no rain for another two weeks, Iowa’s conditions could drop significantly. 

For the weekly Energy Information Administration’s ethanol production report today, traders expect production near 1.036 million barrels per day, up from 1.034 million last week. Ethanol stocks are expected near 19.698 million barrels as compared with 19.588 million barrels last week. U.S. corn exports for the month of April reached 8.499 million tonnes, up 68% from last year. China took 2.55 million of that total.

Market Ideas

December Corn support is seen at $5.92 3/4. Keep $6.27½ and eventually $6.90½ as the next upside targets. Consider buying breaks or consider buying the July22/Dec22 corn futures spread.


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