Canada Markets

Corn markets have recently been under their traditional seasonal selling pressure that hits once it appears the crop will be seeded in a timely manner -- because it will always result in a bin buster at that point in traders' minds.

The odd part about the early May break is it was the old-crop July contract leading the way lower. Given the exceptional demand amid tight supplies of old-crop corn, where does that leave the market?

Managed money traders have led the way lower, presumably on the bearish fundamentals of new-crop corn. A significant jump in acres is based on profitability comparisons with excellent planting conditions helping as that usually adds a few flex acres along the way. Whisper numbers are topping 97 million acres as everyone tries to outdo other private estimates. As far as Monday's World Agricultural Supply and Demand Estimates (WASDE) update goes, USDA used the prospective planting estimate of 95.3 million acres. That will be bearish enough compared to last year's 90.594 million acres amid the favorable planting conditions, especially when they used a record yield estimate of 181 bushels per acre (bpa).

Where it gets interesting is the buying potential of the two groups should the dry weather (that's been bearish due to planting progress) turns bullish on emergence and crop stress concerns; especially considering the corn yield has yet to top 180 bpa after years of the USDA predicting it would. The last few years have been 179.3 bpa (2024), 177.3 bpa (2023) and 173.4 bpa in 2022. With increased area, more marginal land is usually included, which tends to lower the average yield.

Given the much-lower-than-expected 2025-26 ending stocks estimate versus expectations going into the report -- 1.800 billion bushels (bb) versus 2.020 bb expected -- a lower yield potential could become important very quickly.

You will notice on the accompanying chart that even though the price only pulled back about $0.72 per bushel (bu) from the February high, the two groups combined have sold out of basically 50% of the contracts they had bought since the low in 2024. Should they turn bullish again, the history of the size of changes in positions demonstrates the potential buying power.

As mentioned previously, managed money traders just want to be on the right side of a trending market, so the fact that support around $4.40/bu (on the daily chart) appears to be holding could be critical. Higher highs and higher lows on long-term charts suggest this has been just a violent bull market correction. The key will be for the group to be concerned enough about yield potential to abandon their seasonal selling tendencies, before serious technical damage is done.

Commodity index traders are more interested in passive ownership of commodities as a hedge against inflation. With stagflation (high inflation, low economic growth and high unemployment) being as much a concern as outright inflation -- they may very well want to look at buying back into some of these cheaper grains and oilseeds as well.

The key will be to regain confidence in the Trump administration's efforts and the ability of the economy to avoid a recession. The rollback of reciprocal tariffs on China was an important step as the odds of a recession decline, while the remaining tariffs are still widely expected to be inflationary.

During the past three months, while outside participants were aggressive sellers, the produce/merchant/processor/user group were net buyers of 365,538 contracts or 1.828 bb. With corn being purchased by commercial entities, should growing conditions take a turn for the worse, this group is not likely to be willing sellers, considering their motivation to enter the trades to begin with was to hedge against higher prices.

**

I welcome feedback along with any suggestions for future blogs. My daily comments can be found in Plains, Prairies Opening Comments and Plains, Prairies Quick Takes on DTN products.

Mitch Miller can be reached at mitchmiller.dtn@gmail.com

Follow him on social platform X @mgreymiller

(c) Copyright 2025 DTN, LLC. All rights reserved.