Corn Markets Weather the Storm: Short Covering Rallies Amid Mixed Yield Prospects

The global corn market has entered a decisive period, marked by pronounced short covering on commodity exchanges amid mixed production signals and shifting weather concerns. Last week, Corn futures on the CBOT rebounded as investors covered short positions that had been racked up during recent corrections to multi-month lows. Weather forecasts revolving around the US Corn Belt have become central to current price action: predicted heatwaves next week, especially in the southwestern areas, point to possible heat stress, though much of the core region may avoid the worst, according to Vaisala. These developments arrive in a season of heightened yield expectations; some analysts still expect record US crops, but acknowledge that such outcomes remain contingent upon continued, near-optimal growing conditions through the upcoming critical pollination phase. Elevated temperatures in this period could quickly shift yield forecasts lower.

At the same time, the European outlook is softening. The German grain association (DRV) trimmed its 2025 maize harvest estimate, now pegging it 8% below last year, and French crop conditions have deteriorated with only 72% rated ‘good/excellent’—down three points week-over-week. Meanwhile, speculative positioning has shifted: the CFTC shows a sharp reduction in net short contracts, as financial players temper their bearish exposure. International spot offers remain stable for now, with key export origins in Ukraine, France, and South America holding prices amid demand from feed and food producers.

Looking ahead, weather risks during pollination and early grain fill remain the main watchpoints for traders, grain companies, and end-users alike.

📈 Prices

Exchange	Contract	Last Close	Weekly Change (%)	Market Sentiment
CBOT	Sep 25	407.50 USc/bu	-0.24%	Short covering, cautious optimism
CBOT	Dec 25	426.25 USc/bu	-0.35%	Short covering, neutral-bullish
Euronext	Aug 25	209.75 EUR/t	0.00%	Stable
Euronext	Nov 25	202.00 EUR/t	0.00%	Neutral
DCE (China)	Sep 25	2,305 CNY/t	+0.82%	Modestly firmer, domestic demand

🌍 Supply & Demand

• US: High yield projections depend on favourable weather; critical pollination phase underway.
• Europe: German corn crop forecast cut to 4.51 mln t (-8% y/y); France sees further crop condition decline (72% “good/excellent,” down from 75%).
• China: Steady pricing indicates continued strong demand and relatively tight domestic balance sheets.

📊 Fundamentals

• Speculators reduced net shorts on CBOT corn by ~29,000 contracts (now -174,755) as weather risk looms over US crops.
• USDA and European agencies revised supply outlooks, especially in Europe, where yield and acreage prospects have declined.
• Forward prices and offered lots for key export grades (FOB Ukraine/France yellow corn: 0.20-0.25 EUR/kg) remain unchanged, indicating stable commercial flows.

🌦️ Weather Outlook

• US Corn Belt: Vaisala projects rising temperatures next week, with the threat of heat stress in southwestern growing regions. Critical as most US corn enters bloom.
• Europe: Patchy rains failed to improve French and German crops; risk of further downgrades if dry/warm trend persists.
• China: Near-normal growing conditions, but flooding in some northeast provinces may warrant further monitoring.

🌐 Global Production & Stocks

Country	2024/25 Production (mln t)	2024/25 Ending Stocks (mln t)	Year/year Change (%)
USA	387 (est.)	53 (est.)	+1.5% prod; +3% stocks
Brazil	120 (est.)	10 (est.)	-10% prod; -5% stocks
EU-27	60 (est.)	6.2 (est.)	-5% prod; -6% stocks
China	288 (est.)	209 (est.)	Unch.
Ukraine	29 (est.)	2.0 (est.)	+5% prod.; stocks stable

📆 Trading Outlook & Recommendations

• Producers: Consider pre-hedging a portion of the 2024 crop, especially in regions at yield risk.
• Importers/feed users: Monitor pollination weather; opportunity may arise from volatility if the US yield outlook falters.
• Speculators: Reduced short interest implies less downside; monitor weather-driven price risks for potential tactical buys.
• Spot/forward buyers: Forward offers from Ukraine, France, and South America remain competitively priced—opportunistic buying is recommended if coverage is light.

🗓️ 3-Day Regional Price Forecast

Exchange	Forecast Range	Sentiment
CBOT (Sep 25)	405–412 USc/bu	Firm, weather volatility
Euronext (Nov 25)	201–204 EUR/t	Neutral, eyeing EU conditions
DCE (Sep 25)	2,300–2,320 CNY/t	Stable