Corn pressured by ideal US weather and strong Brazilian harvest outlook

Corn futures have extended their downward trend, with Chicago prices sliding to the lowest level in almost eight months amid increasingly favourable US weather and a rapidly advancing Brazilian second crop. Speculative investors are aggressively unwinding long positions, reinforcing the bearish tone and limiting short‑term recovery potential. Corn markets are currently dominated by supply‑side optimism. In the US, forecasts for above‑normal rainfall across much of the Corn Belt over the next 15 days are expected to support germination and early growth of recently planted fields. In Brazil, the large second crop harvest is starting at a good pace and with upgraded yield expectations, while US export commitments remain solid but no longer tight enough to offset the improving production outlook. Basis markets in key origins such as Ukraine and France appear broadly stable to slightly softer in EUR terms, reflecting the global futures weakness.

Prices & Market Mood

CBOT corn futures finished Friday with losses for the sixth consecutive session, falling to their lowest level in nearly eight months. A combination of benign US crop weather and macro headwinds has driven prices to multi‑month lows, with recent trade commentary noting fresh contract lows in early June.

Physical indications show modest pressure but not a collapse. Recent offers suggest Ukrainian corn FOB Odesa around EUR 0.19/kg falling to roughly EUR 0.18/kg by late May before stabilising near EUR 0.19/kg again in early June, while FCA yellow feed corn from Ukraine holds near EUR 0.26/kg. French FOB corn around Paris is quoted close to EUR 0.26/kg, broadly flat over the past weeks. These levels are consistent with a weak but orderly global market.

Supply & Demand Drivers

In the US, meteorologists now expect above‑average rainfall across large parts of the Corn Belt over the next 15 days. This pattern should improve soil moisture, supporting germination and early vegetative growth of the newly sown crop and easing prior yield concerns. Private forecasters highlight widespread rain chances, and official outlooks call for wetter‑than‑normal conditions in the Upper Midwest and adjacent regions.

Brazil is adding further weight to the global balance. The harvest of the country’s large second corn crop is now underway, with Mato Grosso – Brazil’s biggest producing state – already harvesting close to 6% of its area, well ahead of last year and only slightly behind the historical pace. IMEA has just raised its Mato Grosso corn crop forecast by about 1.3% to roughly 53.35 million tonnes, confirming strong yield potential.

On the demand side, US weekly export sales data show corn export commitments at 81.766 million tonnes, about 26% above the same week a year earlier and equivalent to roughly 98% of the current USDA export projection. Shipments of 62.58 million tonnes now cover around 75% of the forecast, broadly in line with average pace. This strong export book underpins demand but is not tight enough to counteract the increasingly comfortable supply outlook.

Fundamentals & Investor Positioning

Fundamentals have turned increasingly bearish from a speculative perspective. At the CFTC reporting date of June 2, net managed‑money long positions in CBOT corn had already been cut by 90,422 contracts to 115,082. The reduction came mainly from long liquidation (down 63,160 contracts), with only a moderate increase in new shorts (up 27,262 contracts). In the following three trading days, market estimates suggest an additional reduction of around 75,000 long contracts in corn futures and options.

This rapid repositioning shows that many financial investors have lost confidence in a near‑term price recovery and are shifting to a more neutral or even slightly bearish stance. Combined with record or near‑record global production projections for 2025/26 and increased output in key exporters such as Brazil, the speculative community is now providing little support to prices and may amplify any further downside if weather remains favourable.

Weather Outlook for Key Regions

US Corn Belt: The 10–15 day outlook points to above‑normal rainfall across most of the belt, particularly the Upper Midwest and Great Lakes area. This should alleviate moisture deficits, enhance stand establishment and limit early yield risks, although excessive localised rains could later raise concerns about ponding in poorly drained fields.

Brazil (Mato Grosso): Weather during early harvest is generally favourable, with no major widespread disruptions reported. The main issue for Brazil now appears to be logistical – fast‑rising stocks and pressure on storage and transport capacity – which tends to weigh on internal prices and keep export offers competitive in EUR terms.

Trading & Risk Outlook

• Producers: Consider scaling into additional hedges or forward sales on rallies, as current weather and Brazilian supply suggest limited upside near term. Focus on basis opportunities where local demand remains firm despite weaker futures.
• Consumers/feed buyers: Current price weakness offers attractive coverage opportunities. Layer in purchases for Q3–Q4 at current EUR levels, but avoid over‑coverage in case of further weather‑driven declines.
• Traders/speculators: Market structure and fund flows favour a modestly bearish bias while US weather stays benign and Brazil’s harvest accelerates. Be prepared for sharp short‑covering rallies if US forecasts turn hotter/drier or if export demand surprises to the upside.

3‑Day Price Indications (Directional, in EUR)

• CBOT-linked EUR flat price: Bias slightly lower to sideways as forecasts remain crop‑friendly and investor longs continue to shrink.
• Ukraine (Odesa, FOB/FCA): Sideways to mildly soft around EUR 0.19–0.26/kg, tracking futures with some regional risk premium.
• France (Paris, FOB): Largely sideways near EUR 0.26/kg, with EU prices anchored by global weakness and comfortable 2025/26 supply expectations.