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Corn Futures Drop Amidst Declining Ethanol Production

Corn futures fell sharply, closing 4 to 7 cents lower. With weekly EIA data indicating a decrease in ethanol production, investors may need to assess the resulting implications for agricultural stocks.

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AI Rating:   5

Corn Futures Performance
Corn futures encountered another wave of decline on Wednesday, with prices decreasing by 4 to 7 cents. This signals a bearish sentiment in the agricultural commodities market, particularly impacting companies reliant on corn production.

Ethanol Production
The weekly EIA report highlighted a drop in ethanol production, which fell to 1.053 million barrels per day, down by 52,000 barrels per day from the previous week. This decrease in production may indicate reduced demand for corn, as ethanol is a primary use for corn in the industry.

Stock Accumulation
Interestingly, even though ethanol production slowed, stocks built up by 775,000 barrels, reaching 27.35 million barrels. This rise in stock could spur concerns among investors regarding oversupply, potentially exerting downward pressure on corn prices and affecting companies involved in corn-based products.

Export Movements
On a positive note, exports of ethanol saw a rise by 53,000 barrels per day to 164,000 barrels per day, which may alleviate some pressure on the market. However, the decline in refiner ethanol inputs by 18,000 barrels per day to 878,000 barrels per day raises additional caution about future demand.

Quarterly Grain Stocks Data
Upcoming quarterly Grain Stocks data to be released on Monday, with a consensus anticipation of 8.153 billion bushels of corn on hand, will be crucial for market sentiment. Ranges of estimates fluctuate from 8.06 to 8.311 billion bushels indicating uncertainty about supply levels, which can sway investor sentiment and stock prices significantly.

International Tender Activity
Lastly, international import activity remains robust, with Taiwan and South Korea tendering for large quantities of corn, which could offset some domestic weaknesses and lift market spirits.

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