Corn Market Faces Losses Amid Tariff Threats and Ethanol Cuts

Corn prices slide as tariffs loom. The market sees losses in various contracts and ethanol production experiences a notable decline.

Date: 13-03-2025

AI Rating: 4

Market Overview
The corn market is currently experiencing significant declines, with major contracts posting double-digit losses. Specifically, contracts are reported to be 10 to 12 cents lower in the nearby terms, showing a bearish trend in the market. This downturn is accompanied by a drop of 7 cents in the new crop December prices, indicating a widespread effect across grain contracts.

Impact of Tariffs
Retaliatory tariffs from Canada and the EU are looming over US corn exports. Canada’s energy minister has warned that these tariffs might affect the ethanol sector, as they could target US goods if the US follows through with delayed USMCA tariffs. Since ethanol is closely related to the corn market, these tariffs could lead to lower demand for corn, further affecting prices. The EU has little US corn on the books, but the potential tariffs come amid significant shipments of 2.47 MMT of corn to the EU this marketing year.

Ethanol Production Decline
The ethanol market is showing signs of stress as indicated by the EIA report, which noted a cutback in ethanol production by 31,000 barrels per day, now totaling 1.062 million bpd. There is also an increase in stocks of ethanol, up by 87,000 barrels, indicating a supply surplus. With the increased stocks in the Midwest reaching a record level, this suggests that the demand for ethanol (which is produced from corn) is weakening, putting further pressure on corn prices.

Export Projections
Traders are attentively awaiting the upcoming Export Sales report, with estimates suggesting old crop corn bookings to range between 0.75 and 1.4 MMT for the week ending on 3/6. However, new crop sales are predicted to be minimal, with estimates between 0 and 100,000 MT. This outlook does not provide optimistic signs for corn prices heading forward.

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