Corn Prices Decline Amid Tariff Threats and Production Cuts

Corn futures fell sharply as EU tariff retaliations loom. With corn experiencing significant losses, and ethanol production being cut back, investors should be cautious about potential impacts on stock prices.

Date: 13-03-2025

AI Rating: 5

Corn Market Overview: The report highlights a significant decline in corn prices, with contracts down by 6 to 10 cents, indicating a bearish trend in the market. The CmdtyView national average Cash Corn price decreased by 9 cents to $4.22 1/4. Such a decline may suggest lower profitability for companies involved in corn production and trading.

Impact of Tariffs: Retaliatory tariffs from the EU targeting US corn due to existing US tariffs on steel and aluminum could lead to further decreases in corn exports, already impacted by a reduction in demand. The US has shipped only 2.47 MMT of corn to the EU this marketing year, which may severely affect revenues and overall market stability. If Canada implements similar retaliatory measures against ethanol, this could exacerbate earnings declines for US ethanol producers.

Ethanol Production Cuts: A vital piece of information presented is the reduction in ethanol production by 31,000 barrels per day, resulting in a total output of 1.062 million bpd. This decline in production, combined with increasing stocks of ethanol, evidences oversupply issues in the market. The rising stocks, particularly in the Midwest which hit a record of 11.537 million barrels, can depress prices further, impacting profit margins. Furthermore, reduced input from refiners could lead to an overall decrease in profitability in the ethanol sector.

Current Booking Estimates: Trader expectations for upcoming corn booking reports are around 0.75 to 1.4 MMT for old crop corn and 0 to 100,000 MT for new crop sales. If these figures do not meet expectations, it could indicate weaker demand and reduced earnings for corn producers, further influencing stock prices negatively.

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