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Facts
- Corn futures (CORN) have risen to their highest levels in one month.
- U.S. ethanol production is increasing, reaching a 19-week-high, while ethanol inventories have fallen to a 51-week low.
Recommendation
Long position on CORN at market price.
- Take profit: 445
- Stop loss: 410
Opinion
From a fundamental perspective, U.S. corn harvesting will surpass the halfway point this week, which may lead to a gradual weakening of selling pressure from commercial hedging in the futures market. In addition, recent U.S. corn export data indicate continued strong momentum in overseas demand. Corn futures gained slightly yesterday, reaching their highest levels in nearly a month; today the contract is trading slightly lower. The market has been driven by robust domestic and export demand, as well as progress data from the ongoing U.S. corn harvest. Despite reports of lower yields, investors still anticipate record U.S. corn production in 2025.
At the same time, ethanol demand remains a key factor supporting the market. EIA data showed ethanol inventories dropped to a 51-week low of 21.919 million barrels, while production climbed to a 19-week high of 1.112 million barrels per day. Ethanol exports averaged 130,000 barrels per day, increasing both week-over-week and year-over-year. According to ANEC forecasts, Brazil’s corn exports in October are expected to reach 6.57 million tons, slightly above the previous estimate of 6.46 million tons. Both U.S. and Brazilian corn exports remain strong, signaling stable global demand that reinforces the bullish fundamentals for corn prices.
Ethanol production at a 19-week high and inventories at a 51-week low signal strong demand for corn used in ethanol manufacturing. Higher ethanol production and exports generally translate into greater domestic corn consumption, which can support prices. Considering all factors — low ethanol inventories, slightly lower U.S. harvest data, and stable export demand — short-term upside potential may outweigh the negative outlook stemming from high supply. In the United States, a significant portion of corn production is used annually for ethanol (bioethanol blended with gasoline). Therefore, demand from the biofuels sector directly affects corn prices: the more ethanol produced, the more corn is consumed, reducing available supply and pushing prices higher. We recommend taking a long position on CORN, with a target around 445 — a level defined by previous price reactions.
Source: xStation5
