Corn Price Strength Should Continue Into 2025

Despite the negative price action on Friday, CME corn futures have enjoyed directional favorable price appreciation during the early winter months or January and December. The price action during the first two days of 2025 was mixed with the curve down sharply on Friday as prices found technical resistance.

 With the arrival of 2025 we see a growing probability of further fundamentally driven price support for old crop (MY24/25) corn and the potential for price headwinds for new crop, MY 25/26 corn. The recent demand structure for US corn has been impressively strong and is supporting both basis and futures. The Department of Energy (DOE) weekly ethanol data shows that since mid-May 2024, the domestic production pace has been running at historical records. While these data points do not represent new fundamental inputs to the corn futures trade, the record output helps capture and partially explains the strengthening basis levels. Export demand for US corn has also been impressive. Impressive because of the either record or close to strength of the US dollar against other corn and feed grain (barley, corn, and wheat) exporting currencies like the Brazilian real, Argentine peso, Euro, Ukraine hryvnia, Australian dollar and the Russian ruble serve as an impediment for US grains. Ultimately, we believe that the global demand structure for US corn was a function of a YoY decline in Brazilian planted acres, limited Ukraine export supplies, and low futures prices, which helped offset some of the US dollar strength This demand structure has helped drive speculative asset flows into the corn trade which as helped futures prices improve. Since bottoming way back on July 15, 2024, the Commitment of Traders (COT) report shows that the managed money (MM) net position increased at the second fastest pace in the post-COVID era (note: the largest short covering was in 2020). In a broad sentiment shift that was propelled by the increasing bullish demand data points mentioned above the short covering continued into the end of Qe’24. During this time, the MM net covered 356,000 short positions and added 166,000 new longs. This new length helped the corn curve steepen while adding $.56/bu in the March’25 contracts.

 The January WASDE report is this Friday, 1/10. This report will contain NASS’s final yield figure for the MY 24/25 crop year. We believe that the USDA domestic yields will lower yields by 1-.5 bpa to 182.1 to a 186.6 bpa. If the government lowers yields by .5 bpa and leaves the demands structure unchanged, there were major adjustments to the exports and imports in the December WASDE and we don’t see any catalysts to raise demand, we see ending stocks falling to 1.696 bbu, or -242 mbu from December. If US ending stocks fall below the 1.7 bbu level, we feel that futures prices should see minimal short and medium term downside risks 

We see March’24 corn futures fairly valued between $4.45/bu and $4.57/bu, May’24 at $4.60-$4.75/bu and July’24 at $4.65-4.82/bu. With a possible trade war and high tariffs with major trade partners looming under a second Trump administration we advise producers to set downside protection. For end users that did not purchase H1’25 corn demand either at or under the $4.00/bu market we like owning calls related strategies on price weakness

Discover how HTS Commodities can assist with your risk management requirements.

Get the latest insights delivered right to your inbox by clicking here

Contact Scott Strand

Direct 612-486-4624 | scott.strand@hilltopsecurities.com

Text 612-699-8869

Trading on regulated commodity exchanges inherently involves risk of loss and is not suitable for everyone. The leverage created by trading on margin can work against you just as much as it can benefit you, and losses could exceed the entire investment as well as additional cash deposits. You may be required to immediately provide capital upon notice to maintain any or all open positions, and failure to do so in a timely manner could result in penalties, liquidating debit balances, unforeseen financial obligation and the loss of opportunity sought by participating in the commodity futures and options marketplace. Only risk capital should be considered for alternative investment or speculation. Before opening an account you should seek advice from related associations, regulators, certified public accountants, industry professionals and other trusted advisors. Be certain that you understand the risks and can withstand the potential losses associated with SWAPS, futures, options on futures or any other derivatives or cash commodity transactions in which you intend to participate. HTSCommodities may not represent, guarantee or warrant that you will profit from any trading activity nor that realized losses will be limited whatsoever.

The paper/commentary was prepared by HTSCommodities for informational purposes only. This paper represents historical information only and is not an indication of future performance. Nor is it a recommendation or solicitation or any specific product. This material has not been prepared in accordance with the guidelines or requirements to promote investment research, it is not a research report and is not intended as such. SOURCES: Bloomberg, U.S. Department of Agriculture, U.S. Energy Information Administration, Commodity Futures Trading Commission, National Oceanic and Atmospheric Administration. Sources available upon request.

Principals, managers and some associates are registered with the National Futures Association (NFA) and all members participate as part of an independent Introducing broker in good standing. Members  operate under the governance and guidelines of the Commodity Futures Trading Commission (CFTC) and are authorized to represent multiple futures clearing merchants or FCMs for the benefit of clients’ selection and or suitability.

Hilltop Securities Inc. is a registered broker-dealer, registered investment adviser and municipal advisor firm that does not provide tax or legal advice. HTS is a wholly owned subsidiary of Hilltop Holdings, Inc. (NYSE: HTH) located at 717 N. Harwood St., Suite 3400, Dallas, Texas 75201, (214) 859-1800, 833-4HILLTOP.

© 2025 Hilltop Securities Inc. | All rights reserved | MEMBER: NYSE/FINRA/SIPC/NFA