USDA Reports Spark Corn Selloff as Supply Outlook Expands

The grains market is digesting a significant shift in US corn supply dynamics Monday, with futures contracts retreating sharply amid fresh government crop assessments. December corn holdings reaching 13.282 billion bushels—substantially exceeding analyst projections of 12.962 billion bushels—has weighed heavily on contract values through midday trading.

Production Figures Trigger Market Correction

The USDA’s latest crop metrics reveal the scope of this season’s abundance. Corn yield climbed to 186.5 bushels per acre, reflecting a modest 0.5 bpa uptick from November’s assessment. Harvested acreage expanded by 1.3 million to 91.3 million acres, combining to lift total production to 17.021 billion bushels—marking a 269 million bushel increase from the previous month’s estimate.

These supply revisions cascade through the demand equation. Ending stock projections surged to 2.227 billion bushels, dwarfing the Bloomberg consensus of 1.985 billion bushels. The gain stems from dual pressures: carryover inventory climbing 19 million bushels while feed utilization expanded by 100 million bushels. This supply glut has outpaced recent export enthusiasm, leaving contract holders with substantial losses approaching 16 to 17 cents per bushel.

Cash Market Reflects Futures Weakness

The CmdtyView national cash corn benchmark retreated 16¾ cents to $3.91½, mirroring the broader futures decline. March 26 contracts are trading at $4.29 (down 16¾ cents), while May 26 and July 26 futures reflect similar pressure at $4.37½ and $4.44¼ respectively.

Export Momentum Fails to Offset Supply News

Despite moderately positive export activity, the shipment data has receded into market background noise. The week ended January 8 saw 1.49 million metric tons of corn exported—up 12.75% week-over-week and 3.4% versus year-ago levels. Mexico dominated as the primary destination with 702,811 MT, trailed by Japan (258,110 MT) and Taiwan (161,058 MT).

The marketing year cumulative now stands at 28.43 million metric tons, representing a 60.54% surge compared to the same period last year. Yet even these robust export figures pale against the weight of expanded domestic supply. Private sale announcements for 204,000 MT to South Korea and 310,000 MT to undisclosed buyers drew minimal attention during midday sessions.

Global Planting Season Adds Context

In Brazil, the first corn crop remains in early harvest phases at 0.5% completion as of Thursday, with the larger second crop sitting at just 0.2% planted according to AgRural assessments. This measured pace in the Southern Hemisphere’s primary producer adds another layer to the global supply narrative, though immediate market implications remain secondary to domestic abundance concerns.

The pronounced gap between current stock levels and analyst expectations—expressed numerically as 16/3 as a mixed number of additional bushels per ratio—underscores the degree to which production exceeded consensus forecasts.

Bottom Line

Corn futures are pricing in a season of agricultural plenty, with supply projections that leave little room for optimism among contract holders seeking price recovery in the near term.