Corn futures are facing their usual seasonal downturn, triggered by expectations of a timely U.S. planting season—a development that, in the eyes of many traders, all but guarantees a bumper harvest. Yet, this year’s early May price slide is unusual in that the decline was spearheaded by the old-crop July contract, despite robust demand and historically tight supplies.
The downturn has been driven largely by managed money traders, who are reacting to the bearish fundamentals surrounding new-crop corn. Expectations of significantly expanded acreage—spurred by favorable planting conditions and strong relative profitability—have fueled talk of plantings exceeding 97 million acres, far above the USDA’s current estimate of 95.3 million acres. This would be a sharp increase from last year’s 90.6 million acres, especially alarming in combination with USDA’s optimistic record yield projection of 181 bushels per acre (bpa).
However, history suggests caution. Despite repeated USDA projections above 180 bpa, actual yields have consistently fallen short: 179.3 bpa in 2024, 177.3 bpa in 2023, and 173.4 bpa in 2022. The expansion into marginal farmland that typically accompanies increased acreage often depresses average yields, further casting doubt on overly bullish forecasts.
Complicating the outlook is a tighter-than-expected 2025-26 ending stocks forecast. USDA’s estimate of 1.800 billion bushels fell short of analysts’ expectations of 2.020 billion bushels, suggesting that any downward revision in yield estimates could rapidly intensify market sensitivity.
Technical indicators also hint at potential support. Prices have only retracted about $0.72 per bushel from February highs, but speculative positions have been halved from their 2024 peak. Should market sentiment turn bullish, the sheer scale of prior liquidations could fuel a significant rebound in buying.
Currently, corn prices are holding key support levels around $4.40 per bushel. Long-term charts show higher highs and higher lows, suggesting the market may still be in a corrective phase of a broader bull trend. A critical factor will be whether traders—especially managed money—shift focus from seasonal selling patterns to concerns about yield and weather-related crop stress.
Commodity index traders, who tend to hold passive positions as an inflation hedge, may also re-enter the market. With concerns about stagflation—characterized by high inflation, low growth, and elevated unemployment—gaining traction, grains and oilseeds at current lower price levels may become attractive once again.
Geopolitical and macroeconomic developments will play a crucial role. Restoring confidence in the Trump administration’s economic strategy and avoiding a recession remain key. The recent rollback of reciprocal tariffs on China is seen as a positive step, although the inflationary impact of remaining tariffs continues to cast a shadow.
Interestingly, while speculative players have exited, commercial entities—producers, merchants, processors, and end-users—have been quietly buying. Over the past three months, they’ve accumulated 365,538 contracts, equivalent to 1.828 billion bushels. If adverse weather conditions arise, these commercial buyers are unlikely to sell off, given their initial motive was to hedge against rising prices.
In sum, the corn market is poised delicately between seasonal pessimism and the potential for a bullish reversal driven by yield concerns, macroeconomic shifts, and re-engagement from both speculative and commercial interests.
