Walsh Corn Supply & Demand - Pure Hedge
The July WASDE report will be released on Friday, July 11th. The last time yield was raised on the July report was 2003. It is likely that the USDA leaves yield close to unchanged at 181.0 bushel per acre (bpa); however, some analysts have predicted record yields. StoneX forecasts 186.9 bpa, which would add 500 million bushels to ending stocks. A yield change that much higher is probably not going to happen in my opinion, based on the USDA’s recent estimates. The average yield estimate for new crop is 180.7 bpa.
New Crop
The average estimate for new crop production is 15.746 billion bushels (bb), with estimates as high as 15.953 bb and as low as 15.697 bb. In June, the USDA estimated production at 15.820 bb. The average analyst estimate for ending stocks is 1.722 bb. On the June report, ending stocks were 1.750 bb. With funds short over 200k contracts, a carryout below expectations could be very bullish. The rumors of a Chinese purchase announcement heading into Independence Day already showed how corn can move higher quickly with so many shorts.
Old Crop
Old crop ending stocks are expected to be slightly lower with an average estimate of 1.352 bb. The USDA had 1.365 bb for ending stocks in June.
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Corn is rated at 74% good/excellent, reflecting the favorable growing conditions as of late, up 6% over this time last year. The recent rating is not far off the 2018 rating and the 76% good/excellent rating seen in July 2016. Wet acres in the eastern corn belt including parts of Illinois, Indiana, Michigan, and Ohio have held back the rating. Indiana’s corn is rated 11% poor/very poor.
Corn sales have been accelerating with flash sales being made to Mexico. More trade deals and less frequent buyers stepping up would be beneficial. Export pace is at 102.3% of the USDA’s forecast for 2024/25, and export inspections are at 83.2% of the USDA forecast, compared to the 5-year average at 76.1%.
Recently, the corn market has traded lower early in the week and then started to move higher as Friday approaches due to the possibility of trade news over the weekend. Trade deals, lower carryout, or a change in the weather could send prices higher fast.
Here Me Out on the Following Trade Idea:
| RATIO PUT CREDIT SPREAD | SELL 2x DEC ’25 400 PUTS, BUY 1x DEC ’25 425 CALL | COLLECT/CREDIT $437.50, MARGIN = $1,950 | 135 Days – 11/21/25 |
Sell 2 puts for a 8 3/4 cent credit or collect $437.50/Trade Package and pay 15 1/2 cents or $775 for the $4.25 call. This trade costs you nothing to put on, you actually get a $437.50 credit/Trade Package to put on the trade. If Dec corn hits $3.84 or lower buy back the entire spread, capping downside at ~$1,160 per spread. The low for the year on the continuous contract is $3.85. Profit $2,187.50 with corn at $4.60, profit is $4,187.50 with corn at $5.00 at expiration.
ALL PRICES ARE WEDNESDAY’S SETTLEMENT – DEC ’25 CORN CLOSED @ 415 ½
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Hans Schmit, Walsh Trading
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