Did Tyson Meals’ (TSN) introduced plans to “cease utilizing excessive fructose corn syrup and different substances in its branded merchandise” change the long-term funding outlook for the US corn market? That was the important thing query we have been left to ponder over the weekend. The announcement was posted on the corporate’s web site final Monday (September 15), and when the buying and selling week was by the December corn futures contract closed at $4.24, down 6.0 cents for the week, whereas the December-March futures unfold closed at a carry of 17.25 cents and lined 55.5% calculated full industrial carry. In different phrases, there was not a dramatic shift out there construction final week.
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What I imply by that is the corn market didn’t present indicators of a transfer to a requirement market, on this case demand destruction versus the demand enhance related to the US Vitality Coverage Act of 2005 that included larger Renewable Fuels Requirements. By definition, a requirement market creates a longer-term change in value expectation. When demand is elevated, the next value vary is created. When demand is decreased, the market strikes to a lower cost vary.
Let’s begin with the industrial positioning within the corn market. If the announcement from Tyson had been a Black Swan occasion – one thing unexpected that modified the dynamics of the market – corn’s futures spreads is the place we might first look.
As talked about, the Dec-March unfold closed final Friday overlaying a nonetheless impartial 56% versus the earlier Friday’s settlement overlaying 55%. Nonetheless, this displays transfer immediate-term demand in relation to new provides coming in as harvest continues to progress.
The 2025-2026 advertising and marketing 12 months Dec-July ahead curve closed at a carry of 33.0 cents and lined 45% calculated full industrial carry as in comparison with the earlier week’s 46%. Once more, this doesn’t point out the industrial aspect sees the anticipated lower in demand for US corn creating a major change out there’s fundamentals over the approaching 12 months.
The Dec25-Dec26 futures unfold closed final Friday at a carry of 38.0 cents, nicely off its low day by day shut of 49.5 cents carry from August 12. Buyers like to observe this unfold as an, however not the, indicator of this 12 months’s fundamentals versus the subsequent advertising and marketing 12 months.
And eventually, the Nov26 soybean/Dec26 corn futures unfold closed at 2.32 (Nov26 soybeans divided by Dec26 corn), persevering with to favor extra corn acres planted subsequent spring, albeit early in our 6-month monitoring interval from September by February.
On the noncommercial aspect:
The newest CFTC Commitments of Merchants report (legacy, futures solely) confirmed Watson held a net-short futures place of 36,169 contracts as of Tuesday, September 16. This was a lower of 18,075 contracts from the earlier week.
This leaves the door open to continued short-covering over the approaching weeks, regardless of the continuing harvest, given the longer-term provide and demand state of affairs is bullish. Extra on this in a second.
If utilizing a Dec-only fund to take a position out there, the long-term December (ZCZ25) steady month-to-month chart continues to point out an uptrend that started on the finish of August 2024 with one other technical purchase sign accomplished on the finish of August 2025.
The underside line, not less than for the noncommercial aspect, is that funds can be anticipated to maneuver to a net-long futures place just like what was reported from the summer season of 2024 by the winter of 2025.
Final however actually not least, the May26-July26 futures unfold:
The Might-July futures unfold closed final Friday at a carry of solely 6.0 cents and lined 28% calculated full industrial carry, as in comparison with the earlier Friday’s settlement overlaying 31%
This tells us there’s a rising concern on the industrial aspect over provides in relation to demand subsequent spring is rising. Why?
Planting season tends to carry a slowdown in provides shifting off farm to terminals or finish customers.
The 2025 crop will not be as giant as USDA’s imaginary numbers say it’s, and/or
Demand over the subsequent 12 months is predicted to be bigger than USDA’s newest guess.
As for the underside line on the industrial aspect, the Nationwide Corn Index was priced final Friday at $3.82. That is nicely under each the 5-year and 10-year finish of September common costs of $4.78 and $4.03 respectively, once more telling us fast provides are ample in relation to demand, primarily based on the easy financial Regulation of Provide and Demand. Nonetheless, from a seasonal standpoint the Index tends to publish its low weekly shut in late September earlier than shifting larger by subsequent Might. I don’t see something within the construction of the market that may change that seasonal tendency.
So, did the announcement by Tyson Meals change the long-term funding outlook for the US corn market? After doing a little bit digging, it’s anticipated to erase “a number of million bushels of demand”. The three% quantity that was being talked about final week was if ALL corn syrup demand went away. Given all this, my reply can be no, the funding outlook for corn has not been modified. Based mostly on what the market is displaying us in late September 2025.
On the date of publication, Darin Newsom didn’t have (both instantly or not directly) positions in any of the securities talked about on this article. All info and knowledge on this article is solely for informational functions. This text was initially printed on Barchart.com
