Front-loaded Exports has fuelled rally in Corn. Can it last?After President Trump instituted broad new tariffs on 2nd April 2025, corn futures initially wavered but then rallied sharply. While this may seem counterintuitive given tariffs' disruptive impact on trade, near-term support for corn comes from front-loaded U.S. exports, a weaker dollar, and lower-than-expected domestic supply.
However, prices are likely to face downward pressure as the U.S. harvest season approaches. This paper examines the short-term bullish factors, outlines the potential risks ahead, and presents a hypothetical trade setup involving a calendar spread on CME Micro Corn futures.
CME Corn futures gapped lower on 3rd April but quickly recovered, jumping 4.5% over the next three trading days to six-week highs by 9th April. This move aligns with the typical spring seasonal trend, as corn often firms in late spring during planting & strong demand season.
Surging Export Commitments Amid Tariffs
Export commitments have surged post-tariff announcement. USDA reports that U.S. exporters had already booked about 85% of the 2024/25 season target by early April, according to Reuters , well above the 5‐year average.
In the week ending 3rd April, net U.S. corn sales hit ~40.2 million bushels, reflecting heavy front-loading. Large private sales continue: for example, in early April exporters announced a 9.4-million-bushel sale of 2024/25 corn to Spain.
These front-loaded sales (especially to Mexico & Europe) suggest buyers are rushing to secure supply before possible trade disruptions. Overall, extraordinarily strong export pace and large “flash” sales are underpinning the market.
Supply is Weaker than Initially Thought
USDA’s April WASDE cut U.S. 2024/25 ending stocks to just 1.465 billion bushels – a 75 million bushels reduction – implying a stocks/use ratio around 9.6%. For context, that ratio is near multi-decade lows for corn. The USDA simultaneously raised exports to 2.55 billion bushels, a full 100 million bushels above the previous estimate.
On the supply side, USDA’s Prospective Plantings (March 2025) projected 95.3 million corn acres for 2025, roughly 5% higher than 2024, above expectations (highlighted by Mint Finance in a previous paper ). This suggests that while near-term stocks remain stressed the situation is likely to improve drastically following the harvest.
Weaker Dollar Supports Increased Corn Exports
A key bullish factor for U.S. corn exports is the recent weakness of the U.S. dollar. After the tariff announcement, the trade-weighted dollar tumbled – hitting fresh lows (e.g. a 10-year low versus the Swiss franc). Through April 10, the dollar was down ~2–3% on the week. A weaker dollar makes U.S. corn cheaper for overseas buyers, supporting export competitiveness. With dollar at multi-year lows, U.S. corn is more attractive globally, partly offsetting any Chinese retaliatory tariffs.
COT and Options Data
Managed-money funds have dramatically pared back their long corn bets since the beginning of March. CFTC COT data show net long positions peaking around 364,000 contracts in early February, then plunging to ~54,000 by the 8th April report. However, the pace of decline has slowed dramatically over the past few weeks and seems to be signalling an end of the cutback by asset managers.
Interestingly, despite the tariff introduction (2/April) and the WASDE release (10/April), implied volatility (IV) moderated. IV has since normalized from the spike observed in March. During this period, skew also declined, reaching a negative value on 8th April - indicating that put options briefly became more expensive than calls.
Although this trend has since reversed, skew remains near its lowest levels in 2025, suggesting sustained interest in put options among market participants.
Source: CME CVOL
OI shift over the past week also signals a cautious tone despite the rally. Near term options have seen an increase in put OI, suggesting participants remain cautious despite the rally.
Source: CME QuikStrike
Hypothetical Trade Setup
While bullish factors have driven a sharp rally in corn prices over the past two weeks, there are dark clouds on the horizon. Tariffs risk disrupting trade and as most importers have already loaded up on US corn, they could slow the pace of future purchases.
Additionally, a downbeat seasonal trend along with an expected bumper harvest signal that prices could reverse sharply from here. On the technical front, momentum remains solidly bullish but approaching a potential overbought level amid a slowing bullish trend.
Corn prices remain pressured from a bumper harvest expected in September. Along with expected trade disruptions and a slowdown in the pace of US exports, prices are likely to decline during the summer. Regardless, prices remain bullish in the near term from a weakening dollar and near-term front loading.
To express views on these converging trends, investors can deploy a calendar spread on CME Micro Corn futures consisting of a long position on the near-term May contract (MZCK2025) and a short position on the September contract (MZCU2025). A hypothetical trade setup providing a reward to risk ratio of 1.8x is mentioned below:
A calendar spread on CME Micro Corn Futures is highly capital efficient with the above trade requiring maintenance margin of just USD 23 as of 15/April. The position remains protected from near-term price increase but benefits from the eventual price decline in September during harvest season.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme .
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
