Happy Columbus Day! The Corn & Ethanol Report 10/14/2024

We kickoff the week with just Fed Governors speaking as we celebrate the federal holiday in certain states. Starting with Fed Kashkari Speech at 8:00 A.M., Fed Waller Speech at 2:00 P.M., and Fed Kashkari Speech at 4:00 P.M.

Following a slightly higher CPI print on Thursday, the Producer Price Index for September came in just above expectations, unchanged from August and up 1.8% from a year ago. It was the lowest PPI inflation rate in 7 months, but the index still set a record high of 145.2. The followed another month of deflation in the Chinese PPI, which was at -1.8% and negative for the 24^th consecutive month. Raw material prices, as measured ny the CRB Index, were 0.1% higher in September, but at present, are 3.4% higher than a year ago.

Ag Resources Analysis of USDA’s October WASDE

USDA’s adjustments to US and world corn supply and demand were unexciting and acted to confirm the market is too cheap below $4.00 but overvalued above $4.40 basis CBOT spot. Yield was hiked 0.2 BPA to a newer record 183.8. End stocks were pegged at 1,999 Mil Bu as lower carry-in and larger projected were more than offsetting. The US market isn’t over suppled, but nor is there any need to ration demand. In fact, export demand growth – which is occurring –

Is needed to balance supply & demand. There’s a strong tendency for NASS to further increased its US corn yield in September & October. ARC sees the final US corn yield in a range of 184.5-185.0 BPA with trendline yield in the 2025 crop year expected to rise 183 BPA. The rise in US corn yield places new pressure to find a fresh future demand driver to drop stocks below 2,000 Mil Bu. USDA’s exporter balance sheet, too, was largely untouched. Total 2024/25 South American supplies were raised 3.6 MMT’s due to higher projected new crop carry-in stocks. This was offset by lower total US supply and combined reduction in Ukrainian + Russia production worth 1.5 MMT’s. ARC also expects additional modest downward revisions to Black Sea yields and production. However, new input is needed to sustain bearish price trends into spring 2025. ARC strongly cautions against chasing rallies above $4.35 spot futures but recommends additional end user coverage below $3.90. The highest concern in the long run was favorable South American weather throughout the next 4-5 months and sharply lower Chinese corn import demand. USDA pegs Chinese imports in 24/25 at 19 MMT’s, vs. 21 previously with some seeing the total closer to 12-13 MMT’s. China has purchased little US corn and only 1 MMT’s of Brazilian corn to date vs. 16 MMT’s at the same time last year. A US corn demand driver is lacking. Strength into mid-winter will be a function of Black Sea supply loss and rising Ukrainian cash prices. March corn futures scored a post-harvest high above $4.50 with soybean/corn ratio to narrow 2:1. US corn acres look to expand in 2025 by 2-3 Mil acres due to the abundance of world soybeans.

Brazilian Wet Season Begins in Earnest Next Week:

The major forecasting models are in broad agreement that nearly daily rain chances expand in Mato Grosso & Goias next week, and thereafter rainfall will be intensifying seasonally into late winter. Equally important is that early seasonal drought will be avoided in Argentina. The South American forecast into late month is favorable. Seeding dates are behind schedule in N Brazil, but a rapid acceleration in progress occurs through the remainder of the month. Soybean planting in Mato Grosso this week is only 9% complete, vs. 35% a year ago. Progress so far mirrored exactly that of 2020. ARC notes Brazilian soybean yield in 2020/21 was then-record large 52.5 BPA. Yield in Mato Grosso in 20/21 was 52.9 BPA, then the second largest on record. Assuming regular rain persist into Dec/early Jan, the risk in Brazil lies not in soybean production but whether safrinha corn benefits from an extended rainy season. This won’t be known until Mar/Apr.

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Have A Great Trading Day!