Dan Flynn is the writer of The Corn & Ethanol Report, a daily market letter covering grains, energies, and various global issues that are the driving force and backbone of the commodity markets. Contact Mr. Flynn at (312) 264-4374
We kickoff the day with NY Empire State manufacturing Index at 7:30 A.M., NAHB Housing Market Index at 9:00 A.M., Fed Daly Speech at 9:20 A.M., Export Inspections at 10:00 A.m., NOPA Crush Report at 11:00 A.M., Fed Barr Speech and 52-Week Bill Auction at 12:00 P.M., Net Long-term TIC Flows, Foreign Bond Investment, and Overall Net Capital Flows at 3:00 P.M.
Not much change in the North & South American weather models. Central US is still expected to have bitterly cold temps in the next week before a thaw occurs in the Corn Belt in the surrounding Great Lakes Region next week, with moderating temps above freezing with snow and rain in the forecast. South American weather remains favorable. The motivation and direction of the market hinge on South American weather, tariffs, and speculators not to get spooked out of their net long positions early. I do reiterate, we should have an answer at the latest in March or April. Traders will be glued to the March 31st Prospective Plantings.
The Trump Administration did not announce actual reciprocal tariffs but indicated that it would study and assess new tariffs on a case-by-case basis starting in April. The time before tariff enactment allows nations to negotiate with the US. CBOT grain futures the tariff enactment delay as positive, with short covering noted, after the announcement. In Friday’s action the CBOT corn settled 2 ¾ cents higher, basis March. Yet, President Trump’s willingness to use widely differing financial measurements for US reciprocal tariffs, such as a country’s own duty, VAT, or nonfinancial barriers, produces considerable cost uncertainty. There is plenty of time to explain and other nations understand the trade imbalance, but until there is more clarity, traders fear the US tariffs and uncertainty (size and application) will push importers to seek other suppliers. Tariffs – or the threat of tariffs – will not aid future US grain export demand. A relief rally is occurring at the CBOT, but Ag Resources (ARC) doubts it can be sustained without adverse South American weather. The fast-advancing Brazilian soybean harvest and winter corn seeding pace offers over-head resistance. Brazilian ethanol tariffs at 18% when the US today charges 2.5% were cited by President Trump as an unfair trading relationship and purpose of reciprocal tariffs. However, Brazil’s Energy and Mining Minister, Silveria,indicated that for the US’s plan to be fair, the US must also lower its import tariff on sugar, which today is 81%, and allow Brazilian sugar into the US. The US sugar industry has long been protected by high import tariffs due to US cane farmers being one of the higher-cost producers in the world. US grain and soybean farmers are also high-cost producers amid rising land and labor costs.
Grains Reopen Weak. The Corn & Ethanol Report 02/18/2025
We kickoff the day with NY Empire State manufacturing Index at 7:30 A.M., NAHB Housing Market Index at 9:00 A.M., Fed Daly Speech at 9:20 A.M., Export Inspections at 10:00 A.m., NOPA Crush Report at 11:00 A.M., Fed Barr Speech and 52-Week Bill Auction at 12:00 P.M., Net Long-term TIC Flows, Foreign Bond Investment, and Overall Net Capital Flows at 3:00 P.M.
Not much change in the North & South American weather models. Central US is still expected to have bitterly cold temps in the next week before a thaw occurs in the Corn Belt in the surrounding Great Lakes Region next week, with moderating temps above freezing with snow and rain in the forecast. South American weather remains favorable. The motivation and direction of the market hinge on South American weather, tariffs, and speculators not to get spooked out of their net long positions early. I do reiterate, we should have an answer at the latest in March or April. Traders will be glued to the March 31st Prospective Plantings.
The Trump Administration did not announce actual reciprocal tariffs but indicated that it would study and assess new tariffs on a case-by-case basis starting in April. The time before tariff enactment allows nations to negotiate with the US. CBOT grain futures the tariff enactment delay as positive, with short covering noted, after the announcement. In Friday’s action the CBOT corn settled 2 ¾ cents higher, basis March. Yet, President Trump’s willingness to use widely differing financial measurements for US reciprocal tariffs, such as a country’s own duty, VAT, or nonfinancial barriers, produces considerable cost uncertainty. There is plenty of time to explain and other nations understand the trade imbalance, but until there is more clarity, traders fear the US tariffs and uncertainty (size and application) will push importers to seek other suppliers. Tariffs – or the threat of tariffs – will not aid future US grain export demand. A relief rally is occurring at the CBOT, but Ag Resources (ARC) doubts it can be sustained without adverse South American weather. The fast-advancing Brazilian soybean harvest and winter corn seeding pace offers over-head resistance. Brazilian ethanol tariffs at 18% when the US today charges 2.5% were cited by President Trump as an unfair trading relationship and purpose of reciprocal tariffs. However, Brazil’s Energy and Mining Minister, Silveria,indicated that for the US’s plan to be fair, the US must also lower its import tariff on sugar, which today is 81%, and allow Brazilian sugar into the US. The US sugar industry has long been protected by high import tariffs due to US cane farmers being one of the higher-cost producers in the world. US grain and soybean farmers are also high-cost producers amid rising land and labor costs.
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Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn