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 Advanced Durable Goods, Durable Goods Orders MoM, Export Sales, GDP Growth Rate QoQ 2nd Est., Durable Goods Orders Ex Transportation MoM, GDP Price Index QoQ 2nd Est., Initial Jobless Claims, Continuing Jobless Claims, Core PCE Prices QoQ 2nd Est., Durable Goods Orders ex Defense MoM, GDP Sales QoQ 2nd Est., Jobless Claims 4-Week Average, Non-Defense Goods Orders Ex Air, PCE Prices QoQ 2nd Est., Real Earnings, and Real Consumer Spending at 7:30 A.M., Fed barr Speech and Pending Home Sales MoM & YoY at 9:00 A.M., EIA Natural Gas Storage and NY Fed Treasury Purchases 4-6 yrs. at 9:30 A.M., Kansas Fed Composite Index and Kansas Fed Manufacturing Index at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., Fed Bowman Speech at 10:45 A.M., 15-Year & 30-Year Mortgage rate at 11:00 A.M., Fed Hammack Speech at 12:15 P.M., Fed Harker Speech at 2:15 P.M., Fed Balance Sheet at 3:30 P.M., and Fed Goolsbee Speech at 9:15 P.M.
Last week the National Association of Realtors reported that US existing home sales in January fell 5% from December but were still 2% higher than a year ago at 4.08 Mil homes. This week, the Census Bureau reported that January new home sales fell 10.5% from December and were 1% less than a year ago at 670,000 homes. The total home sales volume of 4.74 Mil homes was 73,000, or 2% less than the 5-year average. Total home sales in the last 3 years have been at levels not seen since the 2009-2011 housing crisis. In those years, home demand was low due to the financial recession. Low sales volume in the last 3 years has been due to limited supply as home owners are reluctant to give up their 3-4% mortgages that were secured during the pandemic. This continues to drive home prices higher.
South American Weather Pattern Update
South American Forecast Extends Wet Pattern across Argentina; Dry Trend in Eastern Brazil Keeps Soybean harvest Active:
The South American forecast is broadly consistent. The EU & GFS models have both extended the duration of heavy rainfall in Argentina into March 10-11, with the EU model projecting cumulative rainfall in Cordoba, Buenos Aires, and southern Santa Fe at 9-12”. Rain in Argentina will be unwelcomed beyond early March as early planted corn will be ready to harvest. The mid-March outlook in Argentina will be monitored. The EU model’s two week % of normal precipitation in major crop areas show net drying in all but Mato Grosso in Brazil will keep the pace of soybean harvest at or near records. The pace of safrinha corn planting will match longer term averages by the end of the week. Regular showers will be needed in central & northern Brazil beyond the next two weeks to replenish moisture for newly planted corn. South America weather is viewed as benign today but a pattern shift (drier in Argentina, wetter in Brazil) is desired in March.
Global Weather Pattern Discussion
La Nina Ends; Neutral Conditions Most Probable:
Rapid warming has been recorded across the equatorial Pacific in recent weeks – and La Nina is no longer present. Large parts of the equatorial Pacific today are warmer than average. Forecasts suggest additional warming in March an El Nino by mid-summer. A spring of ‘no Nina’ is anticipated based on the ENSO model forecast into late 2025. Note that agreement is poor beyond April but in the near term there’s nothing to indicate large deviations from normal climate patterns in the Northern Hemisphere. Equatorial Pacific warming the margin, raises the chance that rainfall expands to the US Southern Plains, which is needed now into late May. The forecast models offer a more active southern branch of the jet stream by March 5th .
Corn Comments & Analysis
Corn Outperforms Other Ag Markets on Corn/Soybean Spreading; Delay in Mexican Tariffs; US Ethanol Stocks Soar:
Global corn futures ended flat. Ukraine/Argentine fob premiums firmed. Corn shrugged of weakness in corn & soybean amid budding dryness across Brazil’s southeastern safrinha belt, while the duration of soaking rainfall in Argentina must be monitored. Early harvesting commences in Argentina in early March. There will be limited tolerance for delays in harvesting there given the tight nature of the world’s exportable supplies today. Monitor extended range Brazilian forecasts closely. However, new supply threats are needed to stay bullish above $5.00. The market has successfully secured US acreage expansion. Ethanol production inn the week ending Feb 21st at 318 Mil Gal was up slightly year-over-year. Grind through late winter has been strong. But stocks last week were up 57 Mil Gal at 1,158 – which covers an abnormally high 4 weeks of consumption. There’s less urgency to keep US ethanol production enlarged in March & April. Corn’s supply driven rally resumes if South America’s weather pattern fails to change in the next 2-3 weeks. However, rallies remain selling opportunities. Be prepared to hedge additional 2025 production prior to Nass’s March 31st seeding report. Ag Resources (ARC) sees US 2024/25 corn end stocks above 2,100 Mil Bu argues that December corn rallies struggle above $4.75. Be prepared to sell rallies as a seasonal top has formed without fresh adverse weather in Brazil. Heading into March we will have 3 important dates Wase March 11th, LTD March futures March 14th, and Prospective Plantings March 31.
As of the close Tuesday, open interest in corn was down 29,461 contracts, soybeans down 30,781 contracts, and Chicago wheat down 5,925 contracts. With the market higher in the early going, we could see funds and speculators to sell further rallies.
Have A Great Trading Day!
Contact me directly with any questions or to open a trading account at 1-888-264-5665 or dflynn@pricegroup.com.
USDA Annual Outlook Forum This A.M. The Corn & Ethanol Report 02/27/2025
We kickoff the day with Advanced Durable Goods, Durable Goods Orders MoM, Export Sales, GDP Growth Rate QoQ 2nd Est., Durable Goods Orders Ex Transportation MoM, GDP Price Index QoQ 2nd Est., Initial Jobless Claims, Continuing Jobless Claims, Core PCE Prices QoQ 2nd Est., Durable Goods Orders ex Defense MoM, GDP Sales QoQ 2nd Est., Jobless Claims 4-Week Average, Non-Defense Goods Orders Ex Air, PCE Prices QoQ 2nd Est., Real Earnings, and Real Consumer Spending at 7:30 A.M., Fed barr Speech and Pending Home Sales MoM & YoY at 9:00 A.M., EIA Natural Gas Storage and NY Fed Treasury Purchases 4-6 yrs. at 9:30 A.M., Kansas Fed Composite Index and Kansas Fed Manufacturing Index at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., Fed Bowman Speech at 10:45 A.M., 15-Year & 30-Year Mortgage rate at 11:00 A.M., Fed Hammack Speech at 12:15 P.M., Fed Harker Speech at 2:15 P.M., Fed Balance Sheet at 3:30 P.M., and Fed Goolsbee Speech at 9:15 P.M.
Last week the National Association of Realtors reported that US existing home sales in January fell 5% from December but were still 2% higher than a year ago at 4.08 Mil homes. This week, the Census Bureau reported that January new home sales fell 10.5% from December and were 1% less than a year ago at 670,000 homes. The total home sales volume of 4.74 Mil homes was 73,000, or 2% less than the 5-year average. Total home sales in the last 3 years have been at levels not seen since the 2009-2011 housing crisis. In those years, home demand was low due to the financial recession. Low sales volume in the last 3 years has been due to limited supply as home owners are reluctant to give up their 3-4% mortgages that were secured during the pandemic. This continues to drive home prices higher.
South American Weather Pattern Update
South American Forecast Extends Wet Pattern across Argentina; Dry Trend in Eastern Brazil Keeps Soybean harvest Active:
The South American forecast is broadly consistent. The EU & GFS models have both extended the duration of heavy rainfall in Argentina into March 10-11, with the EU model projecting cumulative rainfall in Cordoba, Buenos Aires, and southern Santa Fe at 9-12”. Rain in Argentina will be unwelcomed beyond early March as early planted corn will be ready to harvest. The mid-March outlook in Argentina will be monitored. The EU model’s two week % of normal precipitation in major crop areas show net drying in all but Mato Grosso in Brazil will keep the pace of soybean harvest at or near records. The pace of safrinha corn planting will match longer term averages by the end of the week. Regular showers will be needed in central & northern Brazil beyond the next two weeks to replenish moisture for newly planted corn. South America weather is viewed as benign today but a pattern shift (drier in Argentina, wetter in Brazil) is desired in March.
Global Weather Pattern Discussion
La Nina Ends; Neutral Conditions Most Probable:
Rapid warming has been recorded across the equatorial Pacific in recent weeks – and La Nina is no longer present. Large parts of the equatorial Pacific today are warmer than average. Forecasts suggest additional warming in March an El Nino by mid-summer. A spring of ‘no Nina’ is anticipated based on the ENSO model forecast into late 2025. Note that agreement is poor beyond April but in the near term there’s nothing to indicate large deviations from normal climate patterns in the Northern Hemisphere. Equatorial Pacific warming the margin, raises the chance that rainfall expands to the US Southern Plains, which is needed now into late May. The forecast models offer a more active southern branch of the jet stream by March 5th .
Corn Comments & Analysis
Corn Outperforms Other Ag Markets on Corn/Soybean Spreading; Delay in Mexican Tariffs; US Ethanol Stocks Soar:
Global corn futures ended flat. Ukraine/Argentine fob premiums firmed. Corn shrugged of weakness in corn & soybean amid budding dryness across Brazil’s southeastern safrinha belt, while the duration of soaking rainfall in Argentina must be monitored. Early harvesting commences in Argentina in early March. There will be limited tolerance for delays in harvesting there given the tight nature of the world’s exportable supplies today. Monitor extended range Brazilian forecasts closely. However, new supply threats are needed to stay bullish above $5.00. The market has successfully secured US acreage expansion. Ethanol production inn the week ending Feb 21st at 318 Mil Gal was up slightly year-over-year. Grind through late winter has been strong. But stocks last week were up 57 Mil Gal at 1,158 – which covers an abnormally high 4 weeks of consumption. There’s less urgency to keep US ethanol production enlarged in March & April. Corn’s supply driven rally resumes if South America’s weather pattern fails to change in the next 2-3 weeks. However, rallies remain selling opportunities. Be prepared to hedge additional 2025 production prior to Nass’s March 31st seeding report. Ag Resources (ARC) sees US 2024/25 corn end stocks above 2,100 Mil Bu argues that December corn rallies struggle above $4.75. Be prepared to sell rallies as a seasonal top has formed without fresh adverse weather in Brazil. Heading into March we will have 3 important dates Wase March 11th, LTD March futures March 14th, and Prospective Plantings March 31.
As of the close Tuesday, open interest in corn was down 29,461 contracts, soybeans down 30,781 contracts, and Chicago wheat down 5,925 contracts. With the market higher in the early going, we could see funds and speculators to sell further rallies.
Have A Great Trading Day!
Contact me directly with any questions or to open a trading account at 1-888-264-5665 or dflynn@pricegroup.com.
Thanks,
Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn