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 Core PCE Price Index MoM & YoY, PCE Price Index MoM & YoY, Personal Income MoM, Personal Spending MoM, Goods Trade Balance, Retail Inventories Ex Autos MoM Adv., and Wholesale Inventories MoM Adv. at 7:30 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M.,
US Inflation Fear & Corn:
Since early September, managed money and index funds have bought 720,000 contracts of corn – a record for any 5-month period. US old crop exports were larger than expected and US 2024 corn yields declined as producers reported smaller yields due to seed moisture levels amid the dry autumn. However, US inflation relative to Trump tariffs also had a ole to play in the con rally. The US inflation fear has yet to develop amid sagging energy prices and falling consumer confidence. Tariffs are normally not bullish on commodities, that the US overproduces and exports in abundance. The odds are growing for US recession as debt levels soar and demand softens. DOGR and widespread government job cuts have help portray a slowing US economic outlook. Ag Resources (ARC’s) point is that CBOT futures are laden with excessive length and short of adverse Brazilian or US weather, has produced a seasonal and potential annual price peak.
South American Weather Pattern Discussion
South American Consistent Next 10 Days; Hints of Better Rain in Northern Brazil After March 8th:
The South American forecast has trended wetter in central Brazil in the 11-15 day period. While key areas of central Argentina trend drier in March. The risk of flooding remains in place in Buenos Aires, but otherwise odds are high excessive rain ends in Cordoba and Santa Fe beyond the next 10-days. Enough rain falls in Mato Grosso do Sul and Goias to keep safrinha crop health elevated if two-week forecasts verify. The Eu Model’s 1-10 day and 11-15 day precipitation forecast could cause further market volatility. It is critical that wetter Brazilian weather and drier Argentine weather get pulled in the 10-day forecasts, but for now there’s no new glaring supply threat. Key after mid-March is whether the Brazilian monsoon sputters and whether additional unwanted rain falls in C Argentina.
Central US Weather Update
Drought Spreads in Southern US Plains; Precipitation Favors East into March 13th:
The North American precipitation pattern remains stagnant into mid-March, with temps through the period to be normal to above normal. The risk of dangerous cold is minimal. This week’s Drought Monitor featured additional expansion of abnormal/drought in TX/OK as well as in pockets of the E Midwest. Moisture improvement lies ahead for IL, IN, and OH. The EU & GFS models agree that precipitation of 1-3” impacts areas east of the Mississippi River in the 6-15 day period. Net dryness persists elsewhere. Note also temps in TX/OK will periodically reach into the 60’s & 70’s, which accelerates drying there. There will be a need for regular rain across the HRW Belt prior to prior to April. Much better rain/snow will eventually be needed across the C Plains & W Midwest. There’s no need for concern today, but Dec 1 -Feb26 period has been near the driest on record in large parts of NE, IA, and southern MN.
CBOT corn futures ended sharply lower. The market’s become more reactive to fresh input, and the collision of Canadian, Mexican, and higher Chinese tariffs, larger projected US seedings, strength in the US dollar and wetter Brazilian forecast after March 10th weighed heavily. Fund length is being liquidated. Feb 20th totaled 31 Mil Bu, vs. 57 Mil Bu the previous week and the lowest since the holidays in Dec/Jan. On balance, new US demand drifts lower in spring & summer as new South American crops enter the global market., Close attention to excessive rain in Argentina and net drying in Brazil will be watched closely, but the market’s default for now is one of rising inventories based on larger US acreage. China’s ongoing absence will be a big deal for the market if Brazil does avoid an early end of the rainy season. Any test of recent highs must be used to catch up on sales & hedges. The Argentine harvest begins in the next 2-3 weeks, weather permitting. The burden of tightening balance sheet is on the bulls for now. Next support lies ahead at $4.55-$4.63, basis May. The USDA Outlook Conference pegged 2025 corn acres at 94 Mil up 3.4 from last year. With trendline yield at 181 bpa production would reach 12,585 Bil roughly with ending stocks building to 1.965 bil, 50 Mil above expectations. US corn acres in drought surged 11% this past week to56% well above 31% last year.
Have A Great Trading Day!
Contact me directly with any questions or open a trading account at 1-888-264-5665 or dflynn@pricegroup.com.
Inflation + To Tariff Or Not To Tariff-Let’s Make A Deal. The Corn & Ethanol Report 02/28/2025
We kickoff the day with Core PCE Price Index MoM & YoY, PCE Price Index MoM & YoY, Personal Income MoM, Personal Spending MoM, Goods Trade Balance, Retail Inventories Ex Autos MoM Adv., and Wholesale Inventories MoM Adv. at 7:30 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M.,
US Inflation Fear & Corn:
Since early September, managed money and index funds have bought 720,000 contracts of corn – a record for any 5-month period. US old crop exports were larger than expected and US 2024 corn yields declined as producers reported smaller yields due to seed moisture levels amid the dry autumn. However, US inflation relative to Trump tariffs also had a ole to play in the con rally. The US inflation fear has yet to develop amid sagging energy prices and falling consumer confidence. Tariffs are normally not bullish on commodities, that the US overproduces and exports in abundance. The odds are growing for US recession as debt levels soar and demand softens. DOGR and widespread government job cuts have help portray a slowing US economic outlook. Ag Resources (ARC’s) point is that CBOT futures are laden with excessive length and short of adverse Brazilian or US weather, has produced a seasonal and potential annual price peak.
South American Weather Pattern Discussion
South American Consistent Next 10 Days; Hints of Better Rain in Northern Brazil After March 8th:
The South American forecast has trended wetter in central Brazil in the 11-15 day period. While key areas of central Argentina trend drier in March. The risk of flooding remains in place in Buenos Aires, but otherwise odds are high excessive rain ends in Cordoba and Santa Fe beyond the next 10-days. Enough rain falls in Mato Grosso do Sul and Goias to keep safrinha crop health elevated if two-week forecasts verify. The Eu Model’s 1-10 day and 11-15 day precipitation forecast could cause further market volatility. It is critical that wetter Brazilian weather and drier Argentine weather get pulled in the 10-day forecasts, but for now there’s no new glaring supply threat. Key after mid-March is whether the Brazilian monsoon sputters and whether additional unwanted rain falls in C Argentina.
Central US Weather Update
Drought Spreads in Southern US Plains; Precipitation Favors East into March 13th:
The North American precipitation pattern remains stagnant into mid-March, with temps through the period to be normal to above normal. The risk of dangerous cold is minimal. This week’s Drought Monitor featured additional expansion of abnormal/drought in TX/OK as well as in pockets of the E Midwest. Moisture improvement lies ahead for IL, IN, and OH. The EU & GFS models agree that precipitation of 1-3” impacts areas east of the Mississippi River in the 6-15 day period. Net dryness persists elsewhere. Note also temps in TX/OK will periodically reach into the 60’s & 70’s, which accelerates drying there. There will be a need for regular rain across the HRW Belt prior to prior to April. Much better rain/snow will eventually be needed across the C Plains & W Midwest. There’s no need for concern today, but Dec 1 -Feb26 period has been near the driest on record in large parts of NE, IA, and southern MN.
Corn Comments & Analysis
CBOT Corn Collapses on USDA Balance Sheet; Extended Brazilian Forecast Trends Wetter:
CBOT corn futures ended sharply lower. The market’s become more reactive to fresh input, and the collision of Canadian, Mexican, and higher Chinese tariffs, larger projected US seedings, strength in the US dollar and wetter Brazilian forecast after March 10th weighed heavily. Fund length is being liquidated. Feb 20th totaled 31 Mil Bu, vs. 57 Mil Bu the previous week and the lowest since the holidays in Dec/Jan. On balance, new US demand drifts lower in spring & summer as new South American crops enter the global market., Close attention to excessive rain in Argentina and net drying in Brazil will be watched closely, but the market’s default for now is one of rising inventories based on larger US acreage. China’s ongoing absence will be a big deal for the market if Brazil does avoid an early end of the rainy season. Any test of recent highs must be used to catch up on sales & hedges. The Argentine harvest begins in the next 2-3 weeks, weather permitting. The burden of tightening balance sheet is on the bulls for now. Next support lies ahead at $4.55-$4.63, basis May. The USDA Outlook Conference pegged 2025 corn acres at 94 Mil up 3.4 from last year. With trendline yield at 181 bpa production would reach 12,585 Bil roughly with ending stocks building to 1.965 bil, 50 Mil above expectations. US corn acres in drought surged 11% this past week to56% well above 31% last year.
Have A Great Trading Day!
Contact me directly with any questions or open a trading account at 1-888-264-5665 or dflynn@pricegroup.com.
Thanks,
Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn