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 Redbook YoY at 7:55 A.M., RCM/TIPP Economic Optimism Index at 9:00 A.M., NY Fed Treasury Purchases 6 to 10 yrs. at 9:30 A.M., Fed Williams Speech at 1:20 P.M., Dairy Products at 2:00 P.M., API Energy Stocks and LMI Logistics Managers Index at 3:30 P.M.
US President Trump applied 25% tariffs on Mexico and Canada, and and another 10% on China (20% on all goods in 2025). Only a 10% US tariff was applied on Canadian sour crude imports into the US. Retaliation is expected, and US ag traders will closely follow the targeted goods. It is expected that China will tariff a host of US ag goods including US meats, grains, and other food tariffs. US targeted goods by Canada and Mexico are less certain. Mexico needs US corn/wheat and is logistically beholden to the US rail system. Canada will go after US technology and finished goods. Yet, the most significant impact is canola oil. The US is forecast to import 8.0 MMT’s of Canadian canola oil in 2024/25 for food/bio-fuel production. There have been sizable gains in US and Canadian canola imports since 2022. The lack of canola implies that additional soybean oil must be utilized to produce biofuels as mandates remain. US renewable diesel producers make $.60/gallon using soybean oil feedstock. If renewable diesel prices are maintained steady, soybean oil futures will have to rally $.08-.09 to turn margin negative and pressure supply for food consumers. Look for cash soybean oil to rally sharply amid the 25% Canadian canola tariff.
South American Weather Pattern Discussion
Argentine Forecast Favorably Drier; Brazil Needs Rain:
The 10-day South American forecast is consistent with prior runs. Excessive rainfall in Argentina comes to a end after March 8th, with a lengthy period of dryness forecast thereafter. Rain in Brazil stays confined to Mato Grosso nearby, which initially speeds long safrinha planting but which becomes an issue if the monsoon continues to sputter in late March. The GFS 8-day soil moisture in major crop areas is needed. There are hints of improved rainfall across the driest areas of Mato Grosso do Sul, Parana, and Sao Paulo in Brazil. However, not all models agree and most probably rainfall in these states will be lite in nature. Regular rain will be needed in central and northern Brazil throughout late March and into early May to maximize safrinha corn yield potential. The concern is that once rain exits northern Brazil in March/April does not typically return. Pay close attention to mid-March for guidance,
Central US Weather Update
Dryness Relief Ahead in Midwest; HRW Belt Stays Arid:
A rather active precipitation pattern develops across the eastern half of the US Ag Belt beginning Tuesday. Two systems sweep across the E Plains and Midwest through the period, with moisture equivalent totals of .50—2.00 blanket all but the HRW Belt, Dakotas, and MN. Snowfall upward of 3-9” favors NE, IA, WI, and far northern IL. NOAA’s 7 day forecast shows rain/snow which will be most welcomed in IA, and the Great lakes region. Closer attention to the absence of rainfall across the Southern Plains and Dakotas/MN will be warranted by late month if this pattern fails to change. 16-30 day guidance today features stagnation – rainfall in the second half of March favors the E Midwest and Great Lakes, below normal precipitation continues in TX, OK, KS, and NE. It’s early, but whether current US drought expands or contracts prior to May 1st is important.
CBOT Corn Comments & Analysis
CBOT Corn Falls to 200-Day Moving Average; Post Harvest Rally 60% Retraced; Trump Confirms Tariffs on Mexico, Canada, and China Begin Today:
CBOT corn futures ended sharply lower for a third session,
and are in retreat after starting out higher in the overnight session. As of yesterday open Fund’s liquidated the entire soybean length and remain a combined sizable short position of 112-115,000 of KC & Chicago wheat. The question moving forward, has the bulk of trade policy news been priced in. Ultimately, President Trump confirmed tariffs on Canada and Mexico of 25% will be implemented today. Tariffs on Chinese imports will be raised 10%. China was not expected to source US corn through the remainder of 24/25. Still, the concern is that Mexico more actively buys Argentine supply beginning Apr/May and Brazilian origin in summer. The problem for Mexico is one of logistics, as the bulk of US corn sales travel by rail , and Mexican livestock producers need US corn. Whether Mexico targets US corn in retaliation will be closely followed in coming hours. In the long term, US corn export demand will dim if tariffs stay in place. However, the risk premium has been shed in bulk, and CBOT futures are oversold-something that’s always reconciled. Sell the rumor and buy the fact trading must be considered following todays action. The next fundamental factor will be Brazilian rainfall and how it impacts their winter corn crop. Dryness issues are noted for 30% of their just seeded crop. Be cautious in a break below $4.50 in May futures.
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
Tariffs In Place. The Corn & Ethanol Report 03/04/2025
We kickoff the day with Redbook YoY at 7:55 A.M., RCM/TIPP Economic Optimism Index at 9:00 A.M., NY Fed Treasury Purchases 6 to 10 yrs. at 9:30 A.M., Fed Williams Speech at 1:20 P.M., Dairy Products at 2:00 P.M., API Energy Stocks and LMI Logistics Managers Index at 3:30 P.M.
US President Trump applied 25% tariffs on Mexico and Canada, and and another 10% on China (20% on all goods in 2025). Only a 10% US tariff was applied on Canadian sour crude imports into the US. Retaliation is expected, and US ag traders will closely follow the targeted goods. It is expected that China will tariff a host of US ag goods including US meats, grains, and other food tariffs. US targeted goods by Canada and Mexico are less certain. Mexico needs US corn/wheat and is logistically beholden to the US rail system. Canada will go after US technology and finished goods. Yet, the most significant impact is canola oil. The US is forecast to import 8.0 MMT’s of Canadian canola oil in 2024/25 for food/bio-fuel production. There have been sizable gains in US and Canadian canola imports since 2022. The lack of canola implies that additional soybean oil must be utilized to produce biofuels as mandates remain. US renewable diesel producers make $.60/gallon using soybean oil feedstock. If renewable diesel prices are maintained steady, soybean oil futures will have to rally $.08-.09 to turn margin negative and pressure supply for food consumers. Look for cash soybean oil to rally sharply amid the 25% Canadian canola tariff.
South American Weather Pattern Discussion
Argentine Forecast Favorably Drier; Brazil Needs Rain:
The 10-day South American forecast is consistent with prior runs. Excessive rainfall in Argentina comes to a end after March 8th, with a lengthy period of dryness forecast thereafter. Rain in Brazil stays confined to Mato Grosso nearby, which initially speeds long safrinha planting but which becomes an issue if the monsoon continues to sputter in late March. The GFS 8-day soil moisture in major crop areas is needed. There are hints of improved rainfall across the driest areas of Mato Grosso do Sul, Parana, and Sao Paulo in Brazil. However, not all models agree and most probably rainfall in these states will be lite in nature. Regular rain will be needed in central and northern Brazil throughout late March and into early May to maximize safrinha corn yield potential. The concern is that once rain exits northern Brazil in March/April does not typically return. Pay close attention to mid-March for guidance,
Central US Weather Update
Dryness Relief Ahead in Midwest; HRW Belt Stays Arid:
A rather active precipitation pattern develops across the eastern half of the US Ag Belt beginning Tuesday. Two systems sweep across the E Plains and Midwest through the period, with moisture equivalent totals of .50—2.00 blanket all but the HRW Belt, Dakotas, and MN. Snowfall upward of 3-9” favors NE, IA, WI, and far northern IL. NOAA’s 7 day forecast shows rain/snow which will be most welcomed in IA, and the Great lakes region. Closer attention to the absence of rainfall across the Southern Plains and Dakotas/MN will be warranted by late month if this pattern fails to change. 16-30 day guidance today features stagnation – rainfall in the second half of March favors the E Midwest and Great Lakes, below normal precipitation continues in TX, OK, KS, and NE. It’s early, but whether current US drought expands or contracts prior to May 1st is important.
CBOT Corn Comments & Analysis
CBOT Corn Falls to 200-Day Moving Average; Post Harvest Rally 60% Retraced; Trump Confirms Tariffs on Mexico, Canada, and China Begin Today:
CBOT corn futures ended sharply lower for a third session,
and are in retreat after starting out higher in the overnight session. As of yesterday open Fund’s liquidated the entire soybean length and remain a combined sizable short position of 112-115,000 of KC & Chicago wheat. The question moving forward, has the bulk of trade policy news been priced in. Ultimately, President Trump confirmed tariffs on Canada and Mexico of 25% will be implemented today. Tariffs on Chinese imports will be raised 10%. China was not expected to source US corn through the remainder of 24/25. Still, the concern is that Mexico more actively buys Argentine supply beginning Apr/May and Brazilian origin in summer. The problem for Mexico is one of logistics, as the bulk of US corn sales travel by rail , and Mexican livestock producers need US corn. Whether Mexico targets US corn in retaliation will be closely followed in coming hours. In the long term, US corn export demand will dim if tariffs stay in place. However, the risk premium has been shed in bulk, and CBOT futures are oversold-something that’s always reconciled. Sell the rumor and buy the fact trading must be considered following todays action. The next fundamental factor will be Brazilian rainfall and how it impacts their winter corn crop. Dryness issues are noted for 30% of their just seeded crop. Be cautious in a break below $4.50 in May futures.
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