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 MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.M., Existing Home Sales and Existing Home Sales MoM at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., 20-Year Bond Auction at 12:00 P.M., and Dairy Products Sales at 2:00 P.M.
The Federal Reserve estimated that the aggregate M2 money supply in June rose by 137 million, or 0.63% to a record $22,021 million. It was the largest monthly increase since April, but it was the 2nd largest increase since December 2022. Compared to a year ago, M2 was 4.5% larger, marking the 16th consecutive month of year-over-year gains and the largest gain since July 2022. Expanding liquidity signals that inflation is not likely to go away and could potentially accelerate in 2026. It also diminishes the odds that the Federal Reserve will lower the Fed Funds interest rate anytime soon. Nevertheless, the expanding money supply will continue to drive investor demand to real assets that are viewed as so-called safe haven inflation hedges. The problem is that this time it will likely be stagflation with a rise in inflation and decline in US economic activity (growth).
Central US Weather Pattern Update
Central US Pattern Shift Occurs After July 29th :
The Central US forecast has trended wetter and cooler across the Central & Southern Plains after July 29th, and incoming heat/dryness will be short-lived.An amplified Ridge of high pressure dominates the US climate July 23-30, but thereafter Ridging is forced south and west into the S Plains/Southwest. A seasonally strong jet stream resumes. The principal forecasting models are in broad agreement that needed rainfall impacts KS, NE, and MO. The EU-ensemble model’s 8-14 day precipitation accumulation anomaly forecast has rainfall of 1-2” is projected in KS, NE, SD, MO, IA & W IL. Temps will be at/slightly below normal, with max highs easing into the low/mid-80’s. Overnight lows will exist favorably in the mid/upper60’s Aug 1-5th. Ridge – riding storms sustain adequate/surplus soil moisture across the N Plains and Midwest this week. 5-day precipitation accumulation of 1+” favors the Dakotas, MN, WI, IL, IN,and OH. The Midwest weather forecast is crop favorable.
Global Ethanol Market Update
Brazilian Ethanol Market Sags as Corn Pipeline Refilled:
Spot cash ethanol in Southern Brazil this week is quoted at $1.99/Gal, vs. $2.05 last week and which reflects the lows of April and mid-June. Recall safrinha harvesting in Mato Grosso on Friday reached 77% complete and nationally the Brazilian safrinha crop will be completely harvested by mid-Oct. Ethanol plant supplies will be abundant in the next 30-days. Brazilian ethanol prices seasonally decline from August to early January. Much of Brazil’s expansion of ethanol production will be used domestically but amid record/near record total corn production, Ag Resources (ARC) does expect modest tonnages of Brazilian ethanol to move into the global market this autumn. Similar to corn, the US faces enlarged year-over-year competition for the ethanol market share. Brazilian fob ethanol prices are forecast to test $1.80-$1.85/Gal in Nov/Dec which compares to current spot prices in Illinois at $1.76-$1.80. Brazilian imports of US ethanol are not expected anytime soon.
Corn Comments & Analysis
CBOT Corn Sheds Premium as US Weather Threat Wanes:
Dec CBOT settled 12 cents below last Friday’s high as US forecast trend cooler & wetter, adding rain to key areas of KS & NE in the next 10 days. There’s just not much of a threat to massive production. The bearish outlook is based not just on US corn supply & demand, but the building of total feed grain supplies. US sorghum end stocks in 2025/26 will increase to a multi-decade high without the return of massive Chinese import demand. US sorghum stocks will be burdensome even if large domestic feed and industrial use is found. It’s the competition for Plains feed demand along with record US corn yield potential that triggers feed market oversupply in the months heading into the end of 2025. Abnormal Central US heat will be confined to July 23-30, and no longer is extreme heat forecast across the W Plains. Studies with boots on the ground show vegetation health in NE, as of July 19th is testing record highs. Additionally, the market has been unfazed by incredibly firm basis in Ukraine. ARC notes that amid a US yield of 184, exports in 25/26 of 2.6-2.8 Bil Bu are needed to keep end stocks below2.0 Bil – there’s ample room in the US balance sheet for demand. Lows aren’t anticipated until harvest begins in earnest. Unlike a year ago, larger South American production and sorghum/HRW oversupply challenge the finding of a bottom in the near term. ARC’s downside target remains $3.60-$3.70.
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
Slowing Economy on Fed Inaction. The Corn & Ethanol Report 07/23/2025
We kickoff the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.M., Existing Home Sales and Existing Home Sales MoM at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., 20-Year Bond Auction at 12:00 P.M., and Dairy Products Sales at 2:00 P.M.
The Federal Reserve estimated that the aggregate M2 money supply in June rose by 137 million, or 0.63% to a record $22,021 million. It was the largest monthly increase since April, but it was the 2nd largest increase since December 2022. Compared to a year ago, M2 was 4.5% larger, marking the 16th consecutive month of year-over-year gains and the largest gain since July 2022. Expanding liquidity signals that inflation is not likely to go away and could potentially accelerate in 2026. It also diminishes the odds that the Federal Reserve will lower the Fed Funds interest rate anytime soon. Nevertheless, the expanding money supply will continue to drive investor demand to real assets that are viewed as so-called safe haven inflation hedges. The problem is that this time it will likely be stagflation with a rise in inflation and decline in US economic activity (growth).
Central US Weather Pattern Update
Central US Pattern Shift Occurs After July 29th :
The Central US forecast has trended wetter and cooler across the Central & Southern Plains after July 29th, and incoming heat/dryness will be short-lived.An amplified Ridge of high pressure dominates the US climate July 23-30, but thereafter Ridging is forced south and west into the S Plains/Southwest. A seasonally strong jet stream resumes. The principal forecasting models are in broad agreement that needed rainfall impacts KS, NE, and MO. The EU-ensemble model’s 8-14 day precipitation accumulation anomaly forecast has rainfall of 1-2” is projected in KS, NE, SD, MO, IA & W IL. Temps will be at/slightly below normal, with max highs easing into the low/mid-80’s. Overnight lows will exist favorably in the mid/upper60’s Aug 1-5th. Ridge – riding storms sustain adequate/surplus soil moisture across the N Plains and Midwest this week. 5-day precipitation accumulation of 1+” favors the Dakotas, MN, WI, IL, IN,and OH. The Midwest weather forecast is crop favorable.
Global Ethanol Market Update
Brazilian Ethanol Market Sags as Corn Pipeline Refilled:
Spot cash ethanol in Southern Brazil this week is quoted at $1.99/Gal, vs. $2.05 last week and which reflects the lows of April and mid-June. Recall safrinha harvesting in Mato Grosso on Friday reached 77% complete and nationally the Brazilian safrinha crop will be completely harvested by mid-Oct. Ethanol plant supplies will be abundant in the next 30-days. Brazilian ethanol prices seasonally decline from August to early January. Much of Brazil’s expansion of ethanol production will be used domestically but amid record/near record total corn production, Ag Resources (ARC) does expect modest tonnages of Brazilian ethanol to move into the global market this autumn. Similar to corn, the US faces enlarged year-over-year competition for the ethanol market share. Brazilian fob ethanol prices are forecast to test $1.80-$1.85/Gal in Nov/Dec which compares to current spot prices in Illinois at $1.76-$1.80. Brazilian imports of US ethanol are not expected anytime soon.
Corn Comments & Analysis
CBOT Corn Sheds Premium as US Weather Threat Wanes:
Dec CBOT settled 12 cents below last Friday’s high as US forecast trend cooler & wetter, adding rain to key areas of KS & NE in the next 10 days. There’s just not much of a threat to massive production. The bearish outlook is based not just on US corn supply & demand, but the building of total feed grain supplies. US sorghum end stocks in 2025/26 will increase to a multi-decade high without the return of massive Chinese import demand. US sorghum stocks will be burdensome even if large domestic feed and industrial use is found. It’s the competition for Plains feed demand along with record US corn yield potential that triggers feed market oversupply in the months heading into the end of 2025. Abnormal Central US heat will be confined to July 23-30, and no longer is extreme heat forecast across the W Plains. Studies with boots on the ground show vegetation health in NE, as of July 19th is testing record highs. Additionally, the market has been unfazed by incredibly firm basis in Ukraine. ARC notes that amid a US yield of 184, exports in 25/26 of 2.6-2.8 Bil Bu are needed to keep end stocks below2.0 Bil – there’s ample room in the US balance sheet for demand. Lows aren’t anticipated until harvest begins in earnest. Unlike a year ago, larger South American production and sorghum/HRW oversupply challenge the finding of a bottom in the near term. ARC’s downside target remains $3.60-$3.70.
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,
Dan Flynn
Questions? Ask Dan Flynn today at 312-264-4374