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., PPI, PPI MoM & YoY, Core PPI MoM & YoY, PPI Ex Food, Energy and Trade MoM & YoY, and NY Empire State Manufacturing Index at 7:30 A.M., Fed Williams Speech at 7:45 A.M., Fed Chair Warsh Testimony7 at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., NOPA Crush Report at 11:00 A.M., Fed Cook Speech at 12:00 P.M., Fed Beige Book at 1:00 P.M., and Fed Musalem Speech at 5:30 P.M.
US consumer inflation cooled sharply in June as the CPI fell 0.4% from May, the largest monthly decline since April 2020. The 12-month inflation rate slowed to 3.5%, down from 4.2% in May. The decline was driven by energy, not a vbroad in demand. Energy prices fell 5.7% on the month and gasoline dropped 9.7%, more than offsetting continued increases in food and shelter. Food prices rose 0.2%, with food at home and food away from home both up 0.2%. Core CPI, excluding food and energy, was unchanged in June and eased to 2.6% year-over-year, suggesting that underlying inflationary pressures are moderating. Shelter rose just 0.1%, he smallest monthly increase since January 2021. The report will reduce the odds of a Fed interest rate hike, but based solely on the inflation number, it does not greatly increase the odds of a Fed rate cut. However, higher energy prices driven by a supply shock (war), have had the same effect on consumers and businesses as higher interest rates.
Corn Balance Sheet Tightening
US and global corn balance sheet tightening is guaranteed – its just a matter of degree. This tightening is simply a function of three things 1/ Lower than previously expected carryover stocks due to larger old crop demand. USDA is still 50-100 Mil Bu too low with export forecast. 2/ A lack of contraction in new crop US export disappearance due to European drought and further expansion of Brazilian ethanol grind. 3/The loss of 3.5 Mil US acres as ndicated in the June NASS report. US corn supply & demand using different yield scenarios a yield below 180 BPA pulls US end stocks of 1.55 Bil. It’s important to acknowledge that there’;s no yield scenario that that keeps Usend stocks at or above 2 Bil Bu. Whether 2026 US corn production falls 400 or 670 Mil Bu short of consumption is up to Mother Nature over the next 45 days, but fewer bushels and higher prices are at the core of ARC’s longer-term corn outlook. The correlation between US corn stocks/use and that season’s average cash price has Dec CBOT corn as fairly valued at $4.40-$4.60 assuming USDA’s current balance sheet. But it’s known 26/27 carrying must be trimmed 50-100 Mil Bu amid larger old crop reports. This alone raises fair value to $4.50-$4.80. Any upward revision to new-crop exports, and even modest downward revisions to production, quickly place fair value above $5.00/Bu. July corn prices are driven by Central US weather and yield assessments. If a dire drought is not occurring, it’s typical for rallies to struggle. But this does not eliminate the risk of sharply higher prices after mid-August, and the need for steady/larger US corn seedings in 2027 will be made complicated by the need for larger winter wheat and soybean acreage. Corn is a developing demand bull market, its all about the timing of rally’s sustainability. A top is not expected until Q1 2027 assuming South American weather is favorable.
Corn Comments & Analysis
CBOT Corn Sheds Modest US Weather Risk Premium; US Ethanol Margins Abnormally Profitable
CBOT corn ended slightly weaker as excessive Central US heat will end this weekend. Weather dominates daily price discovery for a few more weeks, but ARC reiterates that US yield challenges are only part of corns longer-term story. Spot EU corn rallied to test early July’s high at $6.96/Bu. Brazil’s cash market is flat despite CONAB raising 2026 Brazilian production by 1.2 MMT to a record 141.7 MMT. Cash Midwest ethanol is quoted at $1.93/Gal. This leaves revenue well above all costs, which is historically unusual in July. ARC sees the ongoing war and the political push for E15 as producing a 2026/27 corn grind rate of 5,650 Mil Bu. Demand for corn oil (grren diesel) and ethanol stays strong into early 2027. Last year was the first time that the US corn yield exceeded 180 BPA due to exceptionally favorable July weather. The first half of July 2026 has been too hot and regionally dry. ARC expects that extreme heat will return in late July/early August which will further edge US corn yield potential lower. ARC estimates the 2026 corn yield at 181 BPA, the second largest on record amid recent heat and budding dryness across the Plains. Sideways trade is possible through July, but breaks should be rewarded with new purchases. CBOT corn most often bottoms in August, and transitions from a buyers-market to a sellers’ thereafter. Key support lies at $4.50 December.
The Heat IS ON. The Corn & Ethanol Report 07/15/2026
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., PPI, PPI MoM & YoY, Core PPI MoM & YoY, PPI Ex Food, Energy and Trade MoM & YoY, and NY Empire State Manufacturing Index at 7:30 A.M., Fed Williams Speech at 7:45 A.M., Fed Chair Warsh Testimony7 at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., NOPA Crush Report at 11:00 A.M., Fed Cook Speech at 12:00 P.M., Fed Beige Book at 1:00 P.M., and Fed Musalem Speech at 5:30 P.M.
US consumer inflation cooled sharply in June as the CPI fell 0.4% from May, the largest monthly decline since April 2020. The 12-month inflation rate slowed to 3.5%, down from 4.2% in May. The decline was driven by energy, not a vbroad in demand. Energy prices fell 5.7% on the month and gasoline dropped 9.7%, more than offsetting continued increases in food and shelter. Food prices rose 0.2%, with food at home and food away from home both up 0.2%. Core CPI, excluding food and energy, was unchanged in June and eased to 2.6% year-over-year, suggesting that underlying inflationary pressures are moderating. Shelter rose just 0.1%, he smallest monthly increase since January 2021. The report will reduce the odds of a Fed interest rate hike, but based solely on the inflation number, it does not greatly increase the odds of a Fed rate cut. However, higher energy prices driven by a supply shock (war), have had the same effect on consumers and businesses as higher interest rates.
Corn Balance Sheet Tightening
US and global corn balance sheet tightening is guaranteed – its just a matter of degree. This tightening is simply a function of three things 1/ Lower than previously expected carryover stocks due to larger old crop demand. USDA is still 50-100 Mil Bu too low with export forecast. 2/ A lack of contraction in new crop US export disappearance due to European drought and further expansion of Brazilian ethanol grind. 3/The loss of 3.5 Mil US acres as ndicated in the June NASS report. US corn supply & demand using different yield scenarios a yield below 180 BPA pulls US end stocks of 1.55 Bil. It’s important to acknowledge that there’;s no yield scenario that that keeps Usend stocks at or above 2 Bil Bu. Whether 2026 US corn production falls 400 or 670 Mil Bu short of consumption is up to Mother Nature over the next 45 days, but fewer bushels and higher prices are at the core of ARC’s longer-term corn outlook. The correlation between US corn stocks/use and that season’s average cash price has Dec CBOT corn as fairly valued at $4.40-$4.60 assuming USDA’s current balance sheet. But it’s known 26/27 carrying must be trimmed 50-100 Mil Bu amid larger old crop reports. This alone raises fair value to $4.50-$4.80. Any upward revision to new-crop exports, and even modest downward revisions to production, quickly place fair value above $5.00/Bu. July corn prices are driven by Central US weather and yield assessments. If a dire drought is not occurring, it’s typical for rallies to struggle. But this does not eliminate the risk of sharply higher prices after mid-August, and the need for steady/larger US corn seedings in 2027 will be made complicated by the need for larger winter wheat and soybean acreage. Corn is a developing demand bull market, its all about the timing of rally’s sustainability. A top is not expected until Q1 2027 assuming South American weather is favorable.
Corn Comments & Analysis
CBOT Corn Sheds Modest US Weather Risk Premium; US Ethanol Margins Abnormally Profitable
CBOT corn ended slightly weaker as excessive Central US heat will end this weekend. Weather dominates daily price discovery for a few more weeks, but ARC reiterates that US yield challenges are only part of corns longer-term story. Spot EU corn rallied to test early July’s high at $6.96/Bu. Brazil’s cash market is flat despite CONAB raising 2026 Brazilian production by 1.2 MMT to a record 141.7 MMT. Cash Midwest ethanol is quoted at $1.93/Gal. This leaves revenue well above all costs, which is historically unusual in July. ARC sees the ongoing war and the political push for E15 as producing a 2026/27 corn grind rate of 5,650 Mil Bu. Demand for corn oil (grren diesel) and ethanol stays strong into early 2027. Last year was the first time that the US corn yield exceeded 180 BPA due to exceptionally favorable July weather. The first half of July 2026 has been too hot and regionally dry. ARC expects that extreme heat will return in late July/early August which will further edge US corn yield potential lower. ARC estimates the 2026 corn yield at 181 BPA, the second largest on record amid recent heat and budding dryness across the Plains. Sideways trade is possible through July, but breaks should be rewarded with new purchases. CBOT corn most often bottoms in August, and transitions from a buyers-market to a sellers’ thereafter. Key support lies at $4.50 December.
Have A Great Trading Day!
Thanks,
Dan Flynn
Questions? Ask Dan Flynn today at 312-264-4374