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 NY Fed Bill Purchases 1 to 4 Months at 6:20 A.M., CB Leading Index MoM at 9:00 A.M., 3-Month & 6-Month Bill Auction.
The Commitment of Traders report showed a week of mixed positioning across the 10 principal ag markets, with managed money reported net buyers across all grain markets, and net sellers of CME livestock futures. The composite net long position rose for the 2nd straight week by 98,304 contracts to a 6-week high of 327,710 contracts. Buying for the week was concentrated in corn, soymeal, soy oil, and Chicago wheat., with funds buying 24,000-31,000 contracts in each grain. The largest liquidation occurred in Live Cattle, where funds sold nearly 17,000 contracts. Fund length was a record-large in May as markets became oversold. But a recovery in the grain market is underway On tightening US global wheat and corn stocks and Chinese demand for US soybeans.
2026-2027 Production Costs
The list of supportive grain market feature is long. US production declines, due to reduced corn & wheat seeding and coupled with Plains drought this spring. Substantial corn production loss in Europe.
Record global corn demand, with further expansion in 2026/27. And elevated production costa, which grain prices and returns must offset to encourage global output expansion in 2027. Urea prices in the US and globally corrected sharply in May amid improved Middle East vessel traffic and as demand entered its seasonal post-spring hiatus. But urea prices are again climbing as Straight of Hormuz traffic is restricted, and Russia vessel flows are challenged by Ukrainian drones. Demand for fertilizer returns in August in South America and very late summer/early autumn in the Norther Hemisphere and ARC,s concern is that urea prices will add $50-$150/MT after the next two weeks. A longer-term bottom is being set in the global urea and nitrogen market. Important input costs will stay particularly lofty. Ocean freight costs have soared in the last two weeks, and the Baltic Dry Index never shed the premium sparked by war in Iran. Bunker fuel prices this week are quoted at $777/MT, compared to March’s peak of $1,000/MT and prices before March 2026 of $4.50-$5.50/MT. Seasonally, the Baltic Dry Index tends to peak in May but score a secondary high in Oct-November. There’s limited downside risk in the cost of ocean freight, and a re-test of March’s high if the Middle East and Black Sea wars are n ot resolved. Relative strength in the US dollar only partially offsets the logistical cost of imports. Additionally, retail motor gasoline this week sits at $3.98/Gal vs. $388 last week and $3.16 a year ago in mid-July. The ongoing two wars will increasingly cost global consumers. The evolution of con production costs and returns is below. The fact that the value of US corn production exists below the cost of production is not, by itself, bullish input. In 2016-2019 and in 2024-2025 there was no real need to encourage expansion amid large US
expansion amid large inventories. The value of US corn production is closely tied to production costs, and in 2027 there is a need for increased corn seeding. Grain over supply of 2025has been wiped out amid lower lower planted area and various weather challenges. ARC views the goal of the market to reward producers and assuming USDA’s national yield forecast, breakeven (*nationally, on average) sits just $5.00. Using ARC’s 181 BPA forecast , in 2026 is $5.17. Breakeven in 2027 stays at $5.00-$5.20 range. These are initial targets for season average cash prices in the 2026/27 crop year.
Corn futures add Black Sea – based risk premium on Friday, and over the weekend all eyes will be on the details of US N/Plains/ NW Midwest rainfall forecast. Major threats to yield have been absent, but market sentiment will begin to sour if areas west of the Mississippi River go another 10-14 days without meaningful moisture. ARC reiterates it doesn’t take much US yield loss to tilt the US exporter and global balance sheet starkly bullish. Midday forecasts Sunday will be key. Downside risk remains limited amid Black Sea war/logistics and firming South American cash basis. Market focus has rightly been on the war between Ukraine & Russia and regional US weather challenges. However, the fact that Brazilian FOB corn prices are in retreat, but FOB premiums for spot delivery $.30/Bu above US Gulf origin. US autumn and winter export demand trends higher. Managed funds were net long 43,000 corn contracts on Tuesday. New speculative length will be established if rain is subtracted from the weather forecast across KS, NE, ND, SD, MN, and IA this weekend. Bottoms are scored in August in demand-led bull markets, so the runway for weaker prices is getting short. The initial target for September corn future is $4.95, a trendline on the weekly chart.
Risk Premium Rises. The Corn & Ethanol Report 07/20/2026
We kickoff the day with NY Fed Bill Purchases 1 to 4 Months at 6:20 A.M., CB Leading Index MoM at 9:00 A.M., 3-Month & 6-Month Bill Auction.
The Commitment of Traders report showed a week of mixed positioning across the 10 principal ag markets, with managed money reported net buyers across all grain markets, and net sellers of CME livestock futures. The composite net long position rose for the 2nd straight week by 98,304 contracts to a 6-week high of 327,710 contracts. Buying for the week was concentrated in corn, soymeal, soy oil, and Chicago wheat., with funds buying 24,000-31,000 contracts in each grain. The largest liquidation occurred in Live Cattle, where funds sold nearly 17,000 contracts. Fund length was a record-large in May as markets became oversold. But a recovery in the grain market is underway On tightening US global wheat and corn stocks and Chinese demand for US soybeans.
2026-2027 Production Costs
The list of supportive grain market feature is long. US production declines, due to reduced corn & wheat seeding and coupled with Plains drought this spring. Substantial corn production loss in Europe.
Record global corn demand, with further expansion in 2026/27. And elevated production costa, which grain prices and returns must offset to encourage global output expansion in 2027. Urea prices in the US and globally corrected sharply in May amid improved Middle East vessel traffic and as demand entered its seasonal post-spring hiatus. But urea prices are again climbing as Straight of Hormuz traffic is restricted, and Russia vessel flows are challenged by Ukrainian drones. Demand for fertilizer returns in August in South America and very late summer/early autumn in the Norther Hemisphere and ARC,s concern is that urea prices will add $50-$150/MT after the next two weeks. A longer-term bottom is being set in the global urea and nitrogen market. Important input costs will stay particularly lofty. Ocean freight costs have soared in the last two weeks, and the Baltic Dry Index never shed the premium sparked by war in Iran. Bunker fuel prices this week are quoted at $777/MT, compared to March’s peak of $1,000/MT and prices before March 2026 of $4.50-$5.50/MT. Seasonally, the Baltic Dry Index tends to peak in May but score a secondary high in Oct-November. There’s limited downside risk in the cost of ocean freight, and a re-test of March’s high if the Middle East and Black Sea wars are n ot resolved. Relative strength in the US dollar only partially offsets the logistical cost of imports. Additionally, retail motor gasoline this week sits at $3.98/Gal vs. $388 last week and $3.16 a year ago in mid-July. The ongoing two wars will increasingly cost global consumers. The evolution of con production costs and returns is below. The fact that the value of US corn production exists below the cost of production is not, by itself, bullish input. In 2016-2019 and in 2024-2025 there was no real need to encourage expansion amid large US
expansion amid large inventories. The value of US corn production is closely tied to production costs, and in 2027 there is a need for increased corn seeding. Grain over supply of 2025has been wiped out amid lower lower planted area and various weather challenges. ARC views the goal of the market to reward producers and assuming USDA’s national yield forecast, breakeven (*nationally, on average) sits just $5.00. Using ARC’s 181 BPA forecast , in 2026 is $5.17. Breakeven in 2027 stays at $5.00-$5.20 range. These are initial targets for season average cash prices in the 2026/27 crop year.
Corn Comments & Analysis
CBOT Corn Rallies, Ends Week Above 200-Day Moving Average; Plains/N Midwest weather in Focus:
Corn futures add Black Sea – based risk premium on Friday, and over the weekend all eyes will be on the details of US N/Plains/ NW Midwest rainfall forecast. Major threats to yield have been absent, but market sentiment will begin to sour if areas west of the Mississippi River go another 10-14 days without meaningful moisture. ARC reiterates it doesn’t take much US yield loss to tilt the US exporter and global balance sheet starkly bullish. Midday forecasts Sunday will be key. Downside risk remains limited amid Black Sea war/logistics and firming South American cash basis. Market focus has rightly been on the war between Ukraine & Russia and regional US weather challenges. However, the fact that Brazilian FOB corn prices are in retreat, but FOB premiums for spot delivery $.30/Bu above US Gulf origin. US autumn and winter export demand trends higher. Managed funds were net long 43,000 corn contracts on Tuesday. New speculative length will be established if rain is subtracted from the weather forecast across KS, NE, ND, SD, MN, and IA this weekend. Bottoms are scored in August in demand-led bull markets, so the runway for weaker prices is getting short. The initial target for September corn future is $4.95, a trendline on the weekly chart.
Have A Great Trading Day!
Thanks,
Dan Flynn
Questions? Ask Dan Flynn today at 312-264-4374