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The Corn & Ethanol Report

Daniel Flynn
http://www.pricegroup.com/
dflynn@pricegroup.com


Putin’s Ukraine Threat Sparks Fund Short Covering. The Corn & Ethanol Report 12/03/2025

We kickoff the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applicattions, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.M., ADP Employment Change at 7:15 A.M., Export & Import Prices MoM & YoY at 7:30 A.M., Industrial Production MoM & YoY, Manufacturing Production MoM & YoY, and Capacity Utilization at 8:15 A.M. S&P Global Composite PMI Final and S&P Global Services PMI Final at 8:45 A.M., ISM Services PMI, ISM Services Business Activity, ISM Services Employment, ISM Services New Orders, and ISM Services Prices at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., and Dairy Products Sales at 2:00 P.M.

The Real Clear Markets/TIPP Economic Optimism Index showed a sharp rebound in consumer sentiment in the December update. The index jumped 9% in December to 47.9, after falling 9% in November. However, the index remained below 50 for the 4th consecutive month and was 11% below a year ago. Investor confidence gained 2.2% from December to 59.9, while non-investor confidence gained 9.1% to 41.8. The 6-Month Economic Outlook gained 11% from November to 44.4, while the Personal Financial Outlook gained 11% from November to 44.4, while the Personal Financial Outlook rose 6.7% to 54. Once again, Americans were less optimistic about the future of the US economy, but were more confident about their own personal outlook. The Financial-Related Stress Index declined 1% from November to 64.2, reflecting that a majority of survey respondents were under some personal financial stress.

South American Weather Pattern Update

Argentine Forecast Drier Next Two Weeks; Rain Falls in Abundance Across Entirety of Brazil:

The South American forecast into Dec 16th is drier across eastern Argentina but is otherwise consistent with prior runs. Model agreement is solid. A pattern of near daily showers – some heavy – will be in place across northern Brazil through the period., and confidence is high meaningful rains expand into southern and central Brazil after Dec 7th. 10-day accumulation of 3-6” is forecast in Mato Grosso, Goias, Minas Gerais and fringe producing regions of far northern Brazil. 10-day totals of 1-3” are offered to Mato Grosso do Sul, Parana and RGDS. And while a pattern of below normal rain is forecast in Argentina, the country will not be without water. Dryness blankets all of Argentina into the weekend. Moderate shower activity returns in the 6-10 day period, and importantly there’s still no La Nina-based blocking pattern forecast. Heat will be absent from all S American crop areas.

Argentina’s pattern will be paid more attention as early planted corn pollinates in bulk, but Ag Resources (ARC) is unconcerned about below normal rainfall Dec 2-16. Soaking showers last week eased dryness considerably in Cordoba and otherwise abnormal dryness in Argentina exist just south and west of major crop areas. Current Argentine soil moisture ranking percentiles show the absence of rain and abundance of sunshine is viewed as welcomed in the near term. The last half of Argentine soybean seeding will occur smoothly/rapidly. Trend South American corn & soy yields are assumed today, and become more probable if normal/near normal weather continues into the early part of January. ARC reiterates dryness is uncommon in central & northern Brazil, particularly if the wet season activates in November. It’s a matter of how big is big with respect to Brazilian soy production in 2026.

Updated 25/26 Exporter Supply & Demand

On Monday ARC discussed the incredible performance of wheat yields in Argentina, which along with larger Aussie production keeps world wheat oversupplied during the winter months. A similar phenomenon grips corn if normal weather persists in Central Argentina for another six weeks. Argentina’s early planted corn crop is off to a great start. The first crop last week was rated 82% GD/EX, vs. 36% a year ago and the highest on record for this particular week. It’s early days but amid additional soil moisture boost last week and the absence of heat into mid-Dec, first crop Argentine corn ratings are expected to stay elevated (70% GD/EX) throughout the month of December. Recall some 30% of Argentina’s corn crop was planted prior to Oct 17th, and so pollination is imminent. Larger Argentine corn production combined with lower projected UD feed/residual disappearance (USDA’s forecast is viewed as 200-300 Mil Bu too high based on history) further loosens the exporter corn stocks/use in 25/26 to rise to 11.7%, vs. USDA’s 10.0% and vs. a fairly tight 9.2% in crop year 24/25. Market dynamics in calendar year 2026 will be similar to 2014-15 and 2018-19, and so CBOT corn stays bound to a range of $4.00-$4.50 unless safrinha is threatened by an early end to the Brazil’s wet season. Note ARC’s projects much larger exporters stocks/use in 25/26 despite growth in world corn trade worth 17 MMT’s to a record US seedings and abundant Sep-Nove rainfall in Argentina. The need to encourage/sustain corn demand growth dominates price discovery into spring ’26.

Corn Comments & Analysis

March Corn Back Above 200-Day; No Shortage of Global Feed Supply:

Fund short covering propelled March corn above key resistance $4.48. Putin’s threat against Ukraine dominated, and other breaking news is absent. ARC recommends catch-up old crop hedges at current prices. Similar to wheat, it’ll take time to clear record global supplies. Weekly ethanol data today also must show larger production to prevent a trimming of USDA’s 25/26 industrial use forecast. Attention will be paid to the volleying strikes between Russia & Ukraine, but for now grain flows continue and Ukrainian shipments to date have been below recent years amid harvest challenges – the threat to Ukrainian shipments means less than 2022. Some 10 MMT’s of Ukrainian corn will be harvested/available to the world market in spring. ABARES has lifted Australian barley production in 25/26 to a record 15.7 MMT’s. This along with ample/cheap Argentine feed wheat keeps competition for importer demand elevated during winter. Don’t chase rallies. Downside risk is enlarged above $4.50, basis March. Whispers of additional Chinese buying of US sorghum, but it’s telling Plains sorghum basis remains historically weak at $1.20-$1.34 under March CBOT corn.

Have A Great Trading Day!



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Contact Dan at (888) 264-5665 or dflynn@pricegroup.com.