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The Corn & Ethanol Report

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


Market Showing Signs of Labored Rallies in the Future. The Corn & Ethanol Report 02/20/2025

We kickoff the day with Initial Jobless Claims, Continuing Jobless Claims, Jobless Claims 4-Week Average, Philadelphia Fed Manufacturing Index, Philly Fed Business Conditions, Philly Fed CAPEX Index, Philly Fed Employment, Philly Fed New Orders, and Philly Fed Prices Paid at 7:30 A.M., Fed Goolsbee Speech at 8:35 A.M., CB Leading Index MoM at 9:00 A.M., EIA Natural Gas Storage at 9:30 A.M., EIA Energy Stocks at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., Fed Musalem Speech at 11:05 A.M., 30-Year TIPS Auction at 12:00 P.M., Fed Barr Speech at 1:30 P.M., Dairy Products Sales at 2:00 P.M., Fed Balance Sheet at 3:30 P.M., and Fed Kugler Speech at 4:00 P.M.

30-year home mortgage interest taxes have relaxed in recent weeks. The Mortgage Bankers Association reported that the average rate last week eased slightly to 6.93%. This was down 0.2% for the week since early December. However, mortgage demand remains weak and just above multi-decade lows amid high mortgage rates and record home prices. Home affordability according to the National Association of Realtors, remains at levels not seen since the mid-1980’s. The Home Affordability Index for December was at 100.7, indicating that the median US home price was barely affordable for the US income.

Central US Weather Pattern Discussion

Wild Temperature Swing Ahead for Central US:

Bitterly cold temps end by tomorrow. This pattern will be replaced by abnormal warmth across the Western US, with spring-like temps probable early next week across the Southern Plains. Highs in TX, OK, and KS Mon-Tues are forecast in the 60’s & 70’s. NOAA’s 6-10 temp probability shows warmth moving east from western hotspots. Long range forecast warrant attention. Ag Resources (ARC) doubts arctic air is allowed back into the HRW Belt, but there are hints that winter won’t fully end prior to March 5th, with certain weather forecasts advertise another arctic blast could return. However, the EU & GFS models are in broad agreement that cold resumes March 2-6. Lows in the teens & 20’s are advertised across the TX/OK panhandles, CO, KS, and NE. Whether snow is allowed to expand into S Plains will be monitored. For now, meaningful US precipitation stays confined to areas east of the Mississippi River

South American Weather Update

Northern Brazil Turns Wet After Feb 25th:

The South American forecast into the opening week of march remains consistent broadly favorable. The pace of soybean harvesting in Brazil stays elevated into the weekend as precipitation will be absent continent wide. The pattern after Feb 25th turns outright wet in Argentina and northern Brazil. Most important is that soil moisture in Mato Grosso, Goias, and far northern Brazil – which accounts for 60% of safrinha corn production – which accounts for 60% of safrinha corn production – will be abundant. South American rainfall into Feb 24th will be confined to NW Mato Grosso and pockets of Bueno Aires in Argentina. ARC estimates Brazil’s soybean harvest by Friday will be 34-36% complete. Another 17 MMT’s (625 Mil Bu) will have been gathered. Cumulative rainfall in the 6-15 day period is projected upward 2-4” in central and northern Brazil and upward of 1-3” in northern Argentina. Argentine drought eases further.

Corn Comments and Analysis

CBOT Corn Corrects; New Supply Threats Lacking:

May CBOT corn scored new rally highs early but weaken amid lack of new bullish fodder, competitive South American fob offers and early safrinha crop health in Brazil is expected to be average/above average . Note outright soaking rainfall of 3-5” is forecast across 80% of Brazil’s safrinha corn belt in the next two weeks. Although corn is 3 ½ cents higher as I write in the overnight session basis Mcg/May there are concerns of the seasonal trend. This season’s rally, while intense, has been remarkable from a timing perspective, and it’s post-winter action concern many analysists and traders if weather issues are avoided. Already Argentine corn is offered aggressively for spring arrival. Ethanol grind is likely to slow following 30 days of deflated margins. Brazilian dryness March/Apr demands new highs in the market, but rallies will be more labored after February. Catch up on 24/25 and 25/26 hedges at the market. Additional new crop sales will be recommended prior to NASS’s work suggests the market has guaranteed US acreage expansion.

Have A Great Trading Day!



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