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The Corn & Ethanol Report

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


Traders Pondering Monday’s Data-No Fresh News. The Corn & Ethanol Report 03/28/2025

We kickoff the day with Core PCE Price Index MoM & YoY, PCE Price Index MoM & YoY, Personal Income MoM, and Personal Spending MoM at 7:30 A.M., Michigan Consumer Sentiment Final, Michigan 5-Year Inflation Expectations Final, Michigan Consumer Expectations Final, Michigan Current Conditions Final, and Michigan Inflation Expectations Final at 9:00 A.M., Fed Barr Speech at 11:15 A.M., and Baker Hughes Oil & Total Rig Count at 12:00 P.M.

The US economy expanded at an annualized 2.4% in Q4 2024, up slightly from the previous estimate of 2.3%. Most of this change ea due to a 0.2% downward revision on imports. Exports declined 1.9% for the quarter, while government expenditures was one of the largest positive contributors to GDP. 4th quarter government expenditures rose by 3.1% compared to the previous estimate of 2.9%. Fixed investment declined 1.1% compared to the prior estimate of -1.4%. Personal Consumption ( a function of gov’t spending)rose by 4%, with spending on goods up 6.2% ahead of the holidays, and services expenditures rose 3%. The US federal debt rose bt $754 trillion to produce $326 trillion of “economic growth”. The debt-to-GDP ratio rose to a record high of $122%, and the per capita federal debt rate increased to a record high of $107,808.

Central US Weather Pattern

Drought to End in Great Lakes; E Midwest; Southeast Corn Seeding Paused:

The Central US forecast remains consistent into April 5th.A stagnant pattern of abundant precipitation in the east & continued dryness across the southern and central Plains is projected. 7-Day precipitation accumulation has been boosted to 2-4” east of the Mississippi River. This matches what’s needed to ease/end drought there, and so is viewed as beneficial. Corn planting which is 61% complete in LA and 14% complete in MS, will be halted, but there’s time for southern crops to be planted with optimal windows. Net soil moisture loss persists across the primary HRW Belt. Central US temps will be more variable into early April, but heat favors TX, OK, & W KS, where highs will periodically reach into the upper 70’s & 80’s. US concern today is confined to Plains winter wheat and ongoing deepening drought.

South American Weather Pattern Discussion

South American Trends Drier; Strength of Monsoon Critical in April: The EU, GFS, and AI models have trended drier in central Brazil into April 6th and project a stark northward shift in Brazilian rainfall in the 11-15 day period. Enough rain falls in Mato Grosso & Mato Grosso do Sul nearby to keep safrinha crop health normal, but moisture demands expand mid-April onward, and whether the N Brazilian monsoon is allowed to continue beyond the first week of April is critical. Extended range guidance today keeps Brazilian rainfall confined to northern Mato Grosso and fringe producing areas in the northeast. The remainder of Brazil’s safrinha belt will be arid. In parts of safrinha producing areas rain totals have been no better than 20-40%of normal in key areas of Gois, Minas Gerais, and Parana is important. The risk of rainfall does erode in April/early May – leaving a large portion of safrinha corn to pollinate without adequate water.

Corn Comments & Analysis

CBOT Corn Does Little; Fund Length Unremarkable: CBOT corn futures ended slightly weaker for a third day.. Breaking news was absent. Long liquidation remains dominate ahead of NASS’s March 31st stocks/seedings data. Ag Resources (ARC) estimates that managed funds in the last 7 sessions have sold 34,000 contracts. Net fund length today is estimated at just 74,000 contracts, unremarkable given tight exporter/global stocks. The downside risk is becoming limited. US corn retains the title as the world’s cheapest feed grain, while projected new crop end stocks can swing 400-500 Mil Bu based on where yield exists within a range of 177-183. Some measure risk premium is needed, and closer attention will be paid to excessive Midwest rain should it continue beyond early April. ARC sees end user value in July corn below $4.60. Seeding Intentions of 94-95 Mil acres has been priced into the market. Export pace analysis suggests USDA’s 24/25 export forecast is 50-75 Mil Bu too low. The July-December corn spread should gain amid tightening old crop supplies and near record new crop seeding. For now, December corn futures have support under $4.30. Rising soybean values will also act to underpin corn.

Surprisingly CBOT grain open interest continued to gain Thursday’s preliminary open interest data shows Chicago wheat up 9,420 contracts, corn up 3,509 contracts, and soybeans up 2,821. Soybean oil was up 7,613 contracts and soybean meal was up 2,058 contracts. It appears managed money is embracing a short grain/long soybean futures position.

Have A Great Trading Day!



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