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The Corn & Ethanol Report

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


Midwest Seeding Rolling Along. The Corn & Ethanol Report 04/30/2025

We kickoff the day with First Notice Day May CBOT Futures, 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., ADP Employment Change at 7:15 A.M., GDP Growth Rate QoQ Adv, Employment Coast-Benefits Q0Q, Wages QoQ & Employment Cost QoQ, GDP Price Index QoQ, Core PCE Prices QoQ Adv, GDP Sales QoQ Adv, PCE Prices QoQ Adv, Real Consumer Spending QoQ Adv, and Treasury Refunding Announcement at 7:30 A.M., Chicago PMI at 8:45 A.M., Core Price Index MoM & YoY, Personal Income MoM, Personal Spending MoM, PCE Price Index MoM & YoY, and Pending Home Sales MoM & YoY 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 US dollar has declined sharply in the past 100 days, but the drop has been especially sharp since the announcement of US tariffs against various nations. Historically, a nation that is the world’s reserve currency should also hold a trade deficit; trust/confidence in its currency helps stabilize the economies of developing nations. However, the Trump Administration is seeking realignment of world trade and a fall in the value of the US dollar. A drop in the greenback aids US exporters and farmers. Brazilian real has been in a constant state of depreciation since 2023 which has aided Brazilian farm profitability. The real lost 13% since the start of the year which will act as a drag on new crop production potential. The ever declining real has been the primary driver of Brazilian exports. If the real trading at trendline support, which, if broken, would further decline to 510-520 by year end.

US Weather Update

Excessive Rain HRW Belt; Outlokk Favorable for Spring Seeding Elsewhere:

Too much rain falls too quickly in parts of TX/OK and far western KS May 6-8, but otherwise US weather threats remains absent. The EU & GFS agree that rainfall of 3-7.00” impacts the southern and western Plains in the 6-10 day period. This in the long run is a positive, but wheat disease/lodging will be monitored. Strong T-storms are implied. A mixture of rain, sunshine, and near normal temps are forecast nationwide over the next 10 days. Heavy showers favor the E Midwest Wed-Friday. Rainfall next week will be confined to the W Plains. Planting windows will be wide open in NE, the Dakota’s & Midwest throughout the 6-15 day period. The NOAA’s predicted soil moisture anomalies on May 13th shows deficits persist in NE and dot portions of MN & IL, but water availability will not be a glaring issue in May.

Mexican Drought Expands; Heat/Dryness Pushes Western Corn Belt Seeding:

Drought erosion has been rapid in the US, but moisture concerns in Mexico increases further into the middle part of May. Soil moisture anomalies as of April 25th shows major drought expanded further south in the last 30 days, and still no meaningful rain is forecast in Chihuahua, Sinaloa, and Jalisco – which combine for 40% of total Mexican corn production – over the next two weeks. High temps un the upper 80’s will be common. There’s ample time to plant summer corn in Mexico, but tropical storms or an outright pattern shift are needed prior to early summer. Winter corn yields have been negatively impacted. Already Ag Resources (ARC) Mexico in crop year 25/26 to import 900-925 Mil Bu of corn. This rises to 980-1,000 Mil Bu, if drought persists. However, there is still time for rain with Mexico’s corn planting extended into June. The corn market this week has been more aggressively shift its focus away from tight old crop stocks to a probable swelling of new crop inventories from August downward. The US since autumn 2024 has been the dominant supplier of corn to importers, but this slows between August and December if the Black Sea avoids a second consecutive year of crippling drought. Recall ARC has raised current-year Brazilian production to 127 MMT’s, vs. 119 last year: Ukrainian production rebounds to 32 MMT’s, vs. 27 last year. And US production assuming trend yield, will be a record 401 MMT’s. The 635 MMT’s of supply will overwhelm the world feed grain market. South American production in 2025/26 is forecast to expand by 2 MMT’s – mostly due to larger projected safrinha area in Brazil. But in the shorter term, it’s the likelihood that exporter production in calendar year 2025 rises by 38-40 MMT’s (1.50-1.57 Bil Bu) that pressures values into harvest or until lasting dryness impacts the Central US or the Black Sea. ARC forecasts exporter corn production in calendar year 2025 at a record 632 MMT’s. Importantly, total global corn consumption grew by just 11 MMT’s (0.8%) year-over-year. Rather the funneling of demand to the US market was mostly a function of lower than expected production in Brazil last summer and the loss of 10MMT’s of combined Ukrainian & Russian supplies. The lack of global demand driver makes the path of building stocks easier if Mother Nature cooperates. ARC’s work suggests that a US yield of 168 BPA or below is required to keep exporter production unchanged year-over-year in 2025.

ARC projects a further tightening of old crop US and exporter corn stocks & stocks/use. Exporter corn stocks/use in 24/25 is forecast at 7.2%. This matches the current record low scored in 2011/12 and 2020/21. However, exporter corn stocks/use rises to 10.5% assuming normal weather in US and Black Sea. US corn stocks/use balloons above 15%. Both suggest fair value in the second half of 2025 lies between $3.70-$4.20 basis spot CBOT corn futures. Its premature to call the corn market oversupplied, but the goal in late 2025 & 2026 will be to find demand and curtail US 2026 corn planted area by 2-3 Mil acres. ARC doubts the 2025 growing season will be void of weather issues, but supply-driven rallies must be used to manage forward risk. December 2025 corn futures above $4.60 and December 2026 above $4.75 provides the opportunity for sales/hedges. The rise in US & exporter corn stocks/use ratios is impressive.

Corn Comments & Analysis

CBOT Corn Ends Sharply Lower; Seeding Date Concerns Absent:

Corn futures shed additional weather premium amid an ongoing lack of meaningful threats to US planting progress and as 10-day forecasts feature a further contraction in abnormal dryness & drought. The surplus soil moisture will be present in TX, OK, and KS is unique relative to recent years, and this raises the burden on heat & dryness in June-July to materially trim yield potential. It’s a long growing season, but the market perceives limited risk today. ARC projects Dec CBOT corn will slide into pre pollination equilibrium at $4.30-$4.40. Summer weather patterns are then awaited. Longer term downside price risk is pegged at $3.75-$3.95 at harvest, but the recent break has boosted ethanol margins, while US corn is still competitive in the global marketplace through July. Spain secured 120,000 Mt’s of US 24/25 corn yesterday. An intermediate low is expected next week. Recoveries must be used for forward hedges, but it will also be important to closely follow the price of September corn call options to place Midwest drought insurance to protect sales. ARC sees downside corn price risk at $4.60 in July and $.30 in Dec futures.

Have A Great Trading Day!



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