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The Corn & Ethanol Report

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


Tightening Global Corn Supply May Continue. The Corn & Ethanol Report 07/29/2026

We kickoff the day with 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., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction and 2-Year FRN Auction at 10:30 A.M., Fed Interest Rate Decision at 1:00 P.M., and Fed Press Conference at 1:30 P.M.

US Corn Yield Probabilities

Weather – and crop condition – based yield models support an idea that USDA will revise August US corn yield forecast downwards in months ahead. Yield models based on crop conditions and temperatures – which are more robust – indicate yield will be no better than 183 BPA! More importantly the model opens the door for sub 180 BPA yield if heat and dryness resumes after August 5th. The correlation between July precipitation averaged across the principl US Corn Belt and yield performance against trend. On balance, dryness in July was largely regional and was most intense in KS, western NE, MO, ND, and northern MN. Corn Belt – wide precipitation in July, assuming neqarby forecasts verify, id 3.4”. This compares to 3.9” on average and correlates with a final national yield very close to trend. However, the relationship between rainfall and yield is the weakest of weather studies. The R-squared is just 0.35. The correlation between July temperatures and yield performance is far stronger. Assuming nearby forecasts verify, July 2026’s average temperature across the principal Corn Belt will be 76.9 degrees Fahrenheit, the highest since 2012 and a full 2.0 degrees above average. US corn yield loss (relative to trend) is common when July’s average temp exceeds 76 degrees. A temperature near 77 degrees suggest yield loss 2-5% is reasonable. Yield loss of 3-5% relative to trend in 2026 places national yield 176-181 BPA. Notice the correlative factor between yield and temps increases to 0.71. Yield performance is better explained by temperatures, and heat is this years concern. Moderation is desired in August, with another warm month unwanted. The correlation between late July crop conditions (% GD/EX) and final yield performance is below. The correlation is weaker than temperatures, but stronger than July precipitation. . Broadly , a crop rated 63% GD/EX in late July is correlated with a yield near trend but no better. And in years in which the crop was rated but 65% GD/EX and yield at or slightly above trend. July temperatures were mild . July temps are key to US corn yields. ARC does not expect an outright yield disaster, and a national yield of 180-181 would be the second highest on record. But regional drought and widespread heat are important given the loss of 3.5 Mil US corn acres and record total disappearance. A year ago, a yield loss of 2-3% relative to trend would have meant little. In 2026, a yield loss of just 3% relative to trend trims 26/27 US corn end stocks to or below 1.3 Bil Bu. Historically, tight, with a rally to ration demand required.

Corn Comments & Analysis

CBOT Corn Bounces at Chart Support; Brazilian Market Climbs Seasonally:

CBOT corn futures recovered on Tuesday. Argentine origin is offered aggressively following record production, and as 30% of the crop there remains to be harvested. However, there are increasingly fewere places to hide from tighten global supply. Any future modest loss of US yield from 181 BPA is important. Forecasts agree unwanted heat resumes across all but the E Midwest after August 5th. This will be closely followed. Interior corn bids in Mato Grosso Brazil have rallied to $144/MT, vs. June’s low of $127. Brazilian interior prices will move higher into December, and the market is moving swiftly higher despite a record crop size which is telling. Brazil benefits from a 32% ethanol blend rate. The US benefits from record global import demand., which expands further in crop year 26/27 as concern over aflatoxin and Ukrainian logistical issues compound record low European corn production. Be prepared for choppiness until US acreage is defined by NASS on August 12th. However, ARC sees upside of $5.40-$5.60, basis March nearby on tightening world corn supplies as the EU corn crop is forecast to drop to 45.6 MMT’s, down nearly 300 Mil Bu from the June forecast. US corn will be wanted in the world marketplace.

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