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The Corn & Ethanol Report

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


Jerome Powell’s Fed Expected to Sit on Hands Again. The Corn & Ethanol Report 06/18/2025

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 5:00 A.M., Building Permits Prel, Housing Starts, Building Permits MoM Prel, Housing Starts MoM, Initial Jobless Claims, Continuing Jobless Claims, and Jobless Claims 4-Week Average at 7:30 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction, 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate, and EIA Natural Gas Storage at 11:00 A.M., Fed Interest Rate Decision, FOMC Projections, 1st yr., 2nd yr., Current, and Longer at 1:00 P.M., Fed Press Conference at 1:30 P.M., Dairy Products Sales at 2:00 P.M., Net Long-term TIC Flows, Foreign Bond Investment, and Overall Net Capital Flows at 3:00 P.M.

The National Association of Homebuilders’ Housing Market Index declined by 6% in June and was 26% less than a year ago at 32 index points. The index fell below the 2024 and 2023 lows and was at the lowest level since December 2022. This contrasted with trade estimates that were looking for an average increase to 36. The Fed has been unwilling to lower interest rates despite low inflation and low unemployment figures, which is plaguing the housing market, with average mortgage interest rates holding near 7%. The survey of homebuilders showed further erosion in current sales conditions and a decline in prospective buyer traffic, while builders’ expectations for sales in the next 6 months also declined. At the pandemic low, the index fell to 30, the lowest since 2011. At the current rate, the index could fall below the pandemic low in July or August. New home building will then struggle and choke off new supply.

Central US Weather Pattern Update

Central US Forecast Remains Favorable; Ridging/Heat is Temporary:

The Central US forecast remains consistent and non-threatening. The season’s first heatwave blankets the Central Plains/Midwest from Sun-Wednesday. However, this will be bookended by regional soaking rain and near normal temps. Nearby, rainfall of .50-1.50” impacts eastern KS, MO, IA, IL, IN, OH, TN, and KY within the next 72 hours. Max temps across the Midwest will be capped in the mid-80’s. The rain and seasonal temperatures are ideal for vegetative growth. A high pressure Ridge progresses east across the Midwest from June 22-26th . Rain this weekend/early next week will be pushed northward into IA, MN, and WI with totals of 1-2.00”. A third system is offered in the 11-15 day period. High temperatures in the 90’s will be common from Kansas and Nebraska into Ohio for 2-3 days. The heat will cause crops to grow deeper roots in search of moisture. Highs in the mid-80’s to mid-90’s are not unusual for summer seasonal trends, offered from June 27th to July 3rd. The EU model’s most recent 8-14 day precipitation forecast has another round of soaking rainfall favors the E Plains & Upper Midwest, with accumulation of 1-2” offered to IA, MN, WI, and MI. Lesser but still welcomed totals of .50-1.00” are projected across much of the eastern Midwest. And a welcomed period of lasting sunshine occurs across key areas of TN & KY. Temps in the 8-14 day period ease into the upper 70’s & 80’s. Forecasts have been consistent in projected the end of Midwest by next Wed/Thurs. The market will be more sensitive to forecasts following heat next week and as corn’s key reproductive stage lies just ahead. But it remains that the speed of the jet stream argues against pattern stagnation and the arrival of an anchored high pressure Ridge into the early days of July. Abundant rainfall and near to above normal temperatures creates greenhouse growing conditions for US row crops.

Corn Comments & Analysis

CBOT Corn Ends Mixed; July Discount to Dec Widens:

July CBOT corn fell to harvest lows while September forward futures ended higher. The market is responding to rising geopolitical turmoil between Israel and Iran. Modest short covering is noted. However, the long-term view remains bearish without widespread searing heat during July – which is absent from extended range forecasts. Cheap sorghum has replaced corn throughout the Plains in feed rations and includes the ethanol grind. The Midwest/Plains cash corn market shows little or no tightness with a new harvest in the Gulf States just 6-7 weeks off. LA corn is now 95% pollinated. This year charts reflect the static basis structure for cash corn post US export dominance. We now have an amply supplied cash market, any corn bullishness must come from extreme heat during pollination. Ag Resources (ARC) looks for next week’s US corn conditions to exceed last year for the first time this crop year during a similar week. The coming Midwest rainfall and variable temperatures should improve US corn conditions on Monday. Unless the Central US weather forecast changes hot/dry, rallies to $4.40-$4.50 December are sales opportunities.

Have A Great Trading Day!



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