Jefferies-Chemicals Hunting Consensus：Corn Discounting Brazil Crop...-20250606

Commodities discount views about the economy, productivity, even weather—including how they interact. What current spot prices discount, in terms ofthe most plausible trajectories through year-end, hinges on our confidence inother key forecasts. Some questions, such as how hot it will get in August, willbe settled soon; others, such as global GDP growth metrics, will take longer.Disagreeing with these views means you disagree with current prices.

UKF Baseline: We use an Unscented Kalman Filter (UKF) to tease out how forecasts shift if you havehigh confidence in only a couple of inputs. In our baseline scenario, we let the UKF forecast 2025outcomes assuming historical relationships, but with no inputs from expert forecasts (WASDE, IMF,consensus, etc.)--and therefore no adjustment for policy shocks. The current base case is for oilprices ending 2025 ~$75/bbl and global GDP growth ~35bps above the IMF forecast leading tocorn rallying to ~$5.50/bu, despite yields ~2% above the current forecast. Other baselines includea stock/use ratio of 25.5% at year-end, late plantings at the low end of the historical range (4.2%),August 0.2ºF above 2024 (2.1ºF above avg.), and August rainfall 0.2 inches below average. Thisframework is significantly more upbeat than what we currently embed in our company forecasts, and itwould, for example, be positive for Buy-rated CTVA.