We kicked off 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., Wholesale Trade at 7:30 A.M., Fed Logan Speech at 8:15 A.M., Wholesale Inventories MoM at 9:00 A.M., EIA Energy Stocks, Fed Barkin Speech. And Fed Goolsbee Speech at 9:30 A.M., Fed Logan Speech at 9:45 A.M., Fed Williams Speech at 10:00 A.M., 17-Week Bill Auction at 10:30 A.M., Fed Barkin Speech at 11:15 A.M., Fed Jefferson Speech at 11:30 A.M., 10-Year Note Auction at 12:00 P.M., FOMC Minutes at 1:00 P.M., Dairy Products Sales at 2:00 P.M., Fed Collins Speech at 4:00 P.M., and Fed Daly Speech at 5:00 P.M.The October International Trade report showed the US trade deficit rose by $8.5 billion from July to a high of $70.4 Billion. Compared to a year ago, the deficit was %10.8 Billion or 18% worse. This marked the 6^th consecutive month that the trade deficit worsened on a year-over-year basis and the 4^th consecutive month that the deficit worsened by 13% or more. August exports increased by 2% to a record high of $271.8 billion on increased exports of telecommunications, civilian aircraft, computer accessories, industrial machinery, pharmaceutical preparations, non-monetary gold, and passenger cars. Imports decline o.9% to $342.2 billion on reduced non-monetary gold, finished metal shapes, crude oil, and passenger cars. The trade deficit with China narrowed from $30.1 billion in July to $27.91 in August.Image Source: Unsplash
Widespread Rain Recorded in Argentina; Confidence High Regular Rain Impacts Brazil Second Half of October:The South American weather forecast remains broadly favorable. The major forecasting models remain at odds over the timing of regular soaking rainfall in Mato Grosso & Goias -the EU model allows heavy rain to begin October 12^th, the GFS projects regular rain to begin October 14^th-but there remains agreement that a more normal pattern gets established in the second half of October. Ag Resources (ARC’s) confidence is high with respect to an accelerated pace of N Brazilian soybean seeding in the second half of Oct. Moderate to regionally heavy rain was recorded in Argentina overnight. 24-hour accumulation was good, more is needed, and additional rain is advertised in all but far southern Argentine growing areas throughout the next 10 days. The South American weather forecast is normalizing as farmers rush seed into the ground.
Central US Weather Pattern DiscussionCentral US Pattern Unlikely Next Two Weeks:Extended range Central US weather forecast have trended drier into Oct 21^st, with a pattern of zero/near-zero rain projected throughout the next two weeks. There are hints that better rain slides into the US within the next 30 days, but confidence beyond late October is low. ARC maintains that 52-54% of US corn and 70-72% of soybeans will be harvested by Oct 20^th . High temps in KS,NE, MO, and parts of W IA will exist in the low 80’s through the balance of the week before cooler temps blanket the Central US in the 6 to10 day period. There is concern about soil moisture. Ideally, some measure of replenishment occurs prior to winter. Otherwise, an active winter precipitation will be needed to prevent a further slow/steady expansion of drought conditions prior to spring 2025.
Updated US Corn Yield ForecastARC projects USDA in its Oct report on Friday to raise US corn yield by 0.8 BPA to a newer record of 184.4. Upward revisions are made across the primary Corn Belt, most notably in MO and IA. Crop ratings all season in IA have been incredibly high – and there’s no seasonal down-trend during Sep & early October – which is atypical. IA’s corn crop since early August has been rated 77% GD/EX. ARC projects yield in IA at a record 216 BPA, vs. 201 in 2023, and projects yield in MO at a record 187 BPA, vs. 153 in 2023. A 186+ US corn yield remain unlikely amid crop failures across the Carolina’s, VA, and amid sub-trend yields in OH and PA. Higher projected corn yield will partially offset lower old crop carry-in supplies. ARC projects total US corn supply (beginning stocks + production) in 2024 at 16.96 Bil Bu, down 35 Mil from USDA, but still the second highest on record – despite the loss of 3.9 Mil panted acres in 2024. It’s true the US will be the world’s primary supplier in winter and spring due to crop loss in Ukraine and as South America shipments fall to near zero after December. But there will be no need for US acreage expansion in spring 2025 without sizable yield loss in Brazil or Argentina. ARC’s yield forecast of 184.4 and ARC’s new crop US corn end stocks forecast of 194 Bil Bu lean neutral corn at $4.00-$4.40, basis spot. But the strategy remains to use rallies to move along 2024 and 2025 corn sales & hedges. A world demand driver is absent today for corn which leaves prices in a longer-term bearish price trend.
CBOT Corn Ends Weak on Plunge in Crude ; Absence of Chinese Corn Demand & Harvest Pressure:Dec CBOT corn traded below its 100-day moving average as China returned to the market with a whimper following its Golden Week holiday and as the market preps for a boost in USDA’s projected US corn yield. ARC’s work suggests a 0.5-1.5 BPA offsets lower carry-in supplies and keeps the US cash pipeline full into yearend. A range of $4.00-$4.30 is projected through the balance of October, with cash basis weakening as storage availability is strained by record large US yields. ARC expects corn to gain on soybeans well into early 2025. Note Ukrainian fob premiums have rallied $.15/Bu in last two weeks. US Gulf corn is competitive in the world market, but needed Chinese demand is lacking. A battle of demand growth and near record total US corn supplies keeps a neutral trend intact. End users should use any decline to $3.80-$4.00 spot futures for forward coverage while rallies stall at $4.30-$4.40. The bulk of US harvest is ahead.More By This Author:Weather Remains the Headline. The Corn & Ethanol ReportFailures Hitting on All Cylinders. The Corn & Ethanol ReportBlack Sea & South American Yields And U.S. Exports. The Corn & Ethanol Report