We kicked off the day with Core PCE Price Index MoM, Personal Income MoM, Personal Spending MoM, Employment Costs-Benefits QoQ, Employment Costs-Wages QoQ, Fed Bowman Speech, PCE Price Index MoM & YoY, and Core PCE Price Index YoY at 7:30 A.M., Chicago PMI at 8:45 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M., and Cattle at 2:00 P.M.A strong rally in the gold started Wednesday overnight and continued through Thursday US trading session, which lifted cash and futures markets to new all-time highs. COMEX futures jumped $50/oz, and the cash market traded more than $30 higher. The gold market in US dollars has set new record highs in 4 of the last 5 years. Investor demand has remained elevated as a place to park cash and avoid currency devaluation, while the world central banks have reached for gold as an alternative to US Treasuries. The latest Commitment of Traders report showed that while gold demand remains elevated., commercial selling has remained minimal. Commercial selling began to improve in August, ahead of anticipated interest rate cut from the Fed, and the commercial net short position is now at a 3-year high of 80,000 contracts, but still historically small. The market has yet to reach prices that encourage large commercial selling.
Ground Hog Day Sunday – US Weather DiscussionRegional Flooding Still Possible in Mid-South; Drought Eases Further in Principal Corn Belt:The Central US forecast into mid-Feb is consistent with prior runs. Meaningful rain/snow through the period favors the mid-South & E Midwest, where in TN & KY 7-day precipitation accumulation is projected in a range of 2-3”. Moisture equivalents in IL, IN, and OH into Feb 7th are pegged in a range of .75-1.50”. No major snow events are offered to the US Plains, and temps stay near to above normal in the first half of February. Drought Conditions recorded change in the last 4-weeks. Midwest drought coverage continues to show that drought/abnormal dryness now nearly absent from S IA, MO, IL, IN, and OH> Drought is unlikely to be mitigated in NE & SD through the balance of winter, but there will be no moisture issues elsewhere in spring.
South American Weather UpdateShowers Return to N Brazil in Next 5 Days; Heavy Rain is Probable in Cordoba/Buenos Aires in Argentina in a 4-8 Day Period:The South American weather pattern into mid-February is viewed as favorable in respect to corn & soybeans yield potential. Daily showers – some heavy – resume in Mato Grosso & Goias in N Brazil Sat-Monday with cumulative total pegged upward of 3-4”. This keeps soybeans harvesting slow but keeps abundant soil moisture in place with safrinha corn when planted. Modest net moisture loss is forecast in Argentina into Feb 2nd, but the major forecasting models agree that soaking rainfall of 1-3” impacts key areas of Cordoba & Argentina soon thereafter. Brazilian soybean harvest/safrinha planting will be watched closely, but the most important factor is the drought in March-April. Later planted corn and soybean yield potential stabilizes if 6-10 outlooks verify. A record Brazilian soybean crop is guaranteed.
On the Corn FrontCBOT Corn Futures Retreat in US Tariff Fear against Mexico & Canada:Corn futures fell as traders took profits ahead of the weekend amid uncertainty of US tariffs. Unless there is a last-ditch effort to delay tariffs that will be implanted tomorrow expects further liquidation in today’s trading session. However, Mexico will be unable to reroute US corn with 65% of US corn flowing into Mexico via joint US-Mex rail system and barge open waters. Corn had previously tested a 15-month high on capital inflows and hot/dry weather in Argentina. It’s premature to be overly concerned about Brazilian seedings, with no negative yield drag expected until after March 5th . New US corn export sales jumped 53 MBU, up 49% from the 4-week average. Sales to Mexico rose 17 MBU to a record 637 MBU. That’s up 20 MBU from a year ago. Mexico is the world’s largest importer of corn and the single largest market for US corn. Should a trade war breakout, corn could be one of the war’s first victims. Argentina & Brazil would likely be beneficiaries should Mexico seek alternative sources of supply. Tariffs could end this rally for now, but the market needs certainty in Brazilian winter corn production to sustain a bearish trend. Key support for March corn is below $4.60 as producers and traders await retaliation from Mexico/Canada.More By This Author:End Of Month/Week-South American Weather Vs. Upside Momentum – The Corn & Ethanol Report
Bulls Are Back In Town In Early Trade. The Corn & Ethanol Report
Bankers & Davos Elites Get Trumped – The Corn & Ethanol Report
