We kickoff the day with Challenger Job Cuts at 6:30 A.M., Export Sales, Initial Jobless Claims, Nonfarm Productivity QoQ Prel, Unit Labour Costs QoQ Prel, Continuing Jobless Claims, and Jobless Claims 4-Week Average at 7:30 A.M., EIA Natural Gas Storage at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., Fed Waller Speech at 1:30 P.M., Fed Daly Speech at 2:30 P.M., Fed Balance Sheet & Total Vehicle Sales at 3:30 P.M.The US trade deficit worsened to $98.4 billion in December, $19.5 billion more than in November and $33.5 billion more than a year ago. UIt was the 2nd largest 1-month deficit, behind March 2022, when the US marked a $102 billion deficit. It was also the most significant 1-month increase in the trade deficit on record and the 2nd largest annualized change. US imports in December rose 3.5% to a record large $365 billion. Goods imports jumped $11.4 billion to $71.8 billion. US exports fell by $7.1 billion from November to $266.5 billion. The largest annual trade gaps were with China (-295.4 billion), the EU (-235.6 billion), Mexico (-171.8 billion), and Vietnam (-123.5 billion). The trade gap with Canada is + $ 63.3 billion. It is expected US President Trump will soon target each of the 4 nations to secure additional US goods, or face import tariffs to protect US businesses.
South American Weather Pattern DiscussionDrying Ahead for Mato Grosso/Goias/Sao Paulo; Heavy Rain Aids Pod/Kernel Weight Stabilized:The South American pattern into mid-February is consistent – wetter across Central and Northern Argentina and Southern Brazil. Soaking rain of 2.0-5.5” has been recorded across crop intensive areas of Cordoba, La Pampa, and Buenos Aires this week. Additional totals of .75-2.00” are forecast in Santa Fe & Entre Rios in the 6-10 day period. Some measure of damage was incurred via heat/dryness in late December/January, but coming rain will act to improve crop yield potential considerably. Brazilian rainfall into Feb 10th favors far W Mato Grosso, as well as Mato Grosso do Sul, Parana, and Rio Grande do Sul where it is welcomed. Below normal precipitation is forecast for Mato Grosso, Goias, and Minas Gerais. Regular rain resumes in N Brazil Feb 14-20th . The mix of rain/sun allows fieldwork to catch up while sustaining adequate soil moisture for just planted safrinha corn crop. The dry weather forecast is ideal for rapid winter corn seeding with no yield drag noted if the crop is seeded by March 5th .
Energy Market DiscussionUS Crude Stocks Begin Seasonal BuildWith the summertime driving season approaching we will be changing blends in gasoline and spot WTI crude’s rally hit a wall in mid-January at $80/barrel. This is part due to uncertain US (and global) trade policies but is equally a function of rising US inventories. US crude stocks in the week ending Jan 31st totaled 424 Mil Barrels, up 8.7 Mil on the previous week and near unchanged from last year. A normal, seasonal swelling occurs each year from late Jan to late spring and the market is digesting the coming 30-35 Mil Barrel increase in weekly US stocks. Ther’s just no urgency to ration available supplies during winter and spring when the switchover to summer blends will undoubtedly take place. We also need a stockpile of diesel for farmers in the field.On the Corn FrontCorn Retreats on US/China Trade Concern; Ukrainian Fob Premiums Drop; US Disappearance Elevated For Now:CBOT corn ended slightly weaker following the absence of US/Chinese negotiations on Tuesday and as Argentine yields are set to stabilize into mid-February. Supply issues remain. Mato Grosso safrinha seeding progress will be critical to advance this month. End users/importers are unlikely to chase rallies above $5.00 basis March – and fund net length is near record large at +370,000 contracts. ARC’s bet is that additional rallies will be challengeds and labored without confirmed weather adversity in Brazil Apr/May. For now, US corn demand is robust. Ethanol production in the week ending Jan 31st was a near record 327 Mil Gal, vs. 298 Mil the previous week. Grind has been supported by record-large US ethanol exports. US ethanol stocks are record large, but ARC and other analysts doubts the USDA trims its 24/25 industrial use forecast until later in the crop year. Catching up on sales near $5.00 in March is advised. The risk leans bearish after late winter without a new supply loss. Tariffs are a concern against Mexico and Canada in March./ If US/China were to enter a new Phase 1 agreement, China would need to comply with the 2020 pact and secure $85 billion of US goods- which is unlikely. China filed a complaint with the WTO.More By This Author:Funds & Markets Following the Master Negotiator. The Corn & Ethanol ReportTariff Pause & South American Weather Supportive Near-Term. The Corn & Ethanol ReportRevenues & Tariffs – The Art Of The Deal. The Corn & Ethanol Report
