We kicked off the day with Redbook YoY at 7:55 A.M., JOLT’s Job Openings, Factory Orders MoM, Factory Orders ex Transportation, and JOLT’s Job Quits at 9:00 A.M., RCM/TIPP Economic Optimism Index at 9:10 A.M., Fed Bostick Speech at 10:00 A.M., 42-Day Bill Auction at 10:30 A.M., Fed Daly Speech at 1:00 P.M., API Energy Stocks at 3:30 P.M., Fed Jefferson Speech and LMI Logistics Managers Index at 6:30 P.M.The Institute of Supply Management’s Purchasing Manager’s Index rose to 50.9 in January. This was a 3% increase from December and a 4% increase over a year ago, marking the 3rd consecutive month of monthly and annualized gains. More importantly, the index was above 50 for the first time since October 2022, marking the first month of expansion in the US factory sector after 26 consecutive months of contraction. The PMI is comprised of several sub-indexes: The new orders index rose from 52.1 in December to 55.1, while the production index increased from 49.9 to 52.5, and the employment index jumped from 45.4 to 50.3. Supplier deliveries increased from 50.1 to 50.9, inventories fell from 48.4 to 45.9, while prices rose from 52.5 to 54.9. The ISM noted that, “the Price Index indicated increasing prices for the fourth consecutive month.” Mill materials, food elements, and natural gas prices were higher. While plastic resins and diesel prices were lower.
South American Weather Pattern DiscussionNeeded Rain across the Argentine Heartland; The South American forecast into mid-February is improving. Ag Resources (ARC) maintains that new crop threats nearby will be confined to N Argentina, Paraguay, and S Brazil, where extreme heat and lack of rain keep intact a pattern of rapid soil moisture loss. 10-day cumulative rainfall of 3-5” will on the margin challenge soy harvest in Mato Grosso & Mato Grosso do Sul, but yield potential there stays elevated. And not until late February will it be known that safrinha seeding will occur outside the ideal window. Needed rain occurs in Cordoba, Santa Fe, & Buenos Aires Wed-Thurs, but otherwise La Nina-based heat/dryness will dominate Argentina, Paraguay, and Rio Grande do Sul in far South Brazil. Note Jan 2- Feb 2 rainfall in Argentina, Paraguay, and S Brazil is just 5-30% of normal. Temps on Sunday were recorded in the 90’s/low 100’s were widespread. Brazilian soy production gain year-over-year offset losses in Paraguay & Argentina, but a modest trimming of crop sizes in Argentina & Paraguay is forecast. Thankfully, rain across the fat production areas of Central Brazil is stabilizing crop yield.
Central US Weather Pattern DiscussionUS Weather Turns Cold After Next 5 Days; Precipitation Favors East;The Central US forecast features a major temp pattern change beginning early next week. Abnormal warmth continues for another few days, with max temps pegged in the 60’s & 70’s across KS, TX, and OK, and in the 40’s & 50’s across the primary Corn Belt. Frigid air drops southward from Canada Feb 8-9, which pulls temps into the teens and 20’s across the majority of the Central US in the 7-15 day period. Lite snow is projected to precede the coldest of temperatures across the US HRW Belt, but snow cover next week should be monitored closely. Minimum low temps in KS, NE, and the TX/OK panhandles are projected at 5-25 degrees. Otherwise, rainfall in excess of 1”, and snow fall in excess of 4” will favor the Upper Great lakes, E Midwest, and Delta/Southeast into Feb 13th . Below normal precipitation continues across the US Plains which is seasonally normal into March.CBOT Corn Recovers; Politics Front & Center; South American Weather Key Next 90 Days:Global corn markets recovered on Monday as free trade with Mexico and Canada resumed for the next 30 days. The pause in US tariffs pushed forward concern over Mexico and Canadian corn cancelations. This allowed corn to focus on South American weather and crop sizes. Clients must be prepared for a wide-ranging corn market as US grain flows are in flux. Recall Mexico is now the world’s largest corn importer, and in crop year 23/24 Mexico secured an incredible 964 Mil Bu of US origin. The time for better soil moisture prior to spring planting has arrived. Needed soaking rain will impact Cordoba/Buenos Aires in the next 72 hours. The rain will be timely and helpful. However, dryness will persist across Northern Argentina and Eastern Paraguay with the 11-15 day forecast finally offering improved rain. US trade policy headlines drive price discovery in the short run. Longer term direction hinges upon Argentine yield data and the speed at which Brazil’s safrinha crop can be seeded in the next 30-days. Volatility is certain. $4.95+ May and $4.70+ Dec being places to catch up on sales amid weak global demand growth.More By This Author:Revenues & Tariffs – The Art Of The Deal. The Corn & Ethanol Report Shot Clock Running On Last Minute Delay on Tariffs – The Corn & Ethanol ReportEnd Of Month/Week-South American Weather Vs. Upside Momentum – The Corn & Ethanol Report
