Dan Flynn is the writer of The Corn & Ethanol Report, a daily market letter covering grains, energies, and various global issues that are the driving force and backbone of the commodity markets. Contact Mr. Flynn at (312) 264-4374
We kickoff the day with Building Permits Prel, Building Permits MoM Prel, Housing Starts, and Housing Starts MoM at 7:30 A.M., Redbook YoY at 7:55 A.M., NY Fed Treasury Purchases 2.25 to 4.5 yrs. at 9:30 A.M., Net Long-term TIC Flows, Foreign Bond Investment, and Overall Net Capital Flows at 3:00 P.M., API Energy Stocks at 3:30 P.M., and International Monetary Market (IMM) Date.
The national Association of Homebuilder’s monthly Housing Market Index rose for the first time in 5-monts after falling to an 11-month low in November. The index is comprised of several sub-indexes that measure the home builder optimism and market conditions. The sub-index for single-family home sales was steady at 40, while the sub-index for expected home sales of the next 6 months went up to 45 from 39. Additionally, the gauge for prospective buyers increased to 24 from 21. Compared to a year ago, the Housing Market Index was up 19%, marking the largest year-over-year increase since June 2021. However, the index remains just above major lows that were scored in 2020 and 2022. Watching the South American weather pattern the GFS has been the better performer since early December with respect to Brazilian precipitation, but confidence in details of any outlook is low. Ag Resources (ARC) research does suggest the risk is that the GFS is again correct given the trend of Brazilian weather to date. Additionally, NOAA’s bias-corrected outlooks, which reflect trends to date, are not overly optimistic on Brazilian rainfall into late month. No longer can the market wait on a pattern change. Recent forecast failures have been offset by potential Brazilian weather improvement in December. Weather conditions are now critical in determining soy and first-crop corn yield potential in central and northern Brazil. We come in mixed with Turnaround Tuesday and holiday markets, soybeans are giving back Monday’s gains. The January soybeans has sustained a modest uptrend since early December, but within this channel daily price action has been back and forth. Charts and technical analysis have shown the grain complex cannot punch through resistance… (Fundamentals tell me otherwise). Premium was added Monday as Argentina proposed a hike to its tax on soy products exports from 30% to 33% and Ag Resources (ARC) hears of additional Chinese demand for March delivery worth 4 to 6 cargoes. Premium is being shed this morning ahead of Brazilian rainfall, which is scheduled to begin in the next 24-36 hours. The GFS and EU model outlooks remain at odds over the intensity and coverage of coming rain but advertise widespread total of at least 1” across the driest areas of Mato Grosso, Goias, and Bahia. (SOIL MOISTURE IS KEY) Ag Resources (ARC), also notes, the recent jump in in Chinese demand for US beans is counter-seasonal and suggest China – and likely others – are uncomfortable with production risk in Brazil. In the overnight electronic session the March corn is currently trading at 476 which is 1 cent lower. The trading range has been 478 ¼ to 475.
Production Risks In Brazil. The Corn & Ethanol Report 12/19/2023
We kickoff the day with Building Permits Prel, Building Permits MoM Prel, Housing Starts, and Housing Starts MoM at 7:30 A.M., Redbook YoY at 7:55 A.M., NY Fed Treasury Purchases 2.25 to 4.5 yrs. at 9:30 A.M., Net Long-term TIC Flows, Foreign Bond Investment, and Overall Net Capital Flows at 3:00 P.M., API Energy Stocks at 3:30 P.M., and International Monetary Market (IMM) Date.
The national Association of Homebuilder’s monthly Housing Market Index rose for the first time in 5-monts after falling to an 11-month low in November. The index is comprised of several sub-indexes that measure the home builder optimism and market conditions. The sub-index for single-family home sales was steady at 40, while the sub-index for expected home sales of the next 6 months went up to 45 from 39. Additionally, the gauge for prospective buyers increased to 24 from 21. Compared to a year ago, the Housing Market Index was up 19%, marking the largest year-over-year increase since June 2021. However, the index remains just above major lows that were scored in 2020 and 2022. Watching the South American weather pattern the GFS has been the better performer since early December with respect to Brazilian precipitation, but confidence in details of any outlook is low. Ag Resources (ARC) research does suggest the risk is that the GFS is again correct given the trend of Brazilian weather to date. Additionally, NOAA’s bias-corrected outlooks, which reflect trends to date, are not overly optimistic on Brazilian rainfall into late month. No longer can the market wait on a pattern change. Recent forecast failures have been offset by potential Brazilian weather improvement in December. Weather conditions are now critical in determining soy and first-crop corn yield potential in central and northern Brazil. We come in mixed with Turnaround Tuesday and holiday markets, soybeans are giving back Monday’s gains. The January soybeans has sustained a modest uptrend since early December, but within this channel daily price action has been back and forth. Charts and technical analysis have shown the grain complex cannot punch through resistance… (Fundamentals tell me otherwise). Premium was added Monday as Argentina proposed a hike to its tax on soy products exports from 30% to 33% and Ag Resources (ARC) hears of additional Chinese demand for March delivery worth 4 to 6 cargoes. Premium is being shed this morning ahead of Brazilian rainfall, which is scheduled to begin in the next 24-36 hours. The GFS and EU model outlooks remain at odds over the intensity and coverage of coming rain but advertise widespread total of at least 1” across the driest areas of Mato Grosso, Goias, and Bahia. (SOIL MOISTURE IS KEY) Ag Resources (ARC), also notes, the recent jump in in Chinese demand for US beans is counter-seasonal and suggest China – and likely others – are uncomfortable with production risk in Brazil. In the overnight electronic session the March corn is currently trading at 476 which is 1 cent lower. The trading range has been 478 ¼ to 475.
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Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn