About The Author

Daniel Flynn

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 MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.M., Fed Markin Speech at 7:30 A.M., Redbook YoY at 7:55 A.M., ISM Manufacturing PMI, JOLT’s Job Openings, ISM Manufacturing Employment, ISM Manufacturing New Orders, ISM Manufacturing Prices, and JOLT’s Job Quits at 9:00 A.M., 17-Week Bill Auction at 10:30 A.M., FOMC Minutes at 1:00 P.M., and API Energy Stocks at 3:30 P.M.

The EIA’s weekly update on retail fuel prices showed a slight uptick for the week ending Dec 25th  The national average retail gasoline price was up $.o6 from the previous week at $3.12?Gal breaking a 13-week long losing streak. Compared to a year ago, the energy price was 1% higher. The average diesel fuel price was $o.2/Gal higher after falling $.65 over the last 8 weeks. Compared to a year ago, the average diesel fuel price was down 14% and marked the 43rd consecutive week of year-over-year declines. The diesel/gas  spread at the pump narrowed to an $.80 diesel premium, still historically high but the lowest since late September. Prices for both fuels were below a year ago, which will aid in a lower December inflation print. The time is near for US farmers to consider booking spring diesel needs on future weakness. Phil Flynn is estimating draws on crude oil of 3 million barrels, and draws on products at 2 million barrels.

Ag Resources also reports soaking rain for northern Brazil into Jan 15th . Brazil’s weather pattern has shifted such that normal/above normal rainfall is most probable over the next 10 days. The shift is rather timely for soybeans planted in December (an estimated 17% of total), while yield stabilization is anticipated to upward of 40% of Brazil’s soy crop. The EU/GFS models have extended active N Brazilian showers into Jan 15th Cumulative rains of 4-9” will blanket Mato Grosso, Goias, Bahia, and Minas Gerais. Totals of 8-12” are possible in Eastern Mato Grosso. The GFS model has projected a 7-day change in soil moisture.

This will effect the Jan 12th Crop Production USDA Supply/Demand, Grain Stocks, WASDE and Winter Wheat Seedings, with the Russian-Ukraine war expansion. Brazil’s monsoon season has arrived-albeit 2.5 months late- with seasonal cumulative rainfall finally building meaningfully in the tropical latitudes. Long term deficits will not be eased, but the timing of coming soaking rainfall is stabilizing to soy yields. Yet, the duration of this wet pattern will be favorable for winter corn and 2nd crop cotton. The intense heat of recent months has passed, but important crop losses have already occurred and will be measured in coming months. Drought ends in east/northeastern Argentina with moisture deficits persisting in west. Argentine weather remains broadly nonthreatening and El Nino since mid-autumn has forced heavy rainfall into east/northeastern regions, and as enough rain has fallen in key areas od southern Cordoba and Buenos Aires to facilitate early growth. Corn and soybean crop ratings improved steadily. Argentine corn is rated 38% good to excellent vs. 15% a year ago, while Argentine soybean crop is rated 40% good to excellent vs. 10% a year ago. Yet, pockets of drought continue. Soil moisture is still short/very short in across the western half of Argentina’s crop area. Soil moisture across the northern half of Cordoba sits at the bottom 2-10% of historical record. Argentine rainfall into Jan 12th will be spotty and generally continue to favor northern areas. Argentine weather matters most between mid-Jan and late February.  The bottom line or Ag Resources $60 K Question is whether the down trend persists or was the start of the year a harbinger of increasing market volatility? Extreme world weather, worsening geopolitical conflicts, 64 nations representing 49% of the worlds population will go to the polls in 2024 to elect their leadership., and China’s inability to boost economic outlook will conspire to produce economic uncertainty and market volatility. This is leaving investors with angst while hedge fund managers and algorithm traders react to headlines in thinning daily volume. Ag Resources looks for 2024 to be a volatile year for trading/investing that is full of opportunity, but timing of trade entry and exit that key profitability. China provided its crude oil refiners a full year of import quota in a surprise move that stokes Q1 world import demand. Moreover, Asian market talk that China is also preparing to release 2024 grain TRQ import licenses. China issues TRQ import licenses annually under its WTO Accension Agreement to private and state-owned companies to facilitate grain importers. Historically, the TRQ import licenses have been utilized based on margins.

Have A Great Trading Day!

 

Thanks,Daniel Flynn

Questions? Ask Dan Flynn today at 312-264-4374