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 Redbook YoY at 7:55 A.M., Richmond Fed Manufacturing Index, Richmond Fed Manufacturing Shipments Index, and Richmond Fed Services Index at 9:00 A.M., 52-Week Bill Auction at 10:30 AM., 2-Year Note Auction at 12:00 P.M., and API Energy Stocks at 3:30 P.M.
The Conference Board’s Index of Leading Economic Indicators was down slightly from November, marking the 21st consecutive month lower and putting the index at the lowest levels since May 2020. This also marked the 18th consecutive month of year-over-year declines. Stock prices were the largest contributor to the index in December, while ISM orders, interest rate spreads, and consumer expectations were the largest detractors. 4th quarter GDP figures will be released on Thursday, with the average trade estimate calling for 4th quarter GDP at 2%. By technical definition, the US avoided a financial recession due to government spending and strong labor market. Historically, since 1960, a recession has occurred every time that the Leading Economic Index has turned negative on a year-over-year basis. Such a US recession would not be possible until the last half of 2024 – ahead of a hey US election.
Heavy rain favors East/Northeast Brazil the next 10 days, while models uncertain over February Argentine pattern. The South American forecast remains consistent into Feb 4th with normal rainfall offered to Northern Brazil, heavy showers in East/Northeast Brazil and complete dryness & warming temps forecast in Argentina. The 10-day forecast is assumed, concern in recent weeks has been centered on Mato Grosso do Sul & Sao Paulo in center-west Brazil but coming dry weather in Argentina needs more monitoring across Buenos Aires, La pampa and fringe northern producing areas over the last three weeks. The Brazilian outlook is non-threatening. Enough rain will fall across Mato Grosso, Goias, and Minas Gerais into the weekend to prevent stress-through regional harvest disruptions are anticipated. There are hints that a wetter pattern evolves in Argentina beyond Feb 5th and model guidance is erratic, and we lack confidence in any wetter pattern. Argentine crops are entering their reproductive period and rain during February and the 1st half of March is critical. Ag Resources (ARC) estimates managed funds on Monday are short a net 259,000 contracts, unchanged from last Tuesday and the 14th largest weekly short record. Commercial traders hold an abnormally large net long position , which suggest an absence of new sellers nearby. Adding to existing shorts is dangerous ahead of key South American weather timeframe amid record global trade through January. The expanding conflict in the Mideast will challenge Ukrainian shipments. US export demand expands seasonally into April. CBOT contracts are forging a tradable base, but a sustained rally requires adverse South American weather.
All Eyes On South American Weather As US Drought Eases. The Corn & Ethanol Report 01/23/2024
We kickoff the day with Redbook YoY at 7:55 A.M., Richmond Fed Manufacturing Index, Richmond Fed Manufacturing Shipments Index, and Richmond Fed Services Index at 9:00 A.M., 52-Week Bill Auction at 10:30 AM., 2-Year Note Auction at 12:00 P.M., and API Energy Stocks at 3:30 P.M.
The Conference Board’s Index of Leading Economic Indicators was down slightly from November, marking the 21st consecutive month lower and putting the index at the lowest levels since May 2020. This also marked the 18th consecutive month of year-over-year declines. Stock prices were the largest contributor to the index in December, while ISM orders, interest rate spreads, and consumer expectations were the largest detractors. 4th quarter GDP figures will be released on Thursday, with the average trade estimate calling for 4th quarter GDP at 2%. By technical definition, the US avoided a financial recession due to government spending and strong labor market. Historically, since 1960, a recession has occurred every time that the Leading Economic Index has turned negative on a year-over-year basis. Such a US recession would not be possible until the last half of 2024 – ahead of a hey US election.
Heavy rain favors East/Northeast Brazil the next 10 days, while models uncertain over February Argentine pattern. The South American forecast remains consistent into Feb 4th with normal rainfall offered to Northern Brazil, heavy showers in East/Northeast Brazil and complete dryness & warming temps forecast in Argentina. The 10-day forecast is assumed, concern in recent weeks has been centered on Mato Grosso do Sul & Sao Paulo in center-west Brazil but coming dry weather in Argentina needs more monitoring across Buenos Aires, La pampa and fringe northern producing areas over the last three weeks. The Brazilian outlook is non-threatening. Enough rain will fall across Mato Grosso, Goias, and Minas Gerais into the weekend to prevent stress-through regional harvest disruptions are anticipated. There are hints that a wetter pattern evolves in Argentina beyond Feb 5th and model guidance is erratic, and we lack confidence in any wetter pattern. Argentine crops are entering their reproductive period and rain during February and the 1st half of March is critical. Ag Resources (ARC) estimates managed funds on Monday are short a net 259,000 contracts, unchanged from last Tuesday and the 14th largest weekly short record. Commercial traders hold an abnormally large net long position , which suggest an absence of new sellers nearby. Adding to existing shorts is dangerous ahead of key South American weather timeframe amid record global trade through January. The expanding conflict in the Mideast will challenge Ukrainian shipments. US export demand expands seasonally into April. CBOT contracts are forging a tradable base, but a sustained rally requires adverse South American weather.
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Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn