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 Non Farm Payrolls, Unemployment Ratre, Average Hourly Earnings MoM & YoY, Participation Rate, Average Weekly Hours, Government Payrolls, Manufacturing Payrolls Private, Nonfarm Payrolls Private, and U-6 Unemployment Rate at 7:30 A.M., Factory Orders MoM and Factory Orders ex Transportation at 9:00 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M., and Total Vehicle Sales,
The Institute for Supply Management reported that its Manufacturing Purchasing Manager’s Index in July slipped 46.6 down from 48.5 in June and below trade estimates of 48.8. The index was the lowest level in 5 months and has been below 50 in 19 of the last 20 months. An index measurement of 50 reflects expansion in the US manufacturing index, and below 50 signals contraction. New US Orders fell to 47.4, down from 49.3 in June and the lowest since June 2020. This was accompanied by the weekly Initial Jobless Claims report that showed the number of people claiming unemployment benefits had risen to a 51-week high. The risk of a recession is here without the US Central Bank cutting rates aggressively.
Central US Weather Forecast Unre typically scored certainty High Amid Tropical Storm; Models Trend Drier in Delta/W Midwest: The EU/GFS forecasts on Thursday evening pushed next week’s hurricane farther east, with landfall anticipated across West Florida and the storm passing across N Florida and back into the Atlantic Aug 6-8. This would leave the remainder of the Central US in a arid weather trend. Extreme heat stays absent from the principal Corn Belt but continues across the US Plains/Delta/Southeast into mid-August. The forecast is viewed as mixed with respect to US summer row yield potential. Rapid soil moisture losses occur in; TX, OK, KS, NE, and SD. Adequate subsoil moisture and lack of heat exist from IA east. Be prepared for changeable 6-15- day outlooks as the path of next week’s tropical event is critical to Central US rainfall forecasts. NOAA agrees with model guidance that projects an eastward turn in the developing Caribbean hurricane to rake Florida and the US Eastern Seaboard.
Global Corn Futures Stabilize; Stone X Pegs US Yield at 182.3 BPA; Corn Valuable Below $4.00: Corn futures ended near unchanged in the US, Brazil and Europe. Fob premiums are unmoved. Export Sales were mixed, with old crop US sales a marketing low 6 Mil Bu but new crop sales were 28 Mil Bu. Cumulative new crop sales on July 25th total 220 Mil Bu, vs. 190 Mil a year ago. US corn remains highly competitive in the world market. Corn’s historical relationship with crude shows high prices in delivery pushes premiums higher, like inflation caused by the current administration’s war on energy. Livestock margins are historically high. Stone X’s projected crop size of 15.2 Bil Bu, vs. USDA’s 15.1 Bil, is seen as neutral. Assuming export demand expansion, a yield of 180-182 does little to build stocks in crop tear 24/25. A USDA yield of 184+ in August is bearish, but anything less triggers early seasonal lows. ARC notes in years of nonthreatening weather/trend yields, market bottoms are typically scored in late Aug/early Sep. Watch for pushback to bearish sentiment in the days ahead.
Weather Risks & Unemployment. The Corn & Ethanol Report 08/02/2024
We kickoff the day with Non Farm Payrolls, Unemployment Ratre, Average Hourly Earnings MoM & YoY, Participation Rate, Average Weekly Hours, Government Payrolls, Manufacturing Payrolls Private, Nonfarm Payrolls Private, and U-6 Unemployment Rate at 7:30 A.M., Factory Orders MoM and Factory Orders ex Transportation at 9:00 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M., and Total Vehicle Sales,
The Institute for Supply Management reported that its Manufacturing Purchasing Manager’s Index in July slipped 46.6 down from 48.5 in June and below trade estimates of 48.8. The index was the lowest level in 5 months and has been below 50 in 19 of the last 20 months. An index measurement of 50 reflects expansion in the US manufacturing index, and below 50 signals contraction. New US Orders fell to 47.4, down from 49.3 in June and the lowest since June 2020. This was accompanied by the weekly Initial Jobless Claims report that showed the number of people claiming unemployment benefits had risen to a 51-week high. The risk of a recession is here without the US Central Bank cutting rates aggressively.
Central US Weather Forecast Unre typically scored certainty High Amid Tropical Storm; Models Trend Drier in Delta/W Midwest: The EU/GFS forecasts on Thursday evening pushed next week’s hurricane farther east, with landfall anticipated across West Florida and the storm passing across N Florida and back into the Atlantic Aug 6-8. This would leave the remainder of the Central US in a arid weather trend. Extreme heat stays absent from the principal Corn Belt but continues across the US Plains/Delta/Southeast into mid-August. The forecast is viewed as mixed with respect to US summer row yield potential. Rapid soil moisture losses occur in; TX, OK, KS, NE, and SD. Adequate subsoil moisture and lack of heat exist from IA east. Be prepared for changeable 6-15- day outlooks as the path of next week’s tropical event is critical to Central US rainfall forecasts. NOAA agrees with model guidance that projects an eastward turn in the developing Caribbean hurricane to rake Florida and the US Eastern Seaboard.
Global Corn Futures Stabilize; Stone X Pegs US Yield at 182.3 BPA; Corn Valuable Below $4.00: Corn futures ended near unchanged in the US, Brazil and Europe. Fob premiums are unmoved. Export Sales were mixed, with old crop US sales a marketing low 6 Mil Bu but new crop sales were 28 Mil Bu. Cumulative new crop sales on July 25th total 220 Mil Bu, vs. 190 Mil a year ago. US corn remains highly competitive in the world market. Corn’s historical relationship with crude shows high prices in delivery pushes premiums higher, like inflation caused by the current administration’s war on energy. Livestock margins are historically high. Stone X’s projected crop size of 15.2 Bil Bu, vs. USDA’s 15.1 Bil, is seen as neutral. Assuming export demand expansion, a yield of 180-182 does little to build stocks in crop tear 24/25. A USDA yield of 184+ in August is bearish, but anything less triggers early seasonal lows. ARC notes in years of nonthreatening weather/trend yields, market bottoms are typically scored in late Aug/early Sep. Watch for pushback to bearish sentiment in the days ahead.
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Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn