Bumper Crop-Inflation- Trade Balance = Destroying Farmers. The Corn & Ethanol Report 09/05/2024

We kickoff the day with Challenger Job Cuts at 6:30 A.M., ADP Employment Change at7:15 A.M., Initial Jobless Claims, Continuing Jobless Claims, Jobless Claims 4-Week Average, Nonfarm Productivity QoQ Final, and Unit Labour Cost QoQ Final at 7:30 A.M., S&P Global Composite PMI Final and S&P Global Services PMI Final at 8:45 A.M., ISM Services PMI, ISM Services Business Activity, ISM Services Employment, ISM Services New Orders, and ISM Services Prices at 9:00 A.M., EIA Natural Gas Storage at 9:30 A.M., EIA Energy Stocks at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., Dairy Products Sales at 2:00 P.M., and Fed Balance Sheet at 3:30 P.M.

The September International Trade report showed that the US trade deficit in July fell 8% from June and was 22% from a year ago, marking the 5^th consecutive month of year-over-year declines and the 3^rd month of triple-digit losses. It was also the largest year-over-year decline in 26 months. For the month, the US imported $78.8 Bil more than it exported, the widest deficit since June 2022. US exports rose by $1.3 Bil or 0.5% from June to a record large $266.6 Bil, led by a $1.8 Bil surge in semiconductor exports, which offset declines for consumer goods and car exports. Imports rose 2.1% from June to $345.4 Bil, the most since 2022, led by imports of computer accessories, industrial supplies/materials, and nonmonetary gold. The trade deficit with China rose by $4.9 Bil to $27.2 Bil as US exports to China declined $1 Bil to $11.5 Bil, and imports rose $3.9 Bil, to $38.7 Bil.

December CBOT Corn Stays Above 50-Day Moving Average; South America – Ukraine More Competitive in World Market:

CBOT corn ended higher for a fourth session on confirmation – via Census exports – that the USDA must raise its 23/24 US corn export number, and as Central US warmth/dryness is accelerating rather significantly. The drop in carryover supply and potential for a modest reduction to yield will pull 24/25 US end stocks below 2.0 Bil Bu. Recall USDA in its Outlook Forum in Feb pegged 24/25 US end stocks at 2.5 Bil Bu. However, pause in this week’s recovery is forecast prior to the release of USDA’s Sep WASDE> Ag Resources (ARC) also notes that US, South American, and Ukrainian corn are offered at parity for Sep-Oct delivery following the recent rally in US Gulf premiums. US origin corn is not uncompetitive like it was a year ago, but world trade in autumn will be spread a bit more evenly. Upside targets are $440 Dec, and $4.50-$4.60, March. After Dec corn reached a fresh 5-week high the next upside resistance is the July high at $426 ½ . This is interesting ahead of the Sep 12^th WASDE.

Central US Precipitation into Sep 18^th Favors Southeast; Warmth Returns After Weekend:

The Central US forecast is consistent/stagnant as theres no meaningful threat of inland hurricanes available to dislodge the current pattern. (Although a 4^th trop[ical depression formed in the Atlantic – all have low %’s of formation in the next week). Heavy showers will favor the Gulf region and Southeast, but otherwise zero rainfall is forecast across the Plains and Midwest into Sep 18^th . Variable temps lie ahead, but there’s general agreement that abnormal warmth resumes in the 6-10 day period, with max readings in the 80’s widespread. There are still major concerns about changes in soil moisture. Maturity will be pushed and harvest will be rather smooth into late month Key issues remain centered on late-season crop stress, drought expansion across the US HRW Belt and low river levels south of St. Louis. 16-30 day guidance leans warm/dry into early October.

 

Have A Great Trading Day!

Thanks,

Daniel Flynn

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