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 the day with Fed Bowman Speech at 7:50 A.M., Chicago PMI at 8:45 A.M., Dallas Fed Manufacturing Index at 9:30 A.M., 3_Month & 6_Month Bill Auction at 10:30 A.M., Quarterly Grain Stockas and Small Grains Summary at 11:00 A.M., Fed Chair Powell Speech at 12:55 P.M., and Crop Progress at 3:00 P.M.
Longshoreman Union’s demand for a total ban on automation as the port strike looms at midnight. As thousands of dock workers are preparing to strike should a deal not be reached by the end of today. It doesn’t look promising as both sides have not been at the negotiation table since June. One business leader is questioning the union’s demand for a total ban on automation. International Longshoreman’s Association (ILA) on Sunday said its 85,000 members, along with “tens of thousands of dockworkers and maritime workers around the world,” will hit the picket line Tuesday, “and strike all the Atlantic and Gulf Coast ports from Maine to Texas. The union is demanding higher wages a total ban on automation at ports regarding cranes, gates and moving containers in the loading and unloading of freight. Benchmark Capital’s Bill Gurley reacted on social media to the union’s demands, writing the federal government should step in if the union seeks a total ban on automation, “outlawing the effective use of technology will unquestionably doom our nation,” Gurley wrote, “We will become globally uncompetitive. The effect on the economy will be astronomical, ($5 Billion a day… Plus layoffs in the car selling and other sectors), not even considering the astronomical damage caused by Helene win which the disaster will take months not weeks to assess the total damage. There is another low- pressure system located over the western Caribbean Sea and Gulf of Mexico that could follow Helen’s pattern, in a busy Atlantic with Isaac, Joyce, Tropical Depression 12 and another system forming in the eastern Atlantic.
The Fed’s preferred price inflation indicator, the Personal Consumption Expenditure Index, rose 0.1% in August and was 2.2% higher than a year ago. The annualized inflation rate was the lowest since February 2021. While the annualized rate of increase slowed to a multi-year low, the PCE Index set a record high. The reduced inflation rate looks to confirm the Fed was on the right track with the recent rate cut. However, the lower rates are sure to lead to higher inflation in 2025. While the inflation rate continues to decline, the savings rate has yet to show a recovery. As inflation soared in 2021 and 2022, the savings rate moved inversely to a 15-Year low but has not rebounded at a proportional rate. The savings rate has improved from the 2022 low of 2% of disposable income to 4.8% in August. Prices have outstripped wages in the last 4 years, and the rising cost of living has taken sizable share of disposable income from consumers.
Helene Wraps Up in mid-South/ E Midwest in the Next 48 Hours; Warm/Dry Pattern Resumes in All Areas into Oct 7th :
The Central US forecast remains consistent in keeping near-term rainfall confined to the remnants of Helene across the far E Midwest/ New England. Another 1-2” of rain is advertised in KY, IN, OH, and PA, before complete dryness the whole of the Central US beginning Sunday. Dryness is projected into Oct 7th . Confidence in details thereafter is low, but climate guidance favors warmth/dryness into mid-autumn. Corn and soybean harvests accelerate beginning next week. Ag Resources (ARC) expects both to reach 50% complete by Oct 15th . US weather concern moving forward will be centered on the evolution of soil moisture across the US HRW Belt – which unfortunately will be declining over the next 10-14 days. Frost/freeze remains absent in the two-week forecast.
CBOT Corn Recovers; Fob Premiums Stay Firm; All Eyes On mid-Oct Brazilian Forecast:
Dec corn scored a newer rally high-settlement on Friday. It’s clear there remains concerns over Brazilian drought and crop planting dates. ARC’s confidence in the arrival of Brazil’s monsoon by mid-October is increasing, but weather forecasts over the weekend are critical. The soybean crop in Mato Grosso is 0.5% planted, vs. 4% a year ago. Limited progress is seen into Oct 7th . Brazilian dryness is much more an issue for safrinha corn yield potential than its soybean production. Managed funds on Tuesday were short a net 131,000 contracts in corn. ARC estimates fund’s current short is 110,000, the smallest since May. Extended South American dryness or a surprise in Jun-Aug feed/residual is needed to sustain bulk short-covering in the short term. ARC maintains corn exists in a longer term bull market as demand is shifted from the Black Sea to the US, but rallies above 44.25 Dec will struggle until US crop size is known and harvest nears 50% complete. It’s premature to chase rallies with 75-80% of the harvest yet ahead.
Grain Stocks, Hurricane Helene Aftermath & Port Strike Today’s Focus. The Corn & Ethanol Report 09/30/2024
We kickoff the day with the day with Fed Bowman Speech at 7:50 A.M., Chicago PMI at 8:45 A.M., Dallas Fed Manufacturing Index at 9:30 A.M., 3_Month & 6_Month Bill Auction at 10:30 A.M., Quarterly Grain Stockas and Small Grains Summary at 11:00 A.M., Fed Chair Powell Speech at 12:55 P.M., and Crop Progress at 3:00 P.M.
Longshoreman Union’s demand for a total ban on automation as the port strike looms at midnight. As thousands of dock workers are preparing to strike should a deal not be reached by the end of today. It doesn’t look promising as both sides have not been at the negotiation table since June. One business leader is questioning the union’s demand for a total ban on automation. International Longshoreman’s Association (ILA) on Sunday said its 85,000 members, along with “tens of thousands of dockworkers and maritime workers around the world,” will hit the picket line Tuesday, “and strike all the Atlantic and Gulf Coast ports from Maine to Texas. The union is demanding higher wages a total ban on automation at ports regarding cranes, gates and moving containers in the loading and unloading of freight. Benchmark Capital’s Bill Gurley reacted on social media to the union’s demands, writing the federal government should step in if the union seeks a total ban on automation, “outlawing the effective use of technology will unquestionably doom our nation,” Gurley wrote, “We will become globally uncompetitive. The effect on the economy will be astronomical, ($5 Billion a day… Plus layoffs in the car selling and other sectors), not even considering the astronomical damage caused by Helene win which the disaster will take months not weeks to assess the total damage. There is another low- pressure system located over the western Caribbean Sea and Gulf of Mexico that could follow Helen’s pattern, in a busy Atlantic with Isaac, Joyce, Tropical Depression 12 and another system forming in the eastern Atlantic.
The Fed’s preferred price inflation indicator, the Personal Consumption Expenditure Index, rose 0.1% in August and was 2.2% higher than a year ago. The annualized inflation rate was the lowest since February 2021. While the annualized rate of increase slowed to a multi-year low, the PCE Index set a record high. The reduced inflation rate looks to confirm the Fed was on the right track with the recent rate cut. However, the lower rates are sure to lead to higher inflation in 2025. While the inflation rate continues to decline, the savings rate has yet to show a recovery. As inflation soared in 2021 and 2022, the savings rate moved inversely to a 15-Year low but has not rebounded at a proportional rate. The savings rate has improved from the 2022 low of 2% of disposable income to 4.8% in August. Prices have outstripped wages in the last 4 years, and the rising cost of living has taken sizable share of disposable income from consumers.
Helene Wraps Up in mid-South/ E Midwest in the Next 48 Hours; Warm/Dry Pattern Resumes in All Areas into Oct 7th :
The Central US forecast remains consistent in keeping near-term rainfall confined to the remnants of Helene across the far E Midwest/ New England. Another 1-2” of rain is advertised in KY, IN, OH, and PA, before complete dryness the whole of the Central US beginning Sunday. Dryness is projected into Oct 7th . Confidence in details thereafter is low, but climate guidance favors warmth/dryness into mid-autumn. Corn and soybean harvests accelerate beginning next week. Ag Resources (ARC) expects both to reach 50% complete by Oct 15th . US weather concern moving forward will be centered on the evolution of soil moisture across the US HRW Belt – which unfortunately will be declining over the next 10-14 days. Frost/freeze remains absent in the two-week forecast.
CBOT Corn Recovers; Fob Premiums Stay Firm; All Eyes On mid-Oct Brazilian Forecast:
Dec corn scored a newer rally high-settlement on Friday. It’s clear there remains concerns over Brazilian drought and crop planting dates. ARC’s confidence in the arrival of Brazil’s monsoon by mid-October is increasing, but weather forecasts over the weekend are critical. The soybean crop in Mato Grosso is 0.5% planted, vs. 4% a year ago. Limited progress is seen into Oct 7th . Brazilian dryness is much more an issue for safrinha corn yield potential than its soybean production. Managed funds on Tuesday were short a net 131,000 contracts in corn. ARC estimates fund’s current short is 110,000, the smallest since May. Extended South American dryness or a surprise in Jun-Aug feed/residual is needed to sustain bulk short-covering in the short term. ARC maintains corn exists in a longer term bull market as demand is shifted from the Black Sea to the US, but rallies above 44.25 Dec will struggle until US crop size is known and harvest nears 50% complete. It’s premature to chase rallies with 75-80% of the harvest yet ahead.
Have A Great Trading Day!
Thanks,
Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn