Exports vs. Record Yields. The Corn & Ethanol Report 10/23/2024

We kickoff the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.M., Fed Bowman Speech at 8:00 A.M., Existing Home Sales, Existing Home Sales MoM, and EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., Fed Barkin Speech at 11:00 A.M., 20-Year Bond Auction at 12:00 P.M., Fed Beige Book at 1:00 P.M., and Dairy Products Sales at 2:00 P.M.

The Federal Reserve reported that the US M2 money supply in September rose by 0.4% from AUGUST TO 21,221 BILLION. This marked the 11^th consecutive month that the money supply increased, and it was the largest monthly gain since December 2022. Compared to a year ago, M2 was 2.61% larger, marking the largest year-over-year increase since August 2022. The rising money supply had minimal impact on short-term interest rates up until August. However, rates for 1-3 month notes slipped below 5% in early September. Long-term rates continue to strengthen, with 10-Year note reaching a 14-week high this week4.2%. The US economy stays strong with a recession avoided into 2025.

US export demand into late winter/very early spring will work to offset record yields and near record total supply in 2024/25. Combined production in Argentina, Brazil, and Ukraine in calendar year 2024 is down 8.5-10.5 MMT’s (330-400 Mil Bu) from the previous year. This along with reduced carryover in Ukraine & Argentina and expanded domestic use in Brazil will cap non-US exports at 178-180 MMT’s, down 14.5-16.5 (570-660 Mil Bu_ year-over-year, and a sizable portion of this loss will be given to the US in the form of export demand between now and Apr/May.

Global af markets are mostly weaker this morning. Macro trends, feature newer rally highs in the US dollar and steady/weaker equity futures in the US & Europe are being followed, while there remains an absence of fresh fundamental input. South American weather threats into the first full week of November are lacking, and Ag Resources (ARC) maintains markets keep intact their back-and-forth nature into the US election on Nov. 5^th . ARC estimates managed funds on Mon & Tuesday bought a net 27,000 contracts of corn, 5,500 contracts of Chicagoi wheat & 15,000 contracts of soybeans. Buying/short covering pauses at mid-week.

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