Photo by Jesse Gardner on Unsplash

We kicked off the day with Redbook YoY at 7:55 A.M., Richmond Fed Manufacturing Index, Richmond Fed Manufacturing Shipments Index, and Richmond Fed Services Revenues Index at 9:00 A.M., 2-Year FRN Auction and 5-Year Note Auction at 10:30 A.M., and API Energy Stocks at 3:30 P.M.

Argentine Rain Overnight then Limited into Jan 2^nd; Climate Guidance Trends Wetter Thereafter; Brazilian Weather Nearly Ideal:

The duration of dryness in Argentina will be watched closely amid a cooler Equatorial Pacific but ARC reiterates subsoil moisture is adequate, and long-range EU & GFS climate guidance allows rain to return to Argentina/S Brazil by Jan 8^th. ARC doubts that weather premium will be added unless Argentina stays dry into mid-January. Note that extreme heat will be absent through the balance of December. Warmth is noted in early January, Brazilian weather is nearly perfect. An active monsoon continues to tropical latitudes throughout the next two weeks. Assuming the current 8-day forecast verifies, Dec rainfall in Mato Grosso will total 10.3”, vs, 6,5” in 2023 and vs, 8.2 on average. The rain intensity at harvest will be watered, but given the late seedings, Mato Grosso’s soybean crop will be gathered from the middle of January to March. A massively large Brazilian soybean crop is being made.

Ag Resources sees no weakening of the Brazilian Monsoon for the next 2-3 weeks, implying that the Brazilian soybean crop will be well watered. Several chances for showers exist for Argentina over the next 10 days. Still, due to the past weeks of drier-than-normal weather conditions, the exact rainfall locations and totals will be closely followed. No extreme heat has harmed Argentine crops, but a few days of heat will develop in early 2025. The difficult question for Argentina is the coming regularity of rainfall. ARC leans to a drier-than-normal profile starting in February, but the nearby lacks heat with several rain chances.Argentine soil moisture is adequate. Showers and storms are forecast into Wednesday with a passing cold front. The extended range forecast offers better rainfall chances after January 5^th . The lack of heat and sporadic rainfall will maintain high crop ratings and aid the first corn crop during pollination. Close attention is warranted for Argentine crops, but high yield potential exists into mid-January.

CBOT Corn Rallies on Dry Argentine Weather Forecast/Chart Bases Short Covering; March Tests $4.48-$4.50 Resistance:

CBOT corn followed wheat with modest daily gains. Managed money continues to add to their net long position on chart based considerations. US farmers are slow seasonal sellers through the holidays with tax based selling expected to unfurl in the opening days of 2025. March corn futures are expected to fail at $4.50 as South American weather stays favorable and Argentina will be a more important exporter starting in March. ARC calculates negative margins for US ethanol producers, with US corn exports declining beyond mid-January. This leaves January NASS crop report as the best hope for a fall in the 2024 corn yield and furthering lightening of stocks. The upside potential in CBOT corn is limited to 3-9 cents with cash basis to weaken in early 2025.

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