We kicked off the day with Chicago Fed National Activity Index at 7:30 A.M., CB Consumer Confidence, 3-Month & 6-Month Bill Auction at 9:00 A.M., NY Fed Treasury Purchases 0 to 1 yrs. at 9:30 A.M., Export Inspections at 10:00 A.M., 42-Day & 52-Week Bill Auction at 10:30 A.M., and 2-Year Note Auction at 12:00 P.M.

The Fed’s preferred inflation indicator, The Personal Consumption Expenditure Index, diverged from the Consumer Price Index in November, The PCE index rose o.13% from October vs. CPI, down 0.5%. This marked the 6^th consecutive month higher, the index has risen 54 of the last 55 months. The annualized inflation rate rose for the 2^nd consecutive month to a 4-month high of 2.4%, and the PCE index set a record high of 1.248, Personal Income rose by 0.3% from October, the smallest increase in 3 months, following an upwardly revised 0.7% in October. Personal Spending increased by o.4% to an annualized rate of $20.2 trillion. The personal savings rate declined to 4.4%, down from 4.5% in October and 4.6% last year.

Photo by Jesse Gardner on Unsplash

South American Weather Pattern Discussion

Argentine Forecast Trends Drier Next 10 days; Rains Return After Dec 31^st-Crop Threat Minimal Nearby:

ENSO (La Nina) is weak across the equatorial Pacific, with Friday’s Reading already pushing back near neutral. Just 8-days ago, ENSO shifted to a weak La Nina, but ocean temps leave already started to warm. La Nina conditions could return by early January. The point is that a La Nina is not controlling the South American climate, and its impact on Argentine and Brazilian weather will be muted over the next 4-6 weeks. This is not to suggest that a trend below-normal rainfall will not last across Argentina, but a full-blown drought is not expected, There has been a recent modest warming trend. La Nina was forecast to develop in July but was delayed due to persistently warm Pacific Ocean temperatures . Typically, it requires La Nina or El Nino to be in place for 4-6 weeks before its signature impacts the climate. The current dry spate of weather in Argentina is not due to La Nina, and the forecast models could be too dry. The model has under forecast Argentine rainfall since October.

Ag Resources Global Weather Pattern Discussion

The forecast models end La Nina in February/March with neutral conditions heading into the Northern Hemisphere spring. Two of the ENSO models forecast El Nino by July, but here, too, these forecasts are outliers, with neutral conditions being the best bet. This implies a lack of strong ENSO correlation for Central US weather during the 2025 growing season. A near-normal Midwest/Plains growing season is forecast. The forecast risk is that El Nino returns by late summer or autumn due to the record-warm Pacific Ocean. This would lead to a second favorable US growing season.

Ag Resources sees no weakening of the Brazilian monsoon 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 3 weeks of drier-than-normal conditions, the exact rainfall location and totals will be closely followed. No extreme heat has harmed Argentine crops to date, but a few days of heat will develop in early 2025,

Ag Resources Corn Comments & Analysis

CBOT Corn Rallies on Dry Argentine Weather Forecast/Chart Based Short Covering; March CBOT to Test $4.48-$4.52Resistance:

March CBOT corn pushed higher Friday, with a short-covering rally in soybeans/soybean meal adding support. Columbia has recently been a buyer of US corn, with Foreign Agricultural Services (FAS) announcing another sale of 150,000 MT’s . The US corn export profile is slowing, with Argentine fob offers below US Gulf. China’s demand for world corn is lacking, with WASDE having cut its China import estimate to 14 MMT,s down 9 MMT’s from last year. China’s been largely absent as a world corn buyer since March. As China’s cash corn market scores a fresh five-year low, it’s doubtful that China will import more than 8 MMT’s in 2024/25. Mexico will easily become corn importer crown at 24 MMT’s. China’s corn market has been dropping while the US futures market has been rising. The Chinese corn import margin is at it’s lowest level since December 2022. This does not bode well for CBOT corn prices without dire South American drought.

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