We kicked off the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Refinance Index, and MBA Purchase Index at 6:00 A.M., Wholesale Trade at 7:30 A.M., Wholesale Inventories MoM at 9:00 A.M., EIA Energy Stocks and NY Fed Treasury Purchases 0 to 2.25 yrs. at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., 10-Year Note Auction at 12:00 P.M., Dairy Products Sales at 2:00 P.M., and Fed Williams Speech at 2:15 P.M.

The National Federation of Independent Business’s (NFIB’s) monthly survey of small businesses continued to reflect a weak outlook among small business owners in December. The Small Business Optimism rose 1% from November and was 2% better than a year ago but remains just above multi-year lows. December marked the 24^th straight month that the index was below the long-term average, which hasn’t happened since small business owners expecting better business conditions within 6 months increase 6 points from November but remained negative 36%, which was still the best in 5 months. 23% of owners reported that inflation was their single most important problem.

Photo by Waldemar on Unsplash

South American weather forecasts stays wet in Argentina with a drier pattern evolving in Brazil beyond Jan 15^th . The forecast is drier in the 6-10 day period, and the duration of any pattern shift there will be monitored closely. Heat accompanies dryness in North Brazil next week, with high temps in Mato Grosso, Mato Grosso do Sul and Goias forecast in the mid-90’s. Mato Grosso do Sul, which produces 8% of Brazil’s soybean crop, has become the center of new drought concerns. Rain is needed there. Otherwise, helpful rain fall 2-4” impacts Mato Grosso, Goias, and Minas Gerais into the weekend. A pattern of continuous showers is forecast in Argentina Jan 14-17, with accumulation of 1-4” advertised in Cordoba, Santa Fe and Entre Rios. Argentine weather conditions stay favorable. The Brazilian outlook leans market neutral, but the return of rain will be needed in Mato Grosso in late January. CBOT grains are lower in moderate volume with soybean/soymeal leaking lower. Corn and wheat have followed amid a lack of news with US inflation data to be closely followed by the US financial markets this morning. A choppy day is expected.

CBOT open interest rose 14,968 contracts in corn and 4,435 contracts in soybeans, while 3,908 in Chicago wheat. Soybean meal open interest was up 1,634 contacts and soybean oil was up 2,573 contracts. Corn open interest has gained ever day since the middle of December and is up 1000,000 contracts since the start of the year. Ag Resources (ARC) said someone is making a big bearish bet.

CONAB estimated Brazil’s soybean crop at 155.2 MMTs and corn at 117.6 MMTs in cuts from their December forecast from 160.2 MMTs/118.5 MMTs, respectfully. CONAB estimated soybean harvested area to grow by 2.7% but for corn to fall 5.6% due to drought and latent soybean seeding. Brazil’s 2^nd corn crop is forecast to fall to 912 MMTs vs a record 102.3 MMTs last year. Poor 2^nd corn crop margins could cause an even deeper decline if new crop cash bids stay depressed. The CONAB January soybean crop would still be a record and exceed last year’s 154.6 MMTs. CONAB cut Brazil’s wheat crop to 8.1MMTs. A wide range of private Brazil soybean crop estimates prevails between 130-155 MMTs.

On the Ethanol Front, the RFA reports US ethanol exports down in November slightly declining from October. The Renewable Fuels Association says ethanol exports of 115.9 million gallons were down 1% on the month, with Canada claiming the top spot for the 32^nd month in a row. Columbia took 2^nd place with a record amount of imports for that nation, followed by India, the European Union, and the United Kingdom. Ethanol imports for November were 3.3 million gallons, mostly from Brazil.

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