We kicked off 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., Goods Trade Balance Adv, Retail Inventories Ex Autos MoM Adv, Wholesale Inventories MoM Adv at 7:30 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., Fed Interest Rate Decision at 1:00 P.M., Fed Press Conference at 1:30 P.M., and Dairy Products Sales at 2:00 P.M.

The Federal Reserve reported that the US M 2 Money Supply in December rose $85.5 billion (0.4%) from November and was $808 billion (3.9%) larger than a year ago. This marked the 14^th consecutive month that the money supply expanded and the 9^th consecutive month of year-over-year increases. This also marked the largest 1-month increase in the money supply in 3 tears, and it was the largest M 2 figure since August 2022 928 months). The expanding supply of dollars is ultimately inflationary as the purchasing power of the US dollar declines. This is most evident in the cash gold market, which is just under the record high that was set in late October and is currently 34% higher than a year ago.

Photo by Jesse Gardner on Unsplash

Central US Weather

Soaking Rainfall Continues Across South Central US:

There will be no shortage of soil moisture for the Delta and Southern Midwest heading into spring planting, as an active southern Branch of the jet steam is forecast to persist across the Delta, Gulf States, and Eastern Plains during the first half of February. The forecast models agree that the southern half of the Central US holds the risk of excessive rain. This area is often dry in years that build to a Central US drought. Seasonally, Ag Resources (ARC) looks for this active pattern to produce rain for the Plains. Any lasting dryness is forecast for the Northern Rockies and the Northern US Plains. Both regions could hold less than desired soil moisture heading into March. Nonetheless compared to recent years, the area that is under drought will be shrinking with time across the central US. ARC sees a risk of a Central US 2025 drought as modest through May.

South American Weather Pattern Discussion

Rainfall graphics for the past five days for Southern Brazil and Argentina reflected that 60-65% of the region have received significant rainfall, stabilizing soil moisture and crop conditions. The best rain of 1.50-4.00” has dropped across western, far southern, and northern Argentina. The key soybean crop of W and N Rio Grande Do Sul have also witnessed significant rain, thereby stabilizing crops. There is little doubt that the prior four weeks of dryness had produced crop stress, but the impact on crop yields will be determined by rain that falls over the next five to seven weeks. The key is February and early March rainfall and temperatures. Rain chances exist across Argentina for another 24-26 hours before 5-g days of dry weather returns. Temperatures stay warm in the mid-80’s to the mid-90’s, which returns the need for timely rain after February 5^th . Thankfully, the forecast models agree that a high-pressure Ridge forms across NE Brazil, displacing upper air humidity to the south and returning Argentine rainfall chances. A regular rainfall pattern is forecast for Argentina/S Brazil.

CBOT Corn Futures Test Key Chart Resistance at $4.90: Retreating Quickly into the Close Leaving Bulls Wondering:

CBOT corn futures rallied throughout the day in yesterday’s trading session and the return of managed money buying, pushing March futures to $4.90. However, rumors that the Trump Administration planned to issue tariffs against Canada, Mexico, and China on Friday pulled values off their highs. ARC has no way of knowing if such rumors are true, but the US open corn sales of just 10,000 MT’s of corn to China and 50,000 MT’s of US corn to Canada, but a massive 7.8 MMT’s (306 Mil Bu) of US corn to Mexico. ARC argues that another 2.5 MMT’s are sold to Mexico in an unknown category for a total of +400 Mil Bu. ARC would bet that Mexico’s retailation to US tariffs would include US corn sales on the books. Mexico’s president is against importing US GM corn and introduces legislation to prevent Mexico’s farmers from planting GM corn seed. EU imports are also well below last year’s and the 5-year average amid the abundance of low-quality feed wheat. ARC would not be surprised if EU corn importers wash out corn purchases. There is a risk in the US corn export outlook. The principal ag markets are shunning the news in the overnight, recovering from yesterday’s late break.

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