We kicked off the day with Core Inflation Rate MoM & YoY, Inflation Rate MoM & YoY, CPI, CPI s.a.,  Initial Jobless Claims, and Jobless Claims 4-Week Average at 7:30 A.M., EIA Natural Gas Storage at 9:30 A.M., Fed Bostic Speech at 10:15 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., 30-Year Bond Auction and Fed Musalem Speech at 12:00 P.M., Monthly Budget Statement at 1:00 P.M., and Fed Balance Sheet at 3:30 P.M.,

The Mortgage Bankers Association’s weekly survey of home lenders showed that the average contract interest rate for 30-Year mortgages eased 0.03% from the previous week but remained at 7%. In the first 27 weeks of 2024, the average rate has been at or above 7% in 15-Weeks. It is worth noting that this week’s interest rate was below a year ago for the first time since September 2021. However, the still elevated mortgage rates have kept mortgage demand surpressed, and the Mortgage Application Index remains near the lowest levels since 1995.

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CBOT Attempts Recovery on US, International Cash Market Strength: Global corn markets ended steady for a second day. Central US weather stays broadly favorable nearby, through the duration of dryness needs close monitoring, and uncertainty over the location of heat. But it’s strength in the international cash market makes $4.00 CBOT Dec corn look cheap until actual yield data is available. Talking with Scott Shellady, “The Cow Guy,” he believes we could see a short covering rally of 50 cents or so, if the funds start to cover shorts or puke all of them out, and he said, $4.50 corn is still too cheap. The market is trading a yield of 180+. It remains that a yield below 177 leans positive of price. Risk is minimal. The Argentine harvest is expected to reach 68-70% complete. The lack of fob premiums weakness in June/early July aligns with the collapse in second crop yields. The US market is priced to boost export demand over the long run. Tomorrow’s USDA Crop Production, YSDA Supply/Demand, and WASDE data will place 24/25 US end stocks on Friday at 2.3-2.4 Bil Bu amid larger harvested area. This is known, and the key is how the market reacts. Short covering will be used to move along cash sales.The funds are at record or near record net short positions of 10 of the principal ag markets. Will be trading July WASDE and weather while Mother Nature keeps her cards close to the vest. Again, CBOT futures are higher in a recovery effort with key government crop reports tomorrow and Brazil’s CONAB update out this morning. And possibly the most important report will be the CFTC Commitment of Traders report due out Friday afternoon. Traders are betting that managed money is holding a record short corn position in the wake of recent price decline. Also, a key inflation data point will be released this morning by the US Labor Dept. with the June guage of prices (excluding food & energy) rising by just .2% the same as May. (Do I smell a revision in the future?) The moderate rise in inflation would allow the US Central Bank a runway to start cutting interest rates as early as September. There are strong indications that the US labor market is back in balance, while lower energy prices are allowing for price stability in consumer goods. The debt markets are betting that the US Central Bank will reduce its Fed Funds rate by 50 basis points by the end of the year. The fall in lending rates will allow for a decline in the value of the US dollar, which will be supportive to world raw material demand.

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