We kicked off the day with Initial Jobless Claims, Continuing Jobless Claims, and Jobless Claims 4-Week Average at 7:30 A.M., EIA Natural Gas Storage at 9:30 A.M., EIA Energy Stocks at 10:00 A.m., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., 10-Year TIPS Auction at 12:00 P.M., Dairy Products Sales at 2:00 P.M., and Fed Balance Sheet at 3:30 P.M.

The Conference Board’s Leading Economic Index turned lower in December following a fractional uptick in November. The index was 101.6, just above the October low, which was the lowest it had been since December 2016. Compared to a year ago, the index was down 3% marling the 30^th consecutive month of year-over-year declines. It’s been the longest period of year-over-year drops since 2006-2009 and the longest stretch of year-over-year declines without and official recession being declared. The December downtick resulted from poor consumer confidence related to weak manufacturing orders, an increase of initial jobless claims, and a decline in building. The Conference Board noted that half of the 10 index components contributed positively and that a 6 and 12-month growth rates were less harmful. Additionally, growth momentum is expected to remain strong, with US real GDP expected to increase by 2.3% in the first half of 2025. The outlook for the US economy stays strong into Q3 2025.

Photo by Jesse Gardner on Unsplash

USDA News:

The USDA announced the sale of 136,000 MT’s (5.4 Mil Bu) of corn to an unknown buyer. A South Korean deed group reportedly bought 136,000 MT’s of optional origin feed corn between $251-$252/MT CIF for April/May shipment. Algeria is seeking 240,000 MT of feed corn, the deadline for the tender is today.

CBOT Corn Surrenders Tuesday’s Rally; Fundamental Resistance Emerges Above $4.90:

March CBOT corn after reaching a fresh 8-month high ended lower amid renewed hints of widespread tariffs after Feb 1^st, as the market was heavily overbought at the end of Tuesday’s trade. Cash ethanol production margins are negative across the W Midwest. A seasonal slowing of weekly ethanol grind occurs in the second half of winter. And the ethanol yields from corn are rising amid the dry nature of the 2024 crop. The elevated dry matter of corn kernels produces better ethanol yield and it will require fewer bushels for feed. Spot cash ethanol prices have rallied since late autumn-but only slightly. Cash ethanol since Jan 1^st is up 3%; spot CBOT corn futures are up 7%. Ag Resources (ARC) notes that Argentine and Ukrainian exporters have opted to compete with US-origin corn at $4.80+. Ukrainian corn shipments as of late January total 11.% MMT’s which leaves an estimated 11-12 MMT’s to ship through early summer. Feb-March Ukrainian exports are expected to match last year’s pace. An early end to Brazil’s wet season is needed to sustain May CBOT corn above $5.00. Catch up on hedges at current prices as managed money is estimated long 355,000 contracts of corn futures.

Central US Weather Pattern Discussion

US Forecast Wetter in E Midwest/Delta in 8-15 Day Period; Expansive Wet Pattern Projected in February:

Precipitation-mostly rain-into Jan 30^th stays confined to the Gulf region, but the major forecasting model’s agree precipitation expands into the Central Midwest Feb 1-6. Quietly, all but the Delta and far E Midwest have seen precipitation of just 0-50% of normal. An expanded pattern of rainfall in Feb/March is welcomed. A warm/wet February forecast. Rain/snow will be most welcomed in NE, and the Dakota’s, where, where drought lingers, and further erosion of longer term dryness is due in MS, AL, and GA. Recall early corn seeding in the South begins in late Feb/early March. Any late-winter cold favors Canada and the US Northern Plains. Relative warmth is forecast elsewhere. Operational models already project normal/above-normal Central US temperatures throughout the 6 to15-day period. Such warmth will be welcomed following the recent Arctic cold.

South American Weather Update

Needed Rain Forecast Across Mato Grosso; Additional Regional Soil Moisture Boosts to Occur in Argentina:

The forecast is viewed as improved with scattered showers impact the drier areas of Argentina’s southwestern Corn Belt, and as finally a 7-9 day period of warmth/dryness impacts Mato Grosso & Goias. Northern Brazilian dryness allows for soybean defoliation and early harvest, and an acceleration in harvest there is projected. Additional rain is needed in Southern Santa Fe & Entr Rios in Argentina, but enough rain falls in nearby Cordoba and N Argentina to stabilize yield potential. The GFS’s projected 8-day change is positive for soil moisture. The CFSv2 model features high odds that a more normal pattern of rain is established across Argentina in February, while a pattern of below-normal pattern of rain returns to N Brazil during safrinha pollination in Feb/Mar. Winter corn seeding should be rapid with additional acres expected to be planted on strong profit margins.

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