We kicked off the day with Redbook YoY at 7:55 A.M., S&P/Case-Shiller Home Price MoM & YoY at 8:00 A.M., Consumer Confidence, House Price Index, House Price Index MoM, Richmond Fed Manufacturing Index, Richmond Fed Manufacturing Shipments Index, and Richmond Fed Services Revenues Index at 9:00 A.M., Dallas Fed Services Index and Dallas Fed Revenues Index at 9:30 A.M., 52-Week Bill Auction at 10:30 A.M., 7-Year Note Auction and Money Supply at 12:00 P.M., API Energy Stocks at 3:30 P.M., and Day 1 FOMC Meeting.

The Atlanta Fed’s GDP Now model forecasts Q3 US GDP at 3.9%, up from the initial GDP Now estimate in July of 2.3% and the early August low of 2.1%. This would barely beat the latest estimate of Q2 GDP at 3.8%. The Atlanta Fed’s estimate is well above trade estimates, which range from 2.4% to 3.3%. Compared to the initial estimate in late July, the PCE contribution, which is the largest contributor, now accounts for 2.31% of GDP versus the initial estimate of 1.29%, while net exports are estimated to add 0.57% versus the initial estimate of -0.31%. Equipment is estimated to add 0.46% to GDP compared to just 0.14% in July.

Photo by Waldemar on Unsplash

South American Weather Pattern Update

South American Forecast Outright Wet in Brazil; No Sign of Lasting Dryness in Argentina:

The South American forecast into mid-November is favorable. Monsoonal rainfall returns in earnest to central and northern Brazil beginning late this week, and near-daily tropical showers are then forecast indefinitely. A relatively drier pattern emerges in Argentina, but this follows rainfall last week of 1.80-4.50” across key areas of Cordoba, Buenos Aires, Santa Fe & Entre Rios – and central Argentina will go completely without water nearby. There’s broad agreement that moderate to scattered showers will affect Cordoba and far northern Argentina over the next 10-days. Surplus moisture will be building from southern Brazil into Mato Gross & Goias. ARC reiterates that it’s nearly impossible to build dryness into N Brazil after the beginning of the wet season, and the regular planting dates that December weather matters the most to Brazilian soy yield potential. Rhere will be no concern issues in Argentina until ate November at the earliest.

Corn Comments & Analysis

CBOT Corn Ends Firm But Off Session Highs; Rally Amplifies cash Movement:

Corn futures rallied to the late summer high at $4.315 and retreated. News that the US/China were able to carve out a framed trade pact on the weekend that could restart US soybean trade to China was supported. Details of the framed trade pact are absent, but it’s important to remember that the trade pledges are non-binding. The odds are high that in a month or so, politics will change export conditions for both US/China. The only glue that binds China to take US soybeans is tariff threats from US President Trump. The movement of US cash corn was reported to be “massive” yesterday which pressured interior basis and refilled the pipeline. Soybeans and sorghum will benefit the most from potential Chinese purchases with domestic Chinese corn prices under pressure and there being a limited import margin. ARC estimates that 27% of the US corn crop has yet to be harvested or some 4.3 Bil Bu. Cash sorghum in W KS is quoted at $2.98/Bu without a bid. ARC sees odds of Chinese corn imports as low. The improvement in cash basis and rally on the CBOT set up an ideal environment to sell cash corn. A South American weather problem is needed to turn the market bullish. Analyst’s peg corn in a $3.90-$4.35 spot range.

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