We kicked off the day with Current Account, Export Sales, Initial Jobless Claims, Continuing Jobless Claims, Jobless 4-Week Average, Philadelphia Fed Manufacturing Index, Philly Fed Business Conditions, Philly Fed CAPEX Index, Philly Fed Employment, Philly Fed New Orders, and Philly Fed Prices Paid at 7:30 A.M., Existing Home Sales, Existing Home Sales MoM, and CB Leading Index MoM at 9:00 A.M., EIA Natural Gas Storage at 9:30 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>, and Fed Balance Sheet at 3:30 P.M.

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The National Association of Realtors Home Affordability Index for January was at 100.7, down 0.2 points from December and 3.8 points less than a year ago. The index implies that the medium home price in the US was barely affordable for the medium family income. Elevated mortgage rates and still-rising home prices keep homes unaffordable for half the country. The weekly Mortgage Bankers Association Report showed that last week’s average mortgage rate was 6.72%, up slightly for the week and 0.25% less than a year ago. Mortgage rates have ranged from 6-7.8% since late 2022, mostly from 6-7% mortgage demand began to collapse in early 2022 as rates began to rise, but home prices have also continued to climb on tight inventories. The real estate market will remain seized until a correction in mortgage rates develop.

South American Weather Pattern Discussion

Rain Falls as Expected in Central Brazil; Normal Precipitation Forecast Outside Parana Next 7 Days:

Rainfall of .30-2.00” was recorded in the last 24 hours in Mato Grosso and far western Goias– which matched prior forecasts. The boost in confidence in 7-day forecasts, which will call for additional rainfall in Mato Grosso, Mato Grosso do Sul, and Goias of 1-2”. Modest net boost in soil moisture lie ahead, and given the relatively low humidity demanded by safrinha corn currently, this also improves crop health. Moisture is expanding across central and northern Brazil. Paran in southern Brazil, which accounts for 15% of safrinha corn area, remains a concern. The Brazilian pattern into late month favors N Brazil with normal/near normal rainfall. Parana will be left arid, and it’s key that regular rain returns there in April. Otherwise, South American weather is all about Brazilian safrinha corn yield potential and whether the N Brazilian monsoon stays active into late April. 90% plus of Brazil’s safrinha corn crop has been planted and is vegetatively growing.

US Weather Forecast Update

Climate Guidance Maintains US Pattern Stagnation; 8-14 Day Outlook Hit in Southern Plains:

The Central US pattern into late march remains one of rapid dryness across the Plains, moisture recharging in IA, and E Midwest, TN, and KY. Precipitation in IA and east of the Mississippi River into Sun/Mon is estimated at .50-2.00”. Heavy snow favors IA, MN, and WI. It is possible light snow will expand into E NE, N KS this weekend but moisture equivalent totals there will be minimal. Plains drought expansion is a growing concern, with max temps in March. The IRI’s updated April-June precipitation probability forecast. Odds are high net soil moisture loss persists across the US HRW Belt, NE, and SD throughout spring. Weather issues are centered on wheat today, but drought must be eased in the western ag belt to reach USDA’s Outlook Forum yield estimates.

Corn Comments & Analysis

World Corn Market Rallies on Hefty US Ethanol Grind; Firm Global Cash Markets:

The back-and-forth nature of CBOT corn futures continues, with May trading in a meager 10-cent trading range this week. Fundamental input leans positive as the US ethanol grind is record large and US corn is the world’s cheapest feed grain. However, uncertainty over trade flows due to reciprocal US tariffs from April 2^nd onward and exorbitant fees on Chinese-made vessels at US ports hinders the addition of new long positions. The outlook stays neutral/choppy into March 31^st. However, the demand for US corn exports will remain sizable into May. US ethanol production in the week ending March 14^th totaled 326 Mil Gal, up 6% from last year and a record for early spring. Ethanol stocks have begun their seasonal tightening, and cash ethanol market is expected to add premium into mid-summer. Feed/residual use is waited, but barring a bearish surprise, final US 24/25 carryover stocks will inch closer to 1.5 Bil Bu. Ag Resources (ARC’s) contacts also suggest Ukrainian bids are firming on lack of available supply. Chart support is offered below $4.55 in May. The tariff rallies at 44.80. The Brazilian corn market is expected to peak in the next 2-3 weeks. Key resistance rests above $4.80-$4.85 basis May corn futures.

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