We kicked off the day with Export Sales, Export Prices MoM & YoY, Import Prices MoM & YoY, Retail Sales MoM & YoY, Initial Jobless Claims, NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, Retail Sales Ex Autos MoM, Continuing Jobless Claims , Jobless Claims 4-Week Average, Philly Fed Business Conditions, Philly Fed CAPEX Index, Philly Fed Employment, Philly Fed New Orders, Philly Fed Prices Paid, and Retail Sales Ex Gas/Autos at 7:30 A.M., Fed Musalem Speech at 8:10 A.M., Industrial Production MoM & YoY, Manufacturing Production MoM & YoY, and Capacity Utilization at 8:15 A.M., Business Inventories MoM, NAHB Housing Market Index, and Retail Inventories Ex Autos 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 and NOPA Crush Report at 11:00 A.m., Fed Harker Speech at 12:10 P.M., Net Long-term TIC Flows, Foreign Bond Investment, and Overall Net Capital Flows at 3:00 P.M., and Fed Balance Sheet at 3:30 P.M.

The US July CPI Inflation rate came in right as expectations of 2.9%, which was the lowest since March 2021, when the pandemic was just getting underway. While the inflation rate fell to a 40-month low, the Consumer Price Index rose to a record high of 330.6, though the food inflation rate was steady at 2.2%. The Meat Price Index set a record high of 338.4, while the Housing Price Index set a record high 335.1. The Education and Communication set a recordhiugh of 146.2, and Other Goods & Services Price Index was up fractionally from June but down 2% from a year ago.

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Weather Models Agree on Lengthy Dry Pattern in Central US Beyond Next 2-3 days; Heat to Favor Plains/Delta:

The EU, GFS and AI models agree that rainfall of 1 +” impacts ND, MN, IA, IL, and WI into Friday, but also that a much drier pattern emerges thereafter. High pressure Ridging current aloft the far southern US expands to cover the Southern & Central Plains during the second half of August. The jet stream, and meaningful precipitation, is forced northward. Soil moisture changes will be monitored. Fortunately, extreme heatstays absent from the primary Corn Belt. Coming rainfall across ND and Upper Midwest will be welcomed. Dryness concerns stay in place across the Plains and Delta, with high temps next week across TX, OK, KS, NE, and LA to reach the upper 90’s & low 100’s. Hurricane activity stays in the Atlantic, rather than the Gulf. No landfall is indicated in the next two weeks.

Ag Resources (ARC) updated global trade matrix for crop year 2024/25 based on the Oct-Sep international year. ARC’s primary message is that it’ll be rather difficult to keep 24/25 below 2,350 Mil Bu, and it’s possible US exports reach 2,400-2,450 Mil Bu if world trade is unchanged year-over-year or if a cooling equatorial Pacific triggers dryness in Argentina & Brazil this autumn and winter. South American Oct-Sep exports are reduced amid lower 2024 crop sizes. South American exports in summer 2025 won’t offset losses over the next 6-7 months relative to USDA’s forecast. Ukrainian & Russian shipments are lower due to drought. Note ARC’s US export forecast is above USDA despite lower projected total world trade. And there are doubts surrounding USDA’s projected decline in global corn trade in 24/25. ARC had a graphic displays exporter shipments through July based on government or ship lineup data. Cumulative Oct-Jul exporter shipments total a record 150 MMT’s, vs. 130 last year. Spring/early summer exports from Ukraine were much larger than expected – which has exhausted supplies there. It’s clear importers/end users since last autumn have responded positively to lower prices. CBOT corn at $4.00, and world fob prices of $1.85-$1.95/MT are not expected to curtail future use. The pace of monthly trade must be followed, but years of world trade contraction have been rare in the last decade.If trade does not contract, US export forecasts must be increased.ARC also notes that 2023/24 was not a stocks – building year for most importers. Combined end stocks in Algeria, Japan, South Korea, Mexico, Saudi Arabia, Taiwan, and Vietnam. Larger imports un these countries were absorbed by higher domestic use, which USDAS projects in 23/24 was a record 102 MMT’s, vs. 97.6 the previous year. USDA projects these importer stocks to decline further in 2024/25. At some point re-stocking will be needed. Brightening US corn export potential is key in the long run. Focus on supplies almost exclusively persists through the balance of August, but it’s difficult to be bearish corn thereafter as total consumption surpasses 15 Bil Bu. Theres less tolerance foir South American weather issues than the market thinks.

Ethanol stocks fell 23.4 mil barrels, below expectations and inline with a year ago. Implied gasoline usage last week rose 1% to 9.045 tbd, and was up 2% YoY. Mark Soderberg with ADM wrote , the old adage, “big crops keep getting bigger” seems to have broken down over the years. Recent history shows that when the USDA raises yields in Aug., final US yields are often below what was projected in August. That’s exactly what has happened the last 5 times yields were raised in Aug. and 11 of 17 times since 1990. Export Sales are expected to range from 20-50 Mil Bu.

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