We kicked off the day with Export Sales, GDP Growth Rate QoQ Adv, GDP Price Index QoQ Adv, Initial Jobless Claims, Continuing Jobless Claims, Core PCE Prices QoQ Adv, GDP Sales QoQ Adv, Jobless Claims 4-week Average, PCE Prices QoQ Adv, and Real Consumer Spending QoQ Adv at 7:30 A.M., Pending Home Sales MoM 7 YoY at 9:00 A.M., EIA Natural gas Stocks 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., and Fed Balance Sheet at 3:30 P.M.

The Mortgage Bankers Association’s weekly update on home mortgage rates showed that the average 30-year mortgage rate was unchanged from the previous week at 7.02%. However, this marked the third consecutive week above 7%, which hasn’t happened since last May. The rate was down slightly from the high 3 weeks ago but marked the 6^th consecutive week of year-over-year gains. This was also the highest rate for late January since 2002. Elevated interest rates continue to suppress home mortgage demand. There was a brief uptick in September and October due to falling interest rates. However, demand relaxed as soon as rates turned higher. The latest data from the National Association of Realtors showed that the medium home sale price was unaffordable for the median family income.

Photo by Jesse Gardner on Unsplash

Soaking Rainfall Continues Across South Central US:

The Delta and Southern Midwest will see surplus soil moisture heading into spring planting as the jet stream roars zonally eastward across the Pacific Ocean which produces frequent storm systems across the South Central and Southeast US. The strong jet stream and speed of the jet will pull storm systems in the Western US with enough upper air humidity to rebuild Central US soil moisture before spring planting. And upper air humidity will be pushing west and including the plains. The 10-day rainfall forecast from the EU model shows an active spring weather pattern for the Delta and Midwest. An arctic air source will be lost with near to above normal temps and quick melting of snowpacks. Spring seeding will begin in mid-February across the Gulf Coast States.

South American Weather Pattern Discussion

Argentine Weather Forecast Adding Rainfall to the Heat of Pampas:

Although the overnight EU and GFS weather models held a decidedly drier outlook, the most recent run of the European, Canadian, and even the GFS are offering needed rain to the hear of Argentine grain belt. The EU weather model update shows meaningful rain of 1.00-3.00” across Buenos Aires, Santa Fe, and Cordoba. Such rain would be ideal for summer row crops that are in the heart of their vegetive stage. A pattern change occurred last week, which will produce regular rainfall across Argentina and Southern Brazil throughout February. However, January will end on a hot/dry note, with daily highs in the 90’s to the lower 100’s with limited rainfall. For crops that missed rain ending Tuesday the coming 4-5 days of extreme heat will be stressful. More seasonal temperatures are due next week, with Argentine and Southern Brazilian highs in the 80’s and lower 90’s. Northern Brazil will be mild, with daily shower chances through Monday before a drier forecast evolves to aid the harvest.

CBOT Corn Futures Leap to New Highs and Test $5.00 March on Capital Inflow; Corn Open Interest is Likely to Reach a Record High on Thursday Above 2,000,000 contracts:

Corn futures pushed against long-term resistance at $5.00-$5.10 spot on new capital inflows and drier-than-desired Argentine weather forecast. South American rain/temp changes and tariffs could halt or slow the bulls aggressiveness. The corn rally was in the face of potential trade tariffs from the Trump Administration against Mexico, Canada, and China. Corn has been on its own upward trajectory awaiting new supplies from Argentina and Brazil. Corn is at key chart resistance, and heading into end of the month and week, profit taking is anticipated. Managed and index funds have both bought a record amount of corn during the last 6 months estimated by Ag Resources (ARC) at over 900,000 contracts. Index funds are now holding their longest net long position since mid-2022. The US Central Bank left interest rates unchanged with an extended pause forecast in their fight against inflation. Any hint of US inflation will cause a robust response in their hiking of rates. CBOT corn values are fundamentally stretched to the upside, but the momentum remains on the upside.

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