We kicked off the day with Core Inflation Rate MoM & YoY, CPI, CPI s.a., Export Sales, Inflation Rate MoM & YoY, 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., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., 30-Year Bond Auction 12:00 P.M., Monthly Budget Statement at 1:00 P.M., and Fed Balance Sheet at 3:30 P.M.

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After rising faster than expected in July, producer prices marked a surprising decline in August. Slipping by o.1% from July, against trade estimates that had called for a 0.3% increase. It was the first decline in PPI in 4 months, with costs for services sliding 0.2%, led by decline in margins for machinery and vehicle wholesaling.. cost for professional and commercial equipment, wholesaling, chemicals, furniture retailing, food and alcohol chemicals, and data processing were all lower. Prices for goods rose 0.1%, marking the 4^th consecutive month higher, led by increases on tobacco products, beef, poultry, printed circuit assemblies, and electric power. Despite the 1-month decline, the PPI was 2.6% higher than last year, a record high for August, and the 2^nd largest monthly print on record behind July), at 149.16.

Corn Comments & Analysis

CBOT Corn Ends Lower in Tepid Volume:

Dec CBOT corn has failed to make new rally highs. The northward acceleration of harvest and weak new crop bids has challenged recoveries, while profitable ethanol margins and uncertainty in yield lend support. Yield estimates ahead of tomorrow’s WASDE are wide ranging, and whether NASS prints a number above or below 184 BPA dominates price discovery. ARC’s strategy of leveraging bearish risk above $4.25 Dec ’25, and $4.60, Dec ’26 is unchanged. The lack of US ethanol capacity expansion and stagnate gasoline consumption keep the burden of demand growth on trade/exports. This morning’s export sales report is critical in measuring trade flows following the declines in late August. How low is low will be determined by actual field reports. However, Southern Hemisphere corn production increases look promising as Argentina forecasts that its harvest will be a record large 61 MMT’s vs. the prior record of 55 MMT’s in 2020. Domestic Argentine corn consumption is just 14-15.5 MMT’s, implying that Argentia could export a record 41-43 MMT’s of corn. Record large US and South American corn crops and limited Chinese demand will push prices lower into harvest.The lack of Central US storage adds to the bearish corn outlook into November.

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