We kicked off the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 5:00 A.M., CPI, Employment Costs-Benefits QoQ-Wages QoQ-Index QoQ at 7:30 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., Fed Interest Rate Decision, FOMC Economic Projections, Monthly Budget Statement, Interest Rate Projection 1^st yr., 2^nd yr., 3^rd yr., Current, and Longer at 1:00 P.M., Fed Press Conference at 1:30 P.M., and Dairy Products Sales at 2:00 P.M.

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The Conference Boards Leading Economic Index for September was reported at 98.3, down 0.3% from August and the lowest reading for the index since February 2015. Compared to a year ago, the index was down 3.3% to mark the 39^th consecutive month of annualized declines. The index has long been a bellwether for US financial recessions, and has been screaming recession since the middle of 2022. However, consecutive negative GDP prints have been masked by massive government spending. Positive contributors to the index in September were the S&P 500 stock index, and the Leading Credit Index. However, those gains were overshadowed by negative contributions from Consumer Expectations for Business Conditions, the ISM New Orders, and Average Weekly Initial Unemployment Claims. The Conference Board looks for 2025 GDP at 1.8%, followed by 1.5% growth in 21026.

South American Weather Pattern Update

South Am Forecast Wetter in Argentina After Dec 20^th; Brazil Weather Nearly Ideal Next Two Weeks:

The South American forecast has improved, with AI and EU model guidance following the GFS in adding rainfall to Argentina in the 11-15 day period. Scattered/regionally heavy rain is also probable in Santa Fe & Entre Rios in eastern Argentina this weekend. It’s difficult to identify threats into the latter part of the month, and the return of rain to Argentina after Dec 20^th works to prevent prolonged heat there. Normal soaking rain persists in Brazil. USsoy values must increasingly contend with above-trend Brazilian soy yield potential and the arrival of new crop supplies in early January. Argentine weather stays important for another 6-8 weeks.

Analysis of USDA’s December WASDE

USDA’s revision to US corn supply & demand is supportive. US corn end stocks were lowered 125 Mil Bu to 2,029 Mil amid a hike in exports. The pace of physical shipments to data was cited. No other changes were made, and US corn end stocks will exist above 2.0 Bil Bu, which explains the market’s range bound trade with rallies capped by record large supply with breaks supported by record large US corn export demand. The pace of US corn sales & shipments has been incredible since summer, but the burden on future demand growth is heavy. There can be no downturn in US corn exports next summer, and ARC expects new sales to be more labored amid sagging Brazilian cash prices and rising odds that Argentina will produce a record of 58+ MMT’s. ARC maintains that 25/26 US end stocks will be closer to 2.5 Bil Bu, which implies downside risk outweighs upside potential at $4.50 March futures. Argentine weather through early January is the most important factor for price discovery over the next 4-6 months. Con is near a seasonal peak. There will be no shortage of feed supply availability in the US or globally in 2026.

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