We kicked off the day with Export Sales, Initial Jobless Claims, Non-farm Productivity QoQ Prel, Unit Labor Costs QoQ Prel, Continuing Jobless Claims, Jobless Claims 4-Week Average, and Wholesale Trade at 7:30 A.M.,  Retail Inventories Ex Autos MoM, and Wholesale Inventories MoM at 0:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., Fed Interest Raye Decision at 1:00 P.M., Fed Press Conference at 1:30 P.M., Consumer Credit Change at 2:00 P.M., Fed Balance Sheet and Used Car Prices MoM & YoY at 3:30 P.M.

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The Mortgage Bankers Association’s weekly report showed that the average mortgage interest rate last week rose 0.8% to a 14-week high of 6.81%. Rates declined through the summer in anticipation of a Fed rate cut bottomed out the same week in September that the Fed Fund’s rate was lowered. As mortgage rates have climbed, mortgage application index fell 11% to a 22-week low. Mortgage rates expected to gain further as the yield on the 10-Year Note has soared in post-election trade, reaching 4.45% on Wednesday, or the most since May, which will suppress demand.

South American Weather Stays Favorable; Argentina Dryness to be Fleeting:

The South American forecast is consistent with prior runs and viewed as favorable into Nov 21^st . An active monsoon persists across central and southern Brazil – where subsoil moisture reserves will soon be established – while a pattern of near to below normal precipitation and near normal temps is forecast in Argentina and S Brazil. The pattern in Argentina won’t be one of complete dryness. Regional showers are forecast in Cordoba and Santa Fe this weekend. Ag Resources (ARC) notes dryness in Argentina is welcomed as soybean seeding advances. Soaking rain last weekend recharged soil moisture. The 11-15 day forecast includes the return of widespread Argentine rainfall worth 1.o-2.5”, but it’s important that regular rain develops in the last half of November and throughout December. Record South American soybean yield potential is intact based on favorable conditions.

Hurricane Rafael Watch:

Hurricane Rafael strengthened to a Category 3 storm as it neared western Cuba Wednesday, and National Hurricane Forecasters said it will likely emerge in the Gulf of Mexico with much of its strength intact. Yesterday NHC’s 10:00 A.M. forecast track included a significant shift to the south, with the track this morning looking likely to make landfall in Mexico and missing the Texas coastline. We will keep you posted on future events.

Central US Weather Pattern Discussion

US Forecast Wetter in Midwest/Delta in 8-14 Day Period; Drought Elimination Probable:

Soaking rainfall impacts nearly the entire HRW Belt over the next 48 hours, with accumulation of 1-3” projected in TX, OK, W KS and CO. The EU, GFS, and AI models agree that additional rain impacts the E Plains, Midwest, ands Delta Nov 13-20. Confidence on exact placement and amounts is low, but odds are high additional net soil moisture improvement occurs. The US December climate forecast is similarly wet east of the Mississippi River. Today’s drought monitor will show substantial improvement across TX, OK, E KS, MO, IL, IA, and WI. Drought will be eliminated in all but NE, the Dakota’s, and MT if extended range forecasts are proven correct. The shift from record drought coverage to normal soil moisture has been swift and needed. The risk for a 2025 Midwest drought is in sharp decline.

CBOT Corn Rallies to Test Chart Resistance; Strong Ethanol Grind Boosts Interior Bids; Ukrainian Market Looking for Demand:

Corn futures ended higher in reaction to Trump’s sweeping victory and the often discussed planned policy to end EV mandates. ARC also noted ethanol production in the week ending Nov 1^st total 325 Mil Gal, a record for early November with plants looking to lock down margin amid the potential of sliding US energy prices. The cumulative US weekly corn grind since Sep 1 is up 3% at 279 Bil Ga. Recall USDA projects ethanol’s demand draw to be fractionally lower. ARC’s sees 24/25 corn ethanol grind at 50-75 Mil Bu USDA’s annual forecast. Sizable industrial use has worked to bottom interior cash basis with bids at major markets up $.20–$.60/Bu in the last 30 days. The gains on the CBOT  and basis should have US producers looking to advance cash sales. ARC struggles to find a fundamental that dislodges the range of $3.90-$4.30 basis December CBOT. Note Ukrainian fob corn is priced at parity with US Gulf corn for the first time since September. Competition for forward importer demand has returned. US farm sales will be made on scale-up basis. ARC continues it sees no good reason why March corn should push above $4.45. Tomorrow is WASDE day with election week almost past us. There is still more to think about and the market is digesting it now.

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