We kicked off the month with Challenger Job Cuts at 6:30 A.M., Initial Jobless Claims, Nonfarm Productivity QoQ Prel, Unit Labour Costs QoQ Prel, Continuing Jobless Claims, and Jobless Claims 4-Week Average at 7:30 A.M., S&P Global Manufacturing PMI Final at 8:45 A.M., ISM Manufacturing PMI, ISM Manufacturing New Orders, and ISM Manufacturing Prices 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 at 11:00 A.M., Cotton System, Fats & Oils, and Grain Crushings at 2:00 P.M.

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ARC spells it out perfectly, the biggest drag on CBOT grain markets in the last year has been overall lack of interest in agricultural markets. Open interest in corn, soybean, and wheat markets fell to near-decade lows in late 2022 and remained historically low throughout 2023. However, (we been talking about a signaling of a fund bear trap) changes are underway with open interest rising, led by the corn market. Corn open interest has jumped by more than 350,000 from the December low to 1.6 Mil contracts this week. Compared to a year ago, corn open interest is 22% larger. Soybean open interest is up 128,000 contracts from the start of the year or 8% larger than a year ago, while wheat open interest is up 50,000 contracts and is 16% larger. End users have added forward coverage while managed money is sitting on a record January short position. Specutively, the short side of the market is crowded.

The South American weather pattern discussion with threatening weather into Feb 9^th, model uncertainty after. The EU, GFS, and Canadian models agree that better shower chances occur in Argentina beyond Feb 8^th – but disagreement over precipitation totals & coverage. ARC who’s yield forecast earlier in the week dominated headlines and they are betting is that meaningful rain into Feb 14^th favors southern and western crop areas. Key producing provinces Santa Fe, N Buenos Aires & Entre Rios will be left arid. Argentina’s temperature forecast features highs in the 90’s/low 100’s into the weekend. Argentine temps next week reach 99-106 degrees which produces acute stress. The GFS ensemble models two-week forecast, normal rain continues across Northern Brazil. Showers impact the driest regions of Southwest Argentina Feb 9-11, but some 50-60% of corn & soybean areas face draws in soil moisture into mid-month. Argentine crop conditions are in retreat.

The Central US weather 30-day drought outlook features widespread improvement or elimination of drought in the Southeast and across the Delta region & Southern Midwest. ARC views NOAA’s current 10-day forecast, which features yet more rainfall in Tx, Ok, La, Ar, and Ms. The February forecast is based on fading El Nino. Elsewhere, abnormal heat and below precipitation continue indefinitely. 16-30 day guidance keeps warmth intact into February.

The tone of the market is, choppy CBOT values are forecast until there is more clarity on South American crop sizes. NASS will release it’s US December Crush report later today. Don’t chase CBOT rallies or sharp breaks with the CBOT markets forming a base.

EIA reported a November soybean oil usage for biofuel production at 1,062 matching October’s data with lowering margins most likely the culprit. The November renewable diesel soyben oil using 449 Mil pounds up 100 Mil pounds from November 2022 or 28%.

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