We kickoff the day with Durable Goods Orders MoM, Durable Goods Orders Ex Transportation MoM, Durable Goods Orders ex Defense MoM, and Non-Defense Orders Ex Air at 7:30 A.M., Redbook YoY at 7:55 A.M., House Price Index and House Price Index MoM & YoY at 8:00 A.m., Fed Barr Speech at 8:05 A.M., CB Consumer Confidence, Richmond Fed Manufacturing Index, Richmond Fed Manufacturing Shipments Index, and Richmond Fed Services Index at 9:00 A.M., Dallas Fed Services Index & Dallas Fed Services Revenues Index at 9:30 A.M., 7-Year Note Auction at 12:00 P.M., and API Energy Stocks at 3:30 P.M.

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South American risk of heat & dryness in Central and Northern Brazil is elevated. The EU and GFS models are consistent in projecting a pattern of well below normal precipitation and elevated temperatures and much of North Central Brazil into March 10^th . The primary safrinha corn belt has some helpful rain returning to Mato Grosso in the 6-10 day period, but 10-day rainfall across key regions of Mato Grosso do Sul, Parana, Goias, and Minas Gerais till total just 15-25% of normal. Heat favors the region as soils rapidly dry. It remains too early to call for a premature exit of Brazil’s monsoon, but the pattern must be watched in interest. Ag Resources (ARC) reiterates drought in N Brazil in Mar/Apr has not been unusual in the last decade. March and April climate guidance remains warm and dry for N-C Brazil and the drought of September-December is forecast to return. The crop impact would be winter corn.

Central US weather pattern discussion with North American forecast adds precipitation from North Dakota to Eastern Canada. With record warmth in the Midwest and will drop dramatically to seasonal averages. Better rain and snow chances are offered to the Northern Plains and Eastern Canadian Prairies during March 4th & 5^th, but otherwise soaking rain stays confined to the Delta/Southeast and eastern Midwest. The EU model’s two-week precipitation accumulation forecast has freezing temperatures blanketing the Central US Wednesday and Thursday, but abnormal warmth returns soon after. ARC max temps

On Monday reached into the upper 70’s/low 80’s in OK,CO,KS,NE,MO, and IA. The precipitation pattern into mid-March is seasonal in nature – though heavy showers are needed across the Plains and W Midwest by early spring. It’s the temperature pattern that is abnormal. The EU & GFS agree that high temps return to the 60’s and 70’s across the Plains & Midwest Saturday through Monday. Fieldwork is widespread. Warmth initially leans bearish as it quickens seeding dates. ARC’s research has concerns that extreme winter warmth implies bouts of extreme heat in summer across the Central US.

The grains are coming in mixed this morning with corn and soybeans higher while the wheat market sags on cheap Russian fob offers and long liquidation in Paris wheat futures heading into March expiration. Managed money is a record grain shot at the CBOT, but dry Nort Central Brazilian weather has not ignited a yield and supply worry with the crop just being seeded. The window to plant corn in Brazil runs into March 10^th – so the window to seed winter corn is closing. Winter Brazilian corn seeded after March 10^th often runs into a withdrawal of the monsoon and drought during the key April & May reproductive and filling process. CBOT updated open interest watch, showed Chicago wheat open interest declined 8,019 contracts, and with just 21,000 contracts open in upcoming First Notice Day in March corn futures., the total open interest fell a massive 57,424 contracts with March open interest declining to 116,086 contracts, while soybean open interest was down 22,495 contracts with March futures open interest falling to 52,261 contracts. By today’s close, March open interest should be largely liquidated, which could mean the end of cash related contract selling.

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