Grain Bottom & Weather. The Corn & Ethanol Report

We started off the day with Chicago Fed National Activity Index, Initial Jobless Claims, Continuing Jobless Claims and Jobless Claims 4-Week Average at 7:30 A.M., S&P Global Composite PMI Flash, S&P Global Manufacturing PMI Flash, and S&P Global Services at 8:45 A.M., Existing Home Sales, Existing Home Sales MoM, and Fed Jefferson Speech at 9:00 A.M., EIA Natural Gas Storage and NY Fed Treasury Purchases 4.5 to 7yrs. at 9:30 A.M., EIA Energy Stocks at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.m., 30-Year TIPS Auction at 12:00 P.M., Dairy Products Sales at 2:00 P.M., Fed Harker Speech at 2:15 P.M., Fed Cook & Fed Kashkari Speech at 4:00 P.M., and Fed Waller Speech at 6:35 P.M.

green-leafed plants

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The Mortgage Bankers Association’s weekly report was negative for the real estate industry in all directions. The average 30_Year mortgage rate rose for the 5th consecutive week to a 10-week high of 7.06% and was 0.44% above a year ago. Rising rates slowed real estate demand, and the mortgage application index fell 10% from the previous week, which was 9% below a year ago, at a 7-week low. Additionally, the Refinance Index feel for 13% for the week while the Purchase Index dropped 9% to the lowest level since early November. After the Trump verdict in New York where no party was harmed or injured in the case in question, this will have underwriters leaving big cities with high taxes, high crime, and economies drowning accelerating economic woes. The politicians will want to raise our taxes to give food and board to migrants instead of our own population.

South American weather watch has Central Argentina wetter and March outlook stays hot and dry in Brazil welcomed rainfall of .75-2.00” has been added to Cordoba in Central Argentina but otherwise the South American outlook is consistent with prior runs. The forecast is benign into March 2nd, with heavy rainfall due in NE Brazil this weekend and in S Brazil in the 6-10 day period. Brazilian soil moisture will be adequate nearby. However, close attention must be paid to Brazil beyond early March. Long term guidance has been unwavering in calling above normal temperatures in March-April and a premature end to the wet season cross some 80% of Brazil’s safrinha corn belt. The weather models are similar in forecasts. Brazil’s safrinha corn seeding as of Sunday is 45% planted. Brazilian weather in March and April are critical. 30-day outlooks warrant monitoring as short term forecast trend dry in N Brazil beginning next week. The evidence keeps stacking up that the downside risk in corn, soybean oil, wheat and soybeans are becoming modest. However, there is no chart or fundamental indicator that seasonal lows are in place, but stocks/use ratios measured against price suggest that any further weakness will be of a leaking. The big money in being short of CBOT or Paris grain futures has been made.

Ukrainian corn exports in February are projected to be near pre-war levels. Ukraine corn shipments in February at 4.1 MMT’s, up 830,000 year-over-year and the largest since 2021. Ukrainian supply in the world marketplace at deflated prices added bearish weight on US and European cash prices. The termination of the Black Sea export corridor in 2024 proved meaningless. The Ukrainian military’s relative dominance of shipping channels along far eastern Europe into Istanbul has been a boom for loadings, and despite periodic attacks on or near grain terminals in S Ukraine. Spot Ukrainian fob corn is quoted $0.5 below March CBOT, US and Argentine premiums are quoted $.45-60 over. Ukraine farmers are seeking to sell stored grain to find capital to seed 2024 spring crops. China’s economy is also worth watching as their good economic news is still being overshadowed by their real estate market.


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