We kicked off the day with Goods Trade Balance Adv, Retail Inventories Ex Autos MoM Adv, and Wholesale Inventories MoM Adv at 7:30 A.M., Redbook YoY at 7:55 A.M., S&P/Case-Shiller Home Price Index MoM & YoY, House Price Index, and House Price Index MoM & YoY at 8:00 A.M., JOLT’s Job Openings, CB Consumer Confidence, and JOLT’s Job Quits at 9:00 A.M., Dallas Fed Services Index and Dallas Fed Service Revenues Index at 9;30 A.M., 42-Day & 52-Week Bill Auction at 10:30 A.M., 2-Year FRN Auction and 7-Year Note Auction at 12:00 P.M., and API Energy Stocks at 3:30 P.M.

Gold Priced in US dollars set a record high last week in both the cash and the futures markets, reflecting a further deterioration of the US dollar. At last week’s high, 1 ounce of gold was valued at $2,758. Monetary gold demand has been strong due to foreign monetary gold demand has been strong due to foreign central bank buying, while non-monetary demand has been driven by investors. And both are trying to escape the declining purchasing power of the US dollar. Last week’s Commitment of Traders report showed that the week ending Oct 22, funds bought 6,805 contracts against commercial selling of 6,107 contracts. The fund position is nearing the historical extreme of 250,000 contracts. However, commercial selling has been minimal. Commercials began selling in early August ahead of the Fed rate cut and have since sold over 32,000 contracts and are net short nearly 79,000. But the current position is far from the lower extreme of 200,000 contracts.

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South American Weather Update

Widespread Moisture Boosts Projected in South America Next Two Weeks;

The South American forecast has trended wetter in Brazil in the 6-10 day period and also advertises the return of rainfall to key areas of Central Argentina Nov 3-6. It’s difficult to find issue with Sout American weather/yield potential outside of modestly delayed soybean seeding dates in n Brazil. Ag Resources (ARC) maintains subsoil moisture reserves will be established by mid-Nov. Also important is that weak La Nina still isn’t negatively impacting weather in Argentina and far S Brazil. The EU weather model’s two-week % of normal precipitation forecast. Brazilian rainfall stays light/scattered in nature for another 2-3 days, but thereafter near daily rain chances develop into Nov 10^th . Cumulative precipitation upward of 3-4” is advertised in Mato Grosso, Goias, and Minas Gerais. A normal South American climate pattern is most probable into the latter part of the S Hemisphere spring.

Central US Weather Pattern Discussion

Soaking Central US Rainfall Pulled into 7-Day Forecast; 2-4” Favors OK, E KS, MO & IA:

The best rainfall in weeks lies ahead for the E Plains and Midwest. Another 48 hours of near complete dryness lies ahead, which allows harvesting and winter wheat seeding to advance, but beginning Thursday a multi-day period of heavy rainfall impacts all but the far Western and Northern US Plains. NOAA’s projected change in soil moisture will be most welcomed in TX, OK, KS, and across the drier parts of the Western Corn Belt. Widespread showers occur Thurs-Fri. Additionally, rain chances are forecast every other day between Nov 4 & Nov 7. Cumulative totals 3-4” are projected to favor TX, OK, E KS, MO, and IA, and the accumulation 1” is offered to all but ND and Southeast. Mississippi River levels south of Memphis will improve by mid-November.

Corn Follows Crude Lower; Dec CBOT Corn Test Key Support at $4.10:

World corn markets ended weaker again. Managed fund’s net position is no longer overly short. Crude oil shed substantial risk premium as Israeli retaliation in Iran so far avoids energy infrastructure. And sizable bushels continue to find domestic amid an abnormally rapid harvest – the US harvest on Sunday was 81% complete, inline with expectations but well above the 10-year average 67%. Spot bids at major markets remain deflated amid short term over supply. A close below 44.10 foreshadows a second test of $3.99-$4.00, basis Dec. ARC’s work maintains fair value lies in a range of $4.00-$4.30, and following the recent correction in Black Sea fob premiums, the US market is working sustain meaningful demand growth. End users are recommended to add to supply coverage on weakness, but not until the US election has passed with seasonal rallies be sustained.

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