We kicked off the day with Advanced Durable Goods MoM, Export Sales, GDP Growth Rate QoQ Adv, Chicago Fed Activity Index, Durable Goods Orders Ex Transportation MoM, GDP Price Index QoQ Adv, Goods Trade Balance Adv, Initial Jobless Claims, Retail Inventories Ex Autos MoM Adv, Wholesale Inventories MoM Adv, Continuing Jobless Claims, Core PCE Prices QoQ Adv, Durable Goods Orders ex Defense MoM, Jobless Claims 4-Week Average, Non-Defense Goods Orders Ex Air, PCE Prices QoQ Adv, and Real Consumer Spending QoQ Adv at 7:30 A.m., New Home Sales & New Home Sales MoM at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., Kansas Fed Composite Index & Kansas Fed Manufacturing Index 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., Building Permits Final & Building Permits Final MoM at 12:00 P.M.

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Ag Resources (ARC) notes, Diesel fuel prices at the pump have been in decline for much of last year on rising stocks. US diesel prices have been rising sharply at the end of 2023, jumping by an average 7%/week. Stocks last week were the largest since August 2021, and the EIA report showed a 1% decline this week. Compared to a year ago, stocks were up 16%. Stocks in terms of days of use are estimated at 40 days, up from November low of 26 days. The seasonal building/driving season is ahead and energy prices are expected to rise on demand. Diesel prices tend to bottom in early February ahead of the construction season peaks often formed in late summer. South American weather forecast consistent, Argentine moisture loss occurs into Feb 6, while strength of Brazilian monsoon needs monitoring February onward. The EU, GFS, and Canadian models are in good agreement and confidence in two-weeks is high. Soaking rainfall into February will be confined to east/northeastern Brazil which mostly benefits coffee/sugar and likely causes some measure of soybean harvest challenges in Minas Gerais, and Bahia. Enough rain falls across central Brazil to keep soil moisture stable, but it remains imperative that normal above normal rain continues in Mato Grosso, Goias and Mato Grosso do Sul well into march to maintain safrinha yield potential. Longer term guidance is concerningly dry across the primary safrinha crop belt. But the primary issue nearby is the duration of coming heat/dryness in Argentina. There are hints of improvement beyond Feb 7^th but confidence is low.

The Brazilian corn market is trading erratically with safrinha growing season imminent. Spot corn in Brazil slightly higher on Wednesday at $5.73/Bu, and the Brazilian market in the last two weeks has been volatile. Brazilian corn rallied from $5.20/Bu to $6.30/Bu between mid-November and mid-December, premium was shed to counter seasonally in early 2024. The market has now stabilized at $5.40 to $5.70. Most importantly, there were no Brazilian corn fob offers until Jume. Safrinha planting in Mato Grosso is 4% complete, vs. 2% last year and vs. 8% on average. ARC expects Mato Grosso safrinha corn planting progress to reach 30% complete by Feb 10^th, and so weather in northern Brazil plays a crucial role in yield determination over the next 90 days. It’s clear Brazilian corn stocks are currently tight.And Brazilian winter corn margins are negative with June/July Mato Grosso cash bids at 43.73/Bu which curtails seedings. As such, reduced seedings makes weather highly important during late March and April.

Not much more to chew on as managed money expands their bearish bet. The biggest gain from the CBOT basket of commodities was soybean oil jumping of 10,750 contracts on the down day. Soybean meal was up 1,395 contracts, soybeans up 1,708 contracts, and corn up 8,465 contracts. Corn open interest has gained nearly every day in January as end users lock down margins and managed money expands their bearish bet.

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