We kicked off the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.M., S&P Global Composite PMI Flash, S&P Global Manufacturing PMI Flash, and S&P Global Services Flash at 8:45 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction and 2-Year FRN Auction at 10:30 A.M., 5-Year Note Auction at 12:00 P.M., Cold Storage, Dairy Products Sales and Milk Production at 2:00 P.M.

The EIA’s weekly update on retail gasoline and diesel fuel prices showed that the national average gasoline price was up fractionally last week at $3.062/Gal while the average diesel price was down 2 cents at $3.838/Gal. Compared to a year ago, gasoline prices were down 10%, marking the 4^th consecutive week of year-over-year declines. Gas prices have been down in 14 of the last 15 weeks. The average diesel fuel price was down 17% from a year ago and has now been lower on a year-over-year basis for 47 consecutive weeks. The spread between retail diesel and gas remains high at $.78/Gal but has narrowed $.22 in the last 13 weeks. The next CPI report will reflect further decline in fuel price for January. The weekly American Petroleum Institute (API) Weekly Energy Stocks showed draws in crude oil at -7.183M and Cushing -2.031M, with builds in gasoline +7.183M with slight draws in distillates at -0.245M.

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CBOT corn’s decline to new multi-year lows has been mostly a function of larger-than-expected US production and to some extent the recent boost in Ukrainian shipments – as a new official export corridor was established. However, ARC notes global corn demand growth is intact, and in fact USDA may be too low with its 23/24 world trade forecast. South American weather forecast broadly drier into Feb 5^th – heat reaches into Southern/Western Argentina next week. The EU & GFS models on the margin have trended drier in all but east/northeastern Brazil. Soaking rains are offered to Minas Gerais and Bahia – two fringe producing states – but a pattern of net soil moisture lies ahead in South America. All eyes will be focused if the GFS ensemble’s two-week precipitation and temperature anomaly forecast. Unwanted heat returns to Mato Grosso do Sul and Sao Paulo center-west Brazil. Dryness has been building in these states since early January. Otherwise, coming warmth/dryness in Brazil. Dryness allows soybean harvesting to advance normally. The bigger issues nearby are the need for rainfall in Argentina February 1^st onward. Rapid soil moisture loss occurs there over the next 10-days, high temps projected to reach the upper 90’s/low 100’s in southern and western producing regions next Mon-Thur. Only lite/scattered showers indicated the next 11-15 day period it’s time to pay close attention to the daily forecast.

CBOT open interest continued to climb on Tuesday with corn adding +10,385 contracts, soybeans +7,279 contracts, soybean meal +4,037 contracts and soybean oil adding +5,155 contracts. Only Chicago wheat open interest fell and was down -564 contracts. Since the first of the year, CBOT corn open interest has climbed nearly 200,000 contracts which likely reflects new FUND SHORTS and User End Pricing. The open interest surge adds to future CBOT price volatility.

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