We kicked off the day with Consumer Inflation Expectations and Export Inspections at 10:00 A.M., and 3-Month & 6-Month Bill Auction at 10:30 A.M.

The February jobs report offered little excitement for January. The US economy added 143,000 jobs in January, well below an upward revised December figure of 307,000 jobs but below the average trade estimate of 170,000. November jobs figure was up by 51,000. The unemployment rate dipped to a 7-month low of 4%, but largely due to a recent population revision raised the civilian labor force by 2.2 million people to 170.74 million. The U6 unemployment rate which includes marginally attached workers and workers forced into part-time for economic reasons, was unchanged in December at 7.5%. Government payrolls increased by 32,000 in January, while private businesses added 111,000 jobs, which was well below expectations of 141,000. Manufacturing payrolls increased by just 3,000 jobs in January.

Photo by Jesse Gardner on Unsplash

South American Weather Pattern Discussion

South American Weather Favorable into Late Feb; Near-Term Brazilian Dryness Accelerates Harvest; No Sign Yet Rainy Season Ends Early:

The South American climate is improving. Soaking rainfall of 1-4” has been recorded this week across key areas of Argentina as well as Parana in Southern Brazil. Long term forecasts are trending wetter in Argentina through early March, and a normal pattern of rain is most probable in Brazil. EU ensemble model’s (the best performing weather model) 1-5 day & 6-10 day South American forecast shows the absence of rain in C and N Brazil which sets the stage for rapid soybean harvesting in mid-and late February. Regular rain resumes in N Brazil in the 6-15 day period, and this too is viewed as favorable. Note the biggest risk to Brazilian safrinha corn production is not seeding seeding dates, but rather the duration of the wet season. Soil moisture in Mato Grosso & Goias stays abundant through the remainder of February.

On the Corn Front

US Tariff Concern Sparks Long Liquidation; Mato Grosso Safrinha Seeding Accelerates:

Corn markets ended weak amid reports Trump planned to enact blanket tariffs on trading partners. This occurred while safrinha corn seeding in N Brazil accelerates and the US dollar ended sharply higher. The old adage, bull markets need to be fed bullish news daily, and it wasn’t in the cards at the end of last week and continuing to start this week. And while it remains that 15-20% Mato Grosso’s corn crop will be planted after March 1^st, fund length is viewed as excessive relative to highly uncertain N American grain flows. Recall Mexico in 23/24 secured an incredible 964 Mil Bu of US corn, and to date sales to Mexico are up 23 Mil Bu (4%) year-over-year. Its imperative that Mexican demand continues freely. Managed funds on Tuesday were long a net 352,000 contracts. Ag Resources (ARC) estimates that only 12,000 contracts have been liquidated since. A new defined trend awaits policy certainty and new crop seeding intentions, but a 20-30 cent break occurs if the flow of bullish news pauses. $5.10, basis May, is hard resistance. CBOT open interest  as of Friday’s close showed corn open interest dropped 12,108 contracts, Soybeans gained 2,956 contracts, and wheat was down 15,011 contracts.

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