Photo by Wouter Supardi Salari on Unsplash

We kickoff the day with Consumer Inflation Expectations and Export Inspections at 10:00 A.M., 3-Month & 6-Month Bill Auction at 10:30 P.m., Fed Bostic Speech at 11:30 A.M., Consumer Credit Change at 2:00 P.M., LMI Logistics Managers Index, and Used Car Sales MoM & YoY.

The monthly jobs report was viewed as bullish on the surface. The US economy added 216,000 jobs in December, exceeding expectations of 170, 000. But this has been the case all year, previous reports were revised lower. The November jobs figure was revised down from 199,000 to 173,000 jobs, and the October jobs figure was cut from 150,000 to 105,000. A lower December revision is expected in upcoming reports. Gov’t payrolls rose by 52,000 jobs, while total private job growth amounted to 164,000. There were just 6,000 manufacturing jobs added in December. Total jobs added in 2023 amounted to 2.7 million, the lowest since 2019 (ex-2020 pandemic year) Average hourly earnings rose by 4.1% in December and averaged 4.3% in 2023, barely above the average 2023 inflation rate of 4.2%. There is no way to do a happy dance on these bearish economic numbers that don’t lie.

The CBOT starts the week in a mixed chop. A mixed opening produced a modest row crop futures bounce on a drier South American weather forecast across N & C Brazil after Jan. 15^th. However, the forecast returned to a wetter solution overnight which sparked a new round of selling this morning. It appears that with fresh US demand lacking, South American weather is the key driving fundamental feature. Also, the Black Sea weather is warming reducing winter wheat stress. The USDA January report will be released on Friday with Brazil’s CONAB crop estimate due out on Wednesday. Ag Resources (ARC) looks for choppy trade heading into Friday’s report. Friday’s CBOT o[pen interest data shows that funds continue to pile into new net short positions. Corn open interest was up 18, 623 contracts, soybeans were up 2,744 contracts, soybean meal was up 7,903 contracts, and soybean oil futures were up 6,511 contracts. The only grain that witnessed an open interest fall was wheat which declined 1,891 contracts on Friday’s short covering bounce. ARC calculates that managed money is now holding its largest net short CBOT grain position since the depth of the pandemic in mid-2020. If weather worsens in Brazil which could start a short covering rally boom we would realize given global demand is not economically stifled. In the overnight electronic session, the march corn is currently trading at 459 ¾ which is 1 cent lower. The trading range has been 462 ½ to 459 ¼.

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