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., Core Inflation Rate MoM & YoY, Inflation Rate MoM & YoY, CPI, and CPI s.a. at 7:30 A.M., Fed Logan Speech at 8:45 A.M., Total Household Debt at 10:00 A.M., 17-Week Bill Auction at 10:30 A.M., Fed Musalem Speech at 12:00 P.M., Fed Schmid Speech at 12:30 P.M., Monthly Budget Statement at 1:00 P.M., and API Energy Stocks at 3:30 P.M.

The National Federation of Independent Business’s monthly small business survey reflected an overall improvement in owner’s outlook, though small business owner’s sentiment was far from positive. The Small Business Optimism Index rose for the 4^th consecutive month, gaining 2% in October to reach a 32-month high of 93.7. However, October marked the 34^th consecutive month that the index was below the long-term average of 98. A net negative 20% of all owners reported higher than normal sales in the last 3 months, down 3 points from September and the lowest since July 2020. A net 31% reported raising compensation, down 1 point from September and the lowest since April 2021. The percentage of owners expecting higher real sales volume rose 5 points to a net negative 4% or the highest figure of the year. 35% of all owners reported job openings that they could not fill, which was up 1 point from September.

Photo by Jesse Gardner on Unsplash

Central US Weather Pattern Discussion

Model Guidance in Better Agreement with NOAA; Additional Soil Moisture Improvement Ahead; River Levels Improve:

The EU & GFS models have trended wetter across the E Plains and Midwest to better align with early-week precipitation outlooks from NOAA. There’s broad agreement that additional rainfall of 1-2” blankets the eastern HRW Belt, Midwest, and Delta/mid-South. This follows precipitation accumulation in the last 10 days worth 3-6” across TX, OK, KS. AR, MO, IA, IL, and WI. A further rapid deterioration of drought lies ahead. River logistics also improve substantially. The Mississippi River at Vicksburg, MS, is projected to rise from 11’-17’ over the next 72 hours, and stay above 10’ into the final days of November. Drought is no longer a concern as the onset of winter approaches. Even normal Dec-Feb precipitation further eases drought in all but NE and parts of the Dakota’s.

CBOT Corn Ends Weak but Outperforms Soybean/Wheat; US Market Losing Competitive Edge:

CBOT corn futures ended only slightly lower in the face of plunging wheat & soybean markets. End user purchasing will continue on breaks as a rather sizable export program lies in the offing and as weekly ethanol grind stays above year-ago levels. However, US dollar strength and fears of future US tariffs keep strong chart-based resistance in place at $4.35, basis Dec, and $450, Basis March. Use recoveries to catch up on sales. US corn is no longer ultra-competitive in the global market. Ukrainian origin competes into Asia, while on the margin South American values are down slightly this week. Dalian corn prices in China have failed to add premium despite the near complete absence of Chinese imports. China’s market appears to be adequately supplied, and most likely the USDA trims annual Chines imports another 1-3 MMT’s in December. Corn is set to outperform soybeans as South American supplies won’t be fully replenished until summer. But the fuel needed to propel March above $4.50 is absent. Rallies will be selling opportunities unless adverse weather blankets South America in December.

South American Weather Models Maintain Wetter Pattern in Southern Brazil; Lack of Heat Prevents Issues in Argentina:

The South American Forecast remains favorable in that regular rains persist indefinitely across key areas of central & northern Brazil and as needed rain expands into southern Brazil after Nov 18^th . Confidence in this expansion of Brazilian rainfall is high amid model agreement & consistency. A drier pattern blankets most of Argentina, but enough rain is forecast across critical areas of Cordoba, Buenos Aires, abd Santa Fe to sustain above average early-season crop ratings. Ag Resources (ARC) also notes that Argentine dryness doesn’t become an issue unless its extended into early December. ARC also showed a graphic of 30-day % of normal rainfall in South America, and major crop areas ARC highlighted. And an abundance of rain has fallen so far in Argentina. This along with a lack of sustained heat keeps trend row crop yield potential there intact.

Disturbance 1 Update:

National Hurricane Center updated 7:00 A.M. EST.

A broad area of low pressure storms are meandering through the central and western Caribbean Sea with environmental conditions conducive to form a tropical depression the next 48 hours and soon after gain hurricane strength, which will be names Sara. The cone guesstimates are all over the board with a possible cold front pushing the storm to the Florida coast. We will keep you posted on this trick and hopefully last storm of the hurricane season.

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