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Friday was kicked off with Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings month-over-month & year-over-year, Participation Rate, Average Weekly Hours, Government Payrolls, Manufacturing Payrolls Private, Nonfarm Payrolls Private, and U-6 Unemployment Rate data at 7:30 A.M.

This was followed by Factory Orders month-over-month and Factory Orders ex Transportation numbers at 9:00 A.M. Next came the Baker Hughes Oil & Total Rig Count at 12:00 P.M., followed by Total Vehicle Sales data.

The Institute for Supply Management reported that its Manufacturing Purchasing Manager’s Index in July slipped 46.6 down from 48.5 in June and below trade estimates of 48.8. The index was at the lowest level in five months, and it has been below 50 in 19 of the last 20 months. An index measurement of 50 reflects expansion in the US manufacturing index, and below 50 signals contraction.

New US Orders fell to 47.4, down from 49.3 in June and the lowest reading since June 2020. This was accompanied by the weekly Initial Jobless Claims report that showed the number of people claiming unemployment benefits had risen to a 51-week high. The risk of a recession is here without the US Central Bank cutting rates aggressively.

Central US Weather Forecast High Amid Tropical Storm; Models Trend Drier in Delta/W Midwest:

The EU/GFS forecasts on Thursday evening pushed next week’s hurricane farther east, with landfall anticipated across West Florida. The storm passing across Northern Florida is expected to move back into the Atlantic around the Aug. 6-8 timeframe. This would leave the remainder of the Central US in an arid weather trend.

Extreme heat has stayed absent from the principal Corn Belt, but it has continued across the US Plains/Delta/Southeast area into mid-August. This forecast is viewed as mixed with respect to US summer row yield potential. Rapid soil moisture losses have occurred in Texas, Oklahoma, Kansas, Nebraska, and South Dakota.

Adequate subsoil moisture and lack of heat exist from Iowa to the east. Be prepared for changeable six- to 15-day outlooks, as the path of next week’s tropical event is critical to Central US rainfall forecasts. The NOAA agrees with model guidance that projects an eastward turn in the developing Caribbean hurricane to rake Florida and the US Eastern Seaboard.

Global Corn Futures Stabilize; Stone X Pegs US Yield at 182.3 BPA; Corn Valuable Below $4.00

Corn futures ended near unchanged in the US, Brazil, and Europe. Fob premiums are unmoved. Export Sales were mixed, with old crop US sales marking a low at 6 Mil Bu, while new crop sales marked 28 Mil Bu. Cumulative new crop sales on July 25 totaled 220 Mil Bu vs. 190 Mil a year ago.

US corn remains highly competitive in the world market. Corn’s historical relationship with crude shows high prices in delivery pushes premiums higher. 

Meanwhile, livestock margins are historically high. Stone X’s projected crop size of 15.2 Bil Bu, vs. USDA’s 15.1 Bil, is seen as neutral. Assuming export demand expansion, a yield of 180-182 does little.

A USDA yield of 184+ in August is bearish, but anything less triggers early seasonal lows. ARC notes in years of nonthreatening weather/trend yields, market bottoms are typically scored in late August/early September. Watch for pushback to bearish sentiment in the days ahead.

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