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The Corn & Ethanol Report

Daniel Flynn
http://www.pricegroup.com/
dflynn@pricegroup.com


Hurricane & Monsoon Season. The Corn & Ethanol Report 10/08/2024

We kickoff the day with Fed Kugler Speech at 2:00 A.M., NFIB Business Optimism Index at 5:00 A.M., Trade Balance, Exports & Imports at 7:30 A.M., Redbook YoY at 7:55 A.M., RCM/TIPP Economic Optimism Index at 9:10 A.M., 42-Day Bill Auction at 10:30 P.M., Fed Bostic Speech at 11:45 A.M., 3-Year Note Auction at 12:00 P.M., Fed Collins Speech at 3:00 P.M., API Energy Stocks at 3:30 P.M., and Fed Jefferson Speech at 6:30 P.M.

The Federal Reserve reported that total US consumer credit in August was 2.1% larger than a year ago, with revolving credit declining 1.2%, while nonrevolving credit expanded at a 3.3% annualized rate. Total credit of $5,099 billion was $116 billion larger than a year ago and record large. This was also the largest year-over-year increase since February. The average interest rate on a 60-month new car loan in the 3rd quarter rose 0.20% to 8.4%, which was the highest since the Fed’s reporting began in 2006. The average credit card interest rate for the first quarter rose to 21.76%, the highest since the Fed’s reporting began in 1994. The recent cut to the Fed Funds rate will result in lower consumer interest rates in the coming months but will also accelerate consumer credit growth which is desired in a “soft” economic landing.

South American Weather Pattern Discussion

South American Drought Ending; Widespread/Substantial Soil Moisture Boost Ahead:

The South American forecast is consistent and all major forecasting models agree that Brazil’s monsoon activates beginning Oct 9th . Another two days of dryness and abnormal heat in C and N Brazil keep planting progress paused, but rains there begin to fall on Thursday/Friday and likely intensify into February/March. The seasonal evolution of monthly rain in Mato Grosso historically trends higher. State-wide precipitation Oct 1 – 21 is projected at 3.05”, vs. 1.05” in 2023. Unlike last year 2024’s delay of the wet season will be only 10-12 days. November climate of temperatures in Brazil and near/above normal rainfall. Equally important is that shower activity will be spread across much of Argentina over the next 10 days. Two systems are forecast – one across N Argentina Mon-Wed and one across S & E Argentina Oct 16-17. Cumulative rainfall of 1-3” is advertised in key areas of Cordoba, Santa Fe, and Buenos Aires. Concern over La Nina’s negative impact on Argentine weather & yields will push back amid the incoming start of the monsoon with La Nina taking 2-3 months to have any impact on Argentine crop yield potential.

CBOT Corn Recovers Slightly; Brazilian Futures Shed Premium Amid Imminent Arrival of Monsoon:

World corn markets were mixed but mostly firm on Monday. The coming rainfall across Mato Grosso/Goias eased the fear that safrinha corn acres there won’t be planted until March, while EU/Black Sea harvest issues persist. A new threat in Europe is emerging in the form of unwanted soaking rain in France, which adds to existing feed grain supply issues. Ag Resources (ARC’s) research maintains corn gains on soybeans in the long run, but it’s imperative to catch up on hedges on any re-test of 4.30+ basis Dec and $4.50+ basis March. Rallies will be labored without meaningful gains in global wheat cash prices. The US harvest on Sunday was 30% completed vs. 27% on average. ARC forecast progress to reach 40% next week. The cash market’s inability to strengthen is a function of building cash corn supplies. The rally in CBOT futures since late August has been record large on a percentage basis, but cash is not leading the advance. Brazilian corn export commitments are 15 MMT’s behind last year with coming rain to push farmers to shed old crop supply. The market also found support from an announced sale of 198 MT (7.8 Mil Bu) of corn to destinations unknown. December corn will struggle above $4.30 with a November low forecast at $4.00.

Hurricane Milton Update

Hurricane Milton expected to make landfall tomorrow night. Forecasters are following the eye of possibly the biggest hurricane in US history, right after the destructive Hurricane Helene, As Milton bounces back & forth from a category 4 & Category 5 the monster storm is expanding on weakness and confusing where and how large of a landfall will have devastating storm surge.

Our Prayers Go Out To All Are Countrymen Suffering Through These Two Monsters God Bless!

Have A Great Trading Day!



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Contact Dan at (888) 264-5665 or dflynn@pricegroup.com.