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., PPI MoM & YoY, Core PPI MoM & YoY, and PPI Ex Food, Energy and Trade MoM & YoY at 7:30 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., Fed Interest Rate Decision, FOMC Economic Projections, Interest Rate Projection 1^st Yr. 2^nd Yr., 3^rd Yr., Interest Rate Current, and Interest Rate Projection Longer at 1:00 P.M., Fed Press Conference at 1:30 P.M., and Dairy Products Sales at 2:00 P.M.Image Source: UnsplashBrazilian weather forecast offering rain beyond Dec 21^st is very low in confidence rating. We will be watching this drought closely. Also in South America news, Argentina is expected to devalue the peso to 800: 1USD from the current levels of 365 : 1 USD and dramatically cut government spending in an economic shock. The November Consumer Price Inflation was reported at 3.1%, right at trade estimates and down from 3.2% in October. It was the lowest annualized monthly inflation rate in 5 months. However, the Consumer Price Index at 307.1 was a record for the index in November, and compared to the pre-pandemic levels, the index was 19% higher. Signs show that the purchasing power of the US dollar improved slightly from October, BUT $1 TODAY IS EQUIVALENT OF PURCHASING POWER OF $0.84 IN JANUARY 2020. FOOD PURCHASING POWER HAS DECLINED EVEN MORE, WITH $1 TODAY equals to $0.80 IN JANUARY 2020. Real wages rose for the 7^th consecutive month, but the average 0.7%/month increase in the last 7 months falls short of offsetting the average 1.9%/month decline that occurred in the 25 previous months. Future wage growth is expected for US workers. AgResources also reports corn ends firm despite the plunge in crude, the Brazilian corn rally continues. But new buying in corn was capped by a $240 break in crude and new seasonal lows in ethanol. Supply/Demand is tighter than last year, but the spot Midwest swap market this week is quoted at $170/Gal, vs $1.75 last week. Margins are being compressed. Demand-based enthusiasm is shifting from the domestic industrial sector to US export opportunities. The Brazilian corn rally continued unabated. March corn in Brazil on Tuesday settled at $6.58/Bu, a $1.73 premium to March CBOT. Charts and seasonals show that the Brazilian market is unlikely to break until late Feb/Mar at soonest. The speed and intensity of the Brazilian corn rally is important. March corn in Brazil is likely to test $6.80-$7.20 by mid-late winter-near unchanged from the prior year! Safrinha production threats are in place amid continued abnormal heat/dryness in Mato Grosso & Goias. The US cash market has done little this week. A jump in interior basis is needed to spark fund short covering in bulk. Forward supply risks remain sizable in South America. Cash sales remain on hold as corn watches the strong rally in world wheat values. This morning added pressure is making us come in a little easier with selling developing from Argentina’s proposed shock treatment to calm its raging inflation. In the overnight electronic session the March corn is currently trading at 481 ¼ which is 4 cents lower. The trading range has been 485 to 480 ½.More By This Author:Global Drought Monitor & Global El Nino Patterns. The Corn & Ethanol Report
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