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The Corn & Ethanol Report. Economy-Markets & Positioning For Reality
By: Daniel Flynn | April 5, 2024

We kickoff the day with Unemployment, Non-Farm Payrolls, Average Hourly Earnings MoM & YoY, Fed Collins Speech, Participation Rate, Average Weekly Hours, Government Payrolls, Manufacturing Payrolls, Nonfarm Payrolls Private, and U-6 Employment Rate at 7:30 A.M., Fed Barkin Speech at 8:15 A.M, Fed Bowman Speech at 11:15 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M., and Consumer Credit Change, Dairy Products, and Used Cars MoM & YoY at 2:00 P.M.

The volatile day in commodities markets yesterday as we started out sailing until gloom & doom overtook took over as a reminder of how bad of shape the economy is overall is very poor, and extremely bad news is ahead if the government doesn’t change it’s ways of spending money like a drunken sailor. No matter how you crunch the numbers the data we receive on a given report will only have negative revisions in the next report. The US trade deficit widened to $68.( billion in February, a $1.3 billion or 2% increase from January. It was also the widest trade gap in 10-months (Apr 2023). The trade deficit widened and exports rose 2.3%to a record high of $263 billion, led by civilian aircraft, crude oil, soybeans, and nonmonetary metals. However, imports increased 2.2% to $331.9 billion, the highest since October 2022. Imports were lifted by increases for cell phones and other household goods, pharmaceutical preparations, cars, parts, and other foods. The trade deficit with China narrowed to a 3-month low of $21.9 billion, while the deficit with Mexico widened to a record. Large $15.3 billion. The numbers are very disturbing.

South American weather watch has Brazilian rain expanding into the driest areas of Mato Grosso do Sul in a 6-10 day period, hints on monsoon exit beyond April 13th . Heavy showers will persist for another 10 days, with needed rainfall of 1-2” to reach into the driest areas of Center-West Brazil in the 6-10 day period. Soil moisture is the concern. Next week’s expansion of Brazil rain is welcomed, but ARC is noting the 11-15 day guidance features a rapid and significant retreat in Brazilian precipitation, with totals of 1+” isolated to far Northern Mato Grosso. Confirmation that monsoonal rains end in mid-April is most worrisome for southern safrinha corn belt-which experiences needed precipitation next week but need much more to maximize safrinha yield potential. Brazilian weather still needs watching as pollination spans from mid-April to early May. Record safrinha corn production a year ago was driven in part by soaking rain in the second half of April and regional showers in Mato Grosso into the first week of May.

The US forecast uncertain over Midwest rain the next 10 days while temps lean to warm/hot beyond the weekend. The EU & GFS models are at odds over the placement of rainfall in the E Midwest April 11-12.The GFS keeps meaningful rain confined to the Delta & East Coast. The EU also allows the Delta to get soaked but the projects rainfall of 1-3” in IL, IN, and OH. Fieldwork gets delayed into the E Midwest is correct, but concern today centers on net soil moisture loss across the Plains and flooding in South/Southeast. Both models agree on this. A lengthy period of dryness occurs west of the Miss River. There is no indication of meaningful rain across the Plains/W Midwest into April 20th . A much warmer temp profile develops on the weekend and continues throughout the 6-15 day period. Maximum highs in TX,OK,KS, and NE reach into the upper 70’s/low 80;s . Temps in the 60’s blanket the primary Corn Belt after April 8th . Regional plantings begins in the second half of April. As we look at the economy with the cost of groceries to feed your family skyrocketing in this horrendous economy we should be wary as wee add to the list of further costs and fear factor of beef, pork, poultry, eggs, and further animal slaughter do the Texas Panhandle fires and the bird-flu disease will only add to price headaches and possible food shortages. The CBOT futures are higher this morning, with the wheat markets globally pacing the advance. Strength in the EU & US market is due to the Russian government’s expanding control of the market there as well as the ongoing numerous weather issues. Traders will also be eyeing the Commitment of Traders data.

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