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., Building Permits Prel, Building Permits MoM Prel, Housing Starts, and Housing Starts MoM 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, 1st yr., 2nd yr., 3rd yr., Projections Current and Longer at 1:00 P.M., Fed Press Conference at 1:30 P.M., Dairy Products Sales at 2:00 P.M., Net Long-term TIC Flows, Foreign Bond Investment, and Overall Net Capital Flows at 3:00 P.M.
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With the talk of the Fed cutting interest rates, expectations are a quarter to a half with Jerome Powell stating this might not be the last cut this year, yesterday’s August Industrial Production rose 0.8% from July, which was above expectations of 0.2%, and it was the largest monthly increase since February and the 2nd largest since January 2023. Manufacturing comprises of 78% of industrial output and increased 0.9%, beating expectations of 0.3%. Capacity utilization recovered from an 8-month low in July and increased to 78% in August. Compared to a year ago, industrial production was o.o4%. Year-over-year changes in industrial production have been less than 1% in 18 of the last 19 months. Historically, industrial production is either increasing or decreasing, and rarely flat. It’s been the longest running period of year-over-year changes of less than 1% since 1960. These numbers are not so promising, but how will the Fed react in this vote harvesting season will speak volumes.
Central US Weather Pattern DiscussionMidwest Forecast Trends Wetter in 6-10 Day Period; Harvest Disruptions Temporary; Warmth id Unending:The major forecasting models have added heavy rainfall into the Eastern Midwest Sep 23-25, with accumulation offered to IL, IN, OH, and MI. Heavy rainfall is also maintained across the Central Plains, and so precipitation next week stretches from KS/NE to OH. Harvest efforts will be paused, but only briefly, while rain is welcomed to replenish moisture reserves and boost Mississippi River water levels. Plains farmers are awaiting soil moisture to plant their new wheat crops. Frost/freeze remains absent prior to Oct 1st. The EU weather model’s forecast has summer-like readings into the middle part of next week, and thereafter lows across the N Plains/Upper Midwest stay in the upper 40’s & 50’s. A warmer than normal autumn is forecast across the Central US.Corn prices settled 1 to 2 cents higher in yesterday’s action. Spreads rebounded but remain historically wide. Based on USDA ear population, weight data and improved ratings would suggest a US yield of 183.6, inline with the Sep USDA estimate. 85% of the crop is dented, 45% is mature while harvest has reached 9%, all slightly above the 5-Year average. Corn open interest has been rising as investors see an opportunity for a bounce, especially with today’s macroeconomic data with the US Central Bank. CONAB is forecasting total grain & oilseed production in Brazil will reach a record 326.9 MMT in 2024/25. The corn forecast at 119.8 MMT is well below the USDA estimate of 127 MMT.More By This Author:Out of Sinc Inflation Keeps Rearing Its Ugly Head. The Corn And Ethanol ReportDemand Is Up – Profit Margins Are Down. The Corn And Ethanol ReportBears Still In Control Despite The Upside Potential: The Corn And Ethanol Report
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