Grain Markets and Other Stuff

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0:00 Brazil Soybean Update
1:33 Argentina Update
2:03 "Perfect Storm"
5:00 USDA Preview
6:36 Ukraine Peace Meeting
7:49 JBS Stock Listing
9:53 Cattle & Outside Markets

Brazil's largest farm cooperative, Coamo, is gearing up to receive substantial quantities of soybeans by the end of January. The accelerated harvest is a result of hot weather conditions, which have expedited the crop's maturation. The last time Coamo received such significant soybean volumes in January was during the 2018/2019 season. Despite the early harvest, soybean yields are holding up as average, even with the shortened growing season. This early influx of soybeans has also led to a reduction in soybean port premiums relative to US soybeans. 🌱🚜🌞

Argentina's soybean and corn crops have been benefiting from adequate rainfall throughout December, as reported by the Buenos Aires grain exchange. The favorable precipitation is expected to continue into January, accompanied by mild temperatures. However, rainfall is projected to taper off in March, with rising temperatures. The Rosario grain exchange is forecasting Argentina's soybean crop to reach 50 million tons and its corn crop to hit 56 million tons. 🌧️🌽🇦🇷

The USDA is scheduled to release several important reports on January 12th, including quarterly Grain Stocks, monthly Crop Production / WASDE, and Winter Wheat Seedings. The January report is historically a significant market mover and has the potential to trigger trend changes. It will also provide the "final" 2023 US corn and soybean production numbers, which are closely monitored by traders. South American production estimates will also be a focus. 📊🌽🌱

In a secret meeting last month, Ukraine, along with G-7 countries and a select group of Global South nations, engaged in discussions regarding Ukraine's "peace formula" and guidelines for future interactions with Russia. However, no major progress was reported from the meeting, highlighting the ongoing complexities of the situation. Notably, China, Brazil, and the United Arab Emirates did not attend, and Russia was not invited. Despite more than $100 billion in aid pledged by the US and EU for Ukraine, efforts to resolve the conflict have faced challenges. 🤝🌍🕊️

A group of UK lawmakers is taking action to pressure the US Securities and Exchange Commission (SEC) to prevent JBS, the world's largest meat supplier, from being listed on the NYSE (New York Stock Exchange). The lawmakers argue that JBS is associated with deforestation, human rights violations, and the seizure of land from Indigenous people. JBS has been seeking NYSE listing for over a decade, and company executives believe that such a listing could significantly boost its market value to nearly $30 billion.🌳🌎🚫

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Winter Storm Finn is set to impact the Midwest and Great Lakes regions, bringing a mix of snow, strong winds, and rain. This storm is currently moving across the Plains and will reach its peak impact in the central and eastern states on Tuesday and Wednesday. Significant snow accumulations, potentially reaching 5 inches or more, are expected in several areas, including western Kansas, eastern Nebraska, Iowa, northern Missouri, northwest Illinois, southern Wisconsin, and northern Michigan. Some localized totals could even reach up to a foot of snow, accompanied by strong winds. 🌨️❄️💨

Despite facing challenges, Ukraine continues to export cargo through its alternative Black Sea corridor. This corridor was established in August as an alternative to the Black Sea grain deal after Russia exited. Ukraine has successfully shipped 15 million tons of cargo through this route, with agricultural goods accounting for 10 million tons of the total. However, Ukraine's grain exports have seen an 18% decline this season compared to the same period last year. Corn exports are down by 23%, while wheat exports have seen a more modest 1% decrease. 🌾🚢🌊

Soybean yields in Mato Grosso, Brazil, are currently below normal due to hot and dry conditions. As of last Thursday, only 0.6% of Brazil's soybean crop had been harvested. These challenging weather conditions have impacted yields in Mato Grosso, and recent rains are now making the harvest difficult. While the crop was initially projected to reach 159 million tons by AgRural, this estimate may be revised in light of the adverse conditions. Additionally, 3.3% of the first corn crop in south-central Brazil had been harvested as of last Thursday. 🌱🌦️🚜

US soybean shipments faced a decline last week, with 674,749 metric tons (25 million bushels) inspected for export during the week ending January 4. This marked a 30% decrease compared to the previous week and a 54% decline compared to the same week last year. In contrast, corn shipments increased by 50% compared to the prior week, reaching 856,597 metric tons (34 million bushels). Wheat shipments also exceeded expectations, totaling 491,074 metric tons (18 million bushels) and increasing by 78% compared to the previous week and a substantial 134% compared to the same week last year. 🌾🚢📉

The US dollar, which had initially shown strength in the first days of the year, retreated for the second consecutive day. This pullback was driven by speculators betting against the dollar, anticipating that the Federal Reserve may start cutting interest rates this year. US Treasury yields also experienced a retreat. The focus now turns to key inflation data with the upcoming release of the December Consumer Price Index (CPI) and Producer Price Index (PPI) reports, which will provide insights into the economic landscape and potential Fed actions. 💵📉📊

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Estimates for Brazil's soybean crop continue to trend downward as adverse weather conditions impact production. Last week, the USDA lowered its projection for the 2022/2023 Brazilian soybean crop to 158.5 million tons due to a lack of rainfall. In contrast, the estimate for the 2022/2023 crop was increased by 3 million tons to 158 million tons. This adjustment reflects the agency's expectations for higher domestic demand for soybean meal and oil, potentially limiting exports of these products. Additionally, Argentina's return to normal export levels may pose challenges for Brazilian exports of soybean oil and meal. Safras also reduced its estimate for this season's Brazilian soybean crop to 151.4 million tons, further highlighting the challenging conditions faced by Brazilian soybean farmers. 🌱🇧🇷🌧️

Large money managers increased their net short positions in the corn market, according to the latest CFTC Commitment of Traders data. During the week ending January 2, these funds were net sellers of 29,000 contracts of corn, reflecting bearish sentiment in the market. Similar trends were observed in soybeans and SRW wheat, where large money managers also increased their net short positions. 📉🌽📊

US corn export sales faced a significant decline last week, with net sales dropping to a marketing year low of 367,500 metric tons (14 million bushels). This decrease of 70% from the previous week and the prior 4-week average highlights the challenges in the export market. On the soybean front, net sales also hit a marketing year low at 201,600 metric tons (7 million bushels), down 80% from the previous week and 85% from the prior 4-week average. Wheat sales of 131,600 metric tons (5 million bushels) were down 52% from the previous week and 79% from the prior 4-week average. These numbers underscore the dynamic nature of US grain exports and the impact of various factors on sales. 🌾🌽🚢

The December jobs report brought some positive news, as more jobs were added than expected. Non-farm payrolls increased by 216,000, surpassing economists' projections of 175,000. The unemployment rate remained steady at 3.7%, defying expectations of a slight uptick to 3.8%. While the pace of job creation in 2023 slowed compared to the previous year, the US economy still added 2.7 million jobs throughout the year. 📈💼🇺🇸

The Securities and Exchange Commission (SEC) is moving closer to approving spot-bitcoin exchange-traded funds (ETFs). The SEC's announcement that exchanges and issuers seeking to list Bitcoin ETFs must submit final paperwork by a certain deadline indicates progress in this area. The SEC commissioners are expected to vote on the exchange-rule filings, and if approvals are obtained, these ETFs could begin trading shortly thereafter. This development highlights the growing interest in cryptocurrency-related investment products and their regulatory evolution. 📈💱📊

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The wheat market saw a rally on Thursday, driven by rumors of increased Chinese buying interest in US Soft Red Winter (SRW) wheat. China has already purchased nearly 2 million metric tons (mmt) of US SRW wheat for the current marketing year, likely due to quality issues in its own crop. This news has pushed the pace of US wheat export sales ahead of last year's levels, although it remains the second weakest in the past decade. 🌾🇨🇳🌾

The USDA is set to release several important reports on January 12th, including quarterly Grain Stocks, monthly Crop Production/WASDE, and Winter Wheat Seedings. These reports can have a significant impact on the markets and may bring about trend changes. The January report will include the "final" 2023 US corn and soybean production figures, which traders will be closely watching, along with any changes in South American production estimates. 📊📈🌽

Brazil is experiencing a wetter weather pattern, with daily rainfall expected over the next 10 days. While this rainfall is beneficial for some areas, northern Brazil, which faced an abnormally dry period from September to December, could become "too wet." Additionally, rain is expected to return to southern Brazil in the 5-10 day period. These weather developments are being closely monitored as they can impact crop conditions and production. 🌦️🇧🇷🌱

US ethanol production declined last week, with weekly output dropping by 5.2%. Despite the weekly decrease, ethanol stocks increased marginally. Implied gasoline demand also experienced a significant drop compared to the previous week but remained up slightly over the same period last year. The ethanol market continues to be influenced by factors such as fuel demand and inventory levels. ⛽🍃📉

Oil prices saw a decline on Thursday, driven by reduced fuel demand and increased fuel inventories. WTI crude closed at $72.19 per barrel as gasoline stocks rose significantly by 10.9 million barrels. Distillate stocks also increased by 10.1 million barrels. Despite the drop in crude inventories by 5.5 million barrels, the surge in fuel stocks took precedence. Shipping disruptions in the Red Sea have influenced the dynamics of crude oil supply and demand. 🛢️⛽📉

The US labor market remains robust, with the number of Americans filing for unemployment benefits falling to 202,000, the lowest since mid-October. This positive trend reflects a strong labor market, even as the demand for workers has slightly declined. The December jobs report, released today, is expected to show an increase in non-farm payrolls and a slight rise in unemployment compared to November. 📈💼🇺🇸

US ethanol production declined last week. Weekly output of 1.05mil barrels decreased 5.2% on the week but increased 9% vs. the same week last year. Ethanol stocks were pegged at 23.6mil barrels. The print was up marginally compared to the previous week, but -4.3% compared to the same week last year. Implied gasoline demand was -13% compared to the previous week and 15% vs. the same week last year. On average, over the last four weeks, implied US gasoline demand is up marginally vs. the same period last year. See charts below.

Oil prices declined on Thursday. Reduced fuel demand and increased fuel inventories caused oil prices to drop y

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Rainfall in northern Brazil is continuing, with daily showers expected for the next week and beyond. The 5-day forecast indicates wet conditions in some of the driest areas of the country, while the 10-day forecast shows rain covering almost the entire region. This is welcome news for areas that have been experiencing drought conditions. Southern Brazil had been excessively wet in October and November, but dry conditions were affecting central and northern regions. The recent rains are falling where they are needed most. 🌧️🇧🇷

Drought conditions have caused the water level in the Panama Canal to drop significantly, reaching 6 feet below normal. As a result, the Panama Canal Authority has had to limit the daily number of vessels passing through the canal to 24, down from the usual capacity of around 38. To address this issue, the authority is considering two options: creating an artificial lake to pump water into the canal or using cloud seeding to increase rainfall. Both solutions would take time to implement, with the artificial lake requiring congressional approval and a substantial budget. However, many farmers and ranchers are concerned about the potential flooding of their lands if the lake is created. 🚢🌊🇵🇦

The Federal Reserve released minutes from its December meeting, indicating that the benchmark lending rate is likely near its peak. Officials agreed that rates need to remain restrictive for some time, but they anticipate initiating rate cuts this year. The Fed's outlook includes three interest rate cuts in 2024, totaling 0.75%. Futures markets, however, are anticipating six rate cuts in the same year. Strong economic growth and ongoing wage increases could pose challenges to inflation control and the Fed's rate-cutting plans. 💱🏦💼

Oil prices saw a significant increase of over 3% on Wednesday, driven by calls from the US and eleven allies for the Houthis to halt their attacks in the Red Sea. Additionally, protests in Libya disrupted oil production from a field that typically produces 300,000 barrels per day. OPEC's announcement of continued support for oil market stability, despite some skepticism about the voluntary production reduction commitments from its members, also contributed to the rise in prices. WTI crude closed at $72.50 per barrel. 🛢️📈💧

Gas prices are expected to decline in the coming weeks, with the national average potentially dropping below $3.00 per gallon. This dip in prices follows the holiday travel season and is part of the typical seasonal trend. However, the trend usually reverses in mid-to-late February when refineries begin maintenance and transition to cleaner, more expensive fuel blends. Diesel prices have also fallen below $4.00 per gallon, reaching levels last seen during the previous summer. ⛽📉🚗

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0:00 Intro + Corn and Soybean Collapse
2:00 Brazil Estimates and Weather
5:04 "The Funds"
5:48 China/Taiwan
7:46 Red Sea / Iran
8:48 Export Sales
9:44 Stock Market Wins 2023
11:27 Cattle and Outside Markets

Corn and soybean futures saw significant declines on Tuesday, with the Mar24 corn contract dropping over 7 cents per bushel and closing at a life-of-contract low. Meanwhile, the Dec24 corn contract closed below $5.00 for the first time since July. The Mar24 soybean contract also faced a sharp drop, losing more than 24 cents and closing at its lowest level since June. This decline was primarily attributed to improved weather conditions in Brazil, with some analysts also considering a potential slowdown in Chinese demand. 🌽📉🌱

Estimates for Brazil's soybean crop continue to be revised downward. StoneX reduced its projection for this season's Brazilian soybean crop to 152.8 million tons, down from its previous estimate of 161.9 million tons, citing a lack of precipitation as the reason for the reduction. South American crop consultant Dr. Michael Cordonnier also cut his projection to 151 million tons due to lower yields on early-harvested soybeans. 🇧🇷🌱📉

Large money managers made adjustments in their positions, with a net increase of 10k contracts of corn, 1k contracts of soybeans, and 6k contracts of SRW wheat during the week ending December 26. 📊🌾💰

China's President Xi Jinping reiterated during his New Year's Eve address that he believes China and Taiwan will eventually be reunified, despite Taiwan's insistence on its independence and its upcoming elections on January 13th, which will play a significant role in determining the future of China-Taiwan relations. 🇨🇳🇹🇼🗳️

Iran sent a warship to the Red Sea after the US Navy destroyed three Houthi boats that were attempting to hijack a Maersk shipping vessel. This incident led to Maersk suspending Red Sea transit, and the situation in the region remains tense as various naval forces patrol the area. 🚢🌊🇮🇷🇺🇸

US corn export sales improved, with net sales of 1.2 million metric tons (49 million bushels), driven in large part by Mexican purchases. However, soybean sales were poor, totaling 983,900 metric tons (36 million bushels), with China as the largest buyer. Wheat sales also declined. 🌽🌾🚢

The stock market closed out 2023 with impressive gains, driven by a strong economy, declining inflation, and speculation of reduced interest rates in the coming months. The S&P 500, Dow Jones, and Nasdaq all posted substantial gains for the year, with expectations of continued momentum into 2024, pending Federal Reserve actions. 📈💼🎉📊

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Recent weather forecasts for Brazil indicate a shift towards wetter conditions, with a widespread rain event expected to begin on Saturday and continue through the first week of January. The heaviest rainfall is anticipated in some of the driest parts of Brazilian soybean regions, benefiting crop conditions. However, areas further south, which already have moisture surpluses, will see relatively drier conditions. 🌧️🇧🇷

Argentina's government is proposing to raise export taxes on major grain crops as part of new economic reforms. This move has faced opposition from Argentina's agricultural industry, which believes it contradicts promises made by the new right-wing government. Despite the proposed tax increase, Argentine farmers have made significant planting progress thanks to abundant rainfall, with 79% of the soybean crop and 70% of the corn crop already planted, according to the Buenos Aires grain exchange. 🚜🌾🇦🇷

A Russian mine damaged a Panamanian cargo ship in the Black Sea, injuring two crew members and forcing the ship's captain to run it aground to prevent sinking. The vessel was en route to a Ukrainian port to load grain. Tensions in the Black Sea have escalated due to Ukraine's attacks on Russian forces in Crimea, including an airstrike that destroyed a Russian warship. ⚓🌊🇷🇺🇺🇦

USDA's weekly drought monitor data showed above-normal temperatures in the Corn Belt, with improvements in drought conditions in parts of Missouri, Iowa, and Minnesota due to above-normal precipitation. However, southern Illinois saw worsening drought conditions due to a lack of moisture, with precipitation at just 25% of normal for the month. Heavy precipitation in the High Plains improved drought conditions in eastern Nebraska and eastern Kansas. 🌞🌾🌦️🇺🇸

US ethanol production increased last week, with output at 1.1 million barrels, up 3.4% from the previous week and 7.6% compared to the same week last year. Ethanol stocks were at 23.5 million barrels, up 2.7% from the previous week but down 2.3% from the same week last year. Implied gasoline demand was up 4.7% from the previous week and 5.2% from the same week last year. 🇺🇸🌽🛢️

Gasoline prices are expected to decline in 2024, with the national average projected to drop to $3.38 per gallon, down from $3.51 in the current year. Summer prices are expected to hover around $4.00 a gallon, except in California, where prices could exceed $6.00. The average American household is expected to spend $2,407 on gasoline in 2024, down 2% from 2023 and 12% from 2022. Diesel prices are also predicted to gradually decline in 2024. ⛽📉💰🚗🇺🇸

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Recent 🌧️ in the US brought relief from drought in various regions, including the Corn Belt, Plains, mid-south, and southeast, with 1-2 inches of precipitation. Mississippi River levels are set to rise by 6-7 feet at Memphis, aiding grain transportation.

Brazil's soybean production estimates continue to decline. Crop scout Cordonnier lowered the estimate to 153 million metric tons (mmt) from 155 mmt. USDA and CONAB will provide updated estimates in January, having previously forecasted over 160 mmt.

US hiring is expected to slow in 2024, impacting wage gains and inflation. Projections suggest annual wage gains may drop to 4.3%. December's jobs report is expected to show 170,000 job gains, but early 2024 could average only 80,000 monthly additions.

US bond yields fell after the Treasury Department's $58 billion 5-year Treasury note sale. Markets anticipate an 86% chance the Fed will keep rates steady in January and an 85% probability of a 0.25% rate cut in March. By December 2024, the Fed's main rate could range from 3.75% to 4%.

Stocks closed higher, with the S&P 500 nearing its record high, up 0.14% at 4,781. 📈 The Dow is poised for a 13% yearly gain, the S&P 500 for 24%, and the Nasdaq for 44%. 📊 Uncertainty remains regarding potential Fed rate cuts and their impact on markets. 🤔

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0:00 Intro + Black Sea Attack / Rally
2:11 Rail Crossings Reopened
4:55 Brazil Update / Early Harvest
6:26 "The Funds"
7:24 US Grain Shipment Update
8:36 Cattle on Feed Report


🇺🇦 Ukraine reported destroying a Russian warship in Crimea, with conflicting reports on damage and casualties. The ground war between Ukraine and Russia is at a near standstill, with aid packages stalled in Washington and Europe.

🚆 US-Mexico railroad crossings at Eagle Pass and El Paso, TX, have reopened after being closed due to a surge of migrants. Nearly 10,000 railcars were held up on both sides of the border during the closures.

🌱 Early soybean harvest has started in Brazil, with Mato Grosso farmers harvesting about 1% of the crop. Drought conditions have forced early harvesting, and yields are expected to be the lowest in 40 years.

📊 Large money managers increased their net short position in the corn market while reducing their positions in soybeans. They were net buyers of SRW wheat.

🌽 US soybean shipments were weak last week, down compared to the previous week and the same week last year. Corn shipments increased, while wheat shipments saw a significant increase compared to the previous week and last year.

🐄 Friday's Cattle on Feed report was seen as neutral to bearish for the cattle market, with cattle on feed at 103% of year-ago levels, placements at 98%, and marketings at 93%.

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🌧️ Rain clusters have brought relief to key Brazilian soybean areas, improving crop conditions. However, a drier pattern is expected in the first half of next week before more rain returns from New Year's holiday through January 4th or 5th.

🇦🇷 Recent rainfall has benefited Argentina's soybean crop, with 91% of planted acres receiving optimal moisture. The corn crop, with 59% of planted acres, is also in good to very good condition.

🌾 The latest USDA drought monitor data shows ongoing drought conditions in several US regions, affecting corn, soybeans, wheat, and cattle. Some areas in the Midwest experienced worsening drought conditions due to above-normal temperatures and dry weather.

🚢 Traffic through the Panama Canal has not increased, despite Houthi attacks disrupting Red Sea travel. The Panama Canal previously limited vessel traffic due to low water levels but increased its daily transits earlier this month.

🌽 US corn export sales declined last week, while soybean sales were strong, boosted by recent flash sales. Wheat sales were down, with Mexico as the largest buyer for the week.

📈 The November Personal Consumption Expenditures Price Index (PCE index) is expected to rise 0.1% on a monthly basis and 3.3% annually. The Federal Reserve is expected to begin cutting rates as early as March.

🎄Please note that the grain markets are closed on Christmas Day and will reopen on Tuesday, December 26th.🎄