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Grain Comments: 12-13-2023

Good morning.

CBOT markets traded lower across the board overnight, as grain markets continue their back-and-forth trade. Volume has been slightly better than previous nights, however is still curtailed. Financial markets today will be awaiting comments out of Fed Chair Powell this afternoon. CH down 4 cents, SF down 9 cents and WH down 11 cents. Products mixed/lower, with meal down $6-8 and bean oil unchanged. Outside markets quiet, crude oil up 30 cents/barrel, the Dow Jones index up 35 points, and the US$ index up 9 points.

Main headlines overnight were announcements coming out of Argentina. Following the close of the markets yesterday, economy minister Luis Caputo announced a number of policy changes, most of which were anticipated.

Argentina announced Peso rate cuts of over 50%, devaluing the currency to 800/US$ from roughly 391 in recent days.

Announced a reduction in state subsidies for fuel and transport, which is a major expenditure for the Argentine government. Amounts were not announced.

Announced suspension of state advertising budget for one year; announced state labor contracts with less than 1 year in force, will be terminated; announced reduction in number of ministries and secretariats.

Announced 10 measures in total, with the IMF mostly cheering the announcements. Main takeaway: things will get worse before they get better.

Today’s November PPI report is expected to fall to 2.2%, the lowest reading in almost 3 years, and back to levels not seen since before the pandemic.

Fed Chair Jerome Powell will speak this afternoon, following the wrap up of the last FOMC meeting of the year. While benchmark rates are expected to remain unchanged, markets are anxious to see what kind of tone Powell sets going forward.

U.S. diesel flows are increasingly heading to Europe as South America buys less due to Panama Canal logjams. About 45% of U.S. diesel exports have been to Europe so far in December, vs about 21% last month.

South American weather continues to be a mixed bag; Argentine forecasts are near ideal for crop development, while the forecast in North/Central Brazil remains stuck and dry. Better rainfall continues to be hinted at in the 2-week forecast, but must be verified soon.

Have a great day!

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