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Grain Comments: 12-14-2023

Good morning.

Chop chop chop at the CBOT. Chicago wheat futures continue their back-and-forth trade for the week, with corn futures in tow. Headwinds from the financial markets, as well as a sharply lower US$ index, have helped rally most raw material markets in the overnight trade. Fresh fundamental ag news is lacking, as today’s likely large export sales are widely anticipated. Trade will be focused on what goes on with South American weather through the weekend. Corn futures are 2-3 cents higher, soybean futures up roughly a penny, and the Chi wheat market is up 6-7 cents. Products were mostly higher; soybean meal unchanged and soybean oil is up about 40 points. Crude oil futures trading around $1.20 higher, the Dow Jones Index is up 120 points, and the US$ index is down 52 points.

Not a lot of fresh news in the ag markets, as the trade continues to digest the recent economic announcements out of Argentina. Argentine farmers were surprised to learn of the export tax increase, as they expected a reduction, or even an elimination, of what the Argentine government refers to as ‘retenciones’, or retentions.

Under new tax proposals, soybeans would be taxed at a 30% rate (vs 33% currently), while all other products would be taxed at 15%. Argentine farmers are currently estimated to be sitting on roughly 7.9 MMT’s of soybeans from the 2023 harvest, as well as 10 MMT’s of wheat. Time will tell whether farmers reward the 3% decrease in taxes on soybean sales or lock the bin doors until the taxes are eliminated entirely.

This morning’s weekly export sales report is expected to show large volumes for corn (800,000-1.6mil), beans (900,00-1.8mil), and wheat (1.2mil-1.6mil). Wheat numbers will reflect recent Chinese purchases.

Tomorrow’s NOPA crush report is also expected to show some good domestic demand for soybeans, with estimates ranging from 186 to 188 mil bu used for crush in the month of November. This would compare to 179.1 mil bu last year.

The Dow Jones Index made a new all-time high close yesterday following Fed Chair Powell’s comments on the economy, finishing the day at 37090. Futures markets have extended those gains this morning, up another 100 points.

Financial markets today will look to garner insight from across the pond, as both the European Central Bank, as well as the Bank of England, are set to announce rate decisions. Whether the optimism out of the US Fed yesterday spills over to Europe will be closely monitored.

As rates are expected to decrease next year, money managers will likely be reevaluating what to do with their funds, with some $6 trillion in US money markets likely seeking new opportunities.

South American weather forecast is like the overnight run in keeping needed moisture in the forecast beyond December 22nd. A boost in moisture by the end of December is vital. A storm system producing 0.5″-2.0″ of rain has moved eastward through NW Argentina overnight.

The US Southern Plains is also expected to see a boost in soil moisture over the coming days, with some of the driest areas of Texas, Oklahoma, Kansas and Nebraska slated to receive rain in the next.

Have a great day!


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