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Grain Comments: 12-19-2023

Good morning.

Markets at the CBOT are lower in overnight trade. Like yesterday, there is simply not a whole lot of fresh fundamental input coming into the ag markets. Traders are squarely focused on the coming South American rainfall and whether it does or does not show up in the next 3-4 days. Corn futures are trading 1-2 cents lower with not even a 3-cent trading range. Soybean futures are 9-10 cents lower and a couple cents off the lows. And the Chi wheat market is down 3-4 cents, with also not having traded much of a range. Products lower, meal down $3-4/ton and bean oil is off about 30 points. Outside markets mixed/quiet: crude oil retracing some of yesterday’s gains down 20 cents, the Dow Jones index up 60-70 points, and the US$ index 10 points lower.

Ag markets are again squarely focused on the coming South American rainfall, as the overnight news flow has all but dried up in recent days. Aside from geopolitical tensions on multiple fronts, news specific to the ag space is null.

The biggest headlines overnight came out of the Red Sea, as some of the world’s largest freight companies reroute their ships around the Southern tip of Africa in response to continued attacks from Iran-backed Houthi rebels.

Overnight, US Defense Secretary Lloyd Austin announced, “Operation Prosperity Guardian”, an initiative to provide a solution to the attacks. This operation would more or less consist of the ships of approx. 10 countries being asked to shoot down Houthi missiles and drones; something that to this point, only US warships have done.

Accompaniment of commercial vessels was also outlined under the new proposal. As of Tuesday morning, the list of companies who had rerouted included oil-giant BP, as well as Maersk, and was growing.

In other international news, the Argentine government announced yesterday a proposal to raise export taxes on soybean meal and soybean oil from 31% to 33%. Details remain murky on Argentina’s export tax plans.

Also noted overnight out of Argentina was severe storms in some of the central growing regions. Details/damage reports are not very clear.

China yesterday announced record corn imports for the month of November; this comes on the heels of record domestic corn production in 2023. Imports were up 384% from the prior year, coming in at 3.59 mmt’s.

In the first 11 months of 2023, Chinese corn imports reached 22.18 mmt’s, up 12.3% from the year prior. This is mostly due to the large Brazilian crop, as buyers took advantage of cheap Brazilian offers.

Forecast models overnight again remained like the runs from yesterday and have kept needed moisture slated to start in the next 48 hours. The GFS remains the drier model. Totals/gauge readings will be extremely important in the coming days.

Have a great day!

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