Written Commentary
OPENING COMMENTS
Macroeconomics:
Wholesale prices sold by producers rose 0.2% in December, estimates were at 0.4%. This easing of inflation pressure will likely compliment the Fed’s probable decision to leave rates unchanged at the January 29th meeting. PPI rose 3.3% in 2024 compared to 1.1% in 2023. Gasoline was up 9.7% and passenger transportation was up 7.2%. The Stock market reacted higher to the report and treasury yields lower. Estimates has shifted from expecting 4 Fed rates cuts in 2025 to possibly only 1. Bank of America even saying they think the fed is done cutting this year.
Ag Fundamentals:
Managed money has extended their long corn position to over 253K contracts. Soybean and soybean meal short covering also took place over the last week leading up to the WASDE report. Farmers have been selling corn into the recent price rally. Spreads are expected to widen carries in order to slow down the flow of corn to the market. The USDA reported a flash sale of 198K MT of soybeans to China this morning, the second sale of this volume this week. This sale will execute out from the PNW. Today, the US Gulf export values are nearly a $1.50 more expensive than Brazilian values. Wheat will feel the reactions to India’s weather and production estimates over the next few weeks. The wheat/corn spread has gotten tight and many are seeing wheat creep into the feed/protein market as corn has rallied.
Core PPI (0.0%) and Month Over Month PPI (0.2%) both were reported -0.2% less than estimates. PPI is the change in price of finished goods and services sold by producers. Core PPI excludes food and energy. The equity markets reacted higher, the dollar, gold and energy all lower.
Brazilian Crop Schedule illustrates the early beans are beginning to harvest in Brazil and first corn crop to begin harvest within the next 20 days.
CFTC COMMITMENTS OF TRADERS
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Export & World News
The US sold another 198K MT of soybeans to China this morning in a flash sale. Taiwan has issued an international tender to buy up to 65K MT of animal feed corn to be sourced from the US, Brazil , Argentina or South Africa. Japan is looking to buy up to 133K Mt of food-quality wheat from the US, Canada or Australia.
Malaysian palm oil futures were down 57 ringgit, at 4443.
Daily Trading Limits: Corn $0.30 (expanded $0.45); Soybeans $0.85 (expanded $1.30); Minneapolis Wheat $0.60 (expanded $0.90); KC Wheat $0.40 (expanded $0.60); Chicago Wheat $0.40 (expanded $0.60)
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