- HEADLINES: Chicago sags as midday GFS weather forecast adds rain to northern Brazil.
- Chicago ag markets are weaker at midday as the GFS weather forecast adds to near-term rain totals in northern and western Mato Grosso and as FAS’s daily reporting system failed to include any fresh US export demand. Several long weekends lie ahead exactly when S American weather matters most. Market-changing input has been absent all week and today is no different. US equity markets have reversed morning losses, with Dow and S&P 500 at newer record highs. Spot crude is unchanged at $73.95. The US dollar index has recovered slightly, and a rather narrow wedge is forming between 102.0 and 102.5. Research maintains currencies will play a larger role in ag market price discovery in Q1 2024.
- US ethanol production in the week ending Dec 15 totalled 315 million gallons, vs. 316 million the previous week but up 4% from mid-Dec 2022. Cumulative weekly EIA ethanol production is up 4%. USDA’s 2025 million bu hike to industrial corn use in its November WASDE has been validated in recent weeks. Production margins have collapsed from the highs of Sep/Oct, but we still calculate plant revenue in the W Midwest at or slightly above total costs. Year on year gains in weekly grind will continue well into spring.
- US commercial crude stocks last Friday totalled 444 million barrels, up 3 million from the prior week and up 6% from last year. Energy stocks, including ethanol, rise seasonally during the winter months.
- Argus Media is reporting 2024/25 French winter wheat seedings at 4.24 million hectares, down 11% from last year and the lowest since 2000 following an abnormally cold/rainy autumn. Knowing precise EU winter wheat seedings will be challenging until spring, but our contacts do suggest regional acreage losses were heavy. This is not an issue for EU/Black Sea prices today, the EU grain market remains oversupplied, but excessive supplies will be cleared in 2024 without ideal spring/summer weather.
- The midday GFS weather forecast is wetter than the morning solution in Northern Brazil into Dec 25-26, with totals of 1-2” now projected to blanket Mato Grosso, Goias and Bahia. Confidence is increasing with respect to N Brazil receiving the best rains of the season in the next five days. However, the GFS forecast maintains a return to warmth and dryness in N Brazil in the 6-10 day period. Normal/broadly favourable conditions are forecast across the southern third of Brazil’s soy belt.
- March beans have fallen to major chart support at $13.10-13.12. March corn has scored new contract lows. There has been no counter to fund selling so far this week, and amid low participation rates large air pockets sit above and below the market. Sales are not recommended on breaks as a 150-155 million mt Brazilian soy crop is being suggested, despite coming rainfall.