- HEADLINES: Corn, soy shed premium ahead of Brazilian rain; Black Sea concerns lift global wheat market.
- Chicago ag markets are mixed at midday, with wheat higher and row crops weaker. A civilian vessel on its way to Danube ports in SW Ukraine withstood damage from a previously placed explosive mine and following Ukraine’s attack on Russian naval assets earlier this week, Black Sea tensions are rising, not falling. Corn and soy are shedding modest premium ahead of soaking Brazilian rainfall next week and amid March soy’s inability to trade above its 200-day moving average. March corn, too, has struggled at initial $4.80 chart resistance. Otherwise, volume is thin. Chart patterns are driving whatever new money is being put to work. Egypt cancelled its tender for wheat for March delivery but gave no reason.
- Argentine President Milei has sent Congress his proposed reform bill, which features sweeping changes, both legislative and economic in nature. It appears the 15% tax on grain exports will remain in place, while taxes on soymeal/oil exports will rise from 31 to 33%. Yet, as has been the case since his inauguration, uncertainty is high with respect to what can be passed. Milei has little support in Argentina’s House and even less in Argentina’s Senate. Additional legislative sessions are scheduled through Jan 31.
- US ethanol production in the week ending Dec 22 was a larger than expected 325 million gallons, up 15% from the same week a year ago and the largest since Oct 2021. Note the counter-seasonal nature of last week’s expanded grind. A seasonal erosion in industrial corn use lies ahead during the winter months, but there can be no doubt US ethanol is cheap in the world marketplace as well as relative to motor gasoline. Cumulative weekly EIA ethanol production since Sep 1 is up 217 million gallons (5%) year on year.
- US commercial crude stocks last Friday totalled 437 million barrels, down 7 million from the prior week but up 4% from late Dec 2022. Gasoline stocks were 226 million gallons, up 1% from the prior year. Nothing unexpected was revealed in EIA crude data. Spot WTI is down $1.20 at $72.90.
- The GFS weather forecast remains consistent in calling for needed soaking rainfall across the driest areas of northern Brazil beginning Sun/Mon. That this pattern shift has been pulled into the GFS’s 3-day outlook is important and boosts confidence in the arrival of soaking rainfall. 10-day totals are pegged at 1-4” in Mato Grosso, Goias, Bahia and Minas Gerais. Totals above 2.5” will be scattered, but near-term outlooks are trending favourable, particularly for soybeans planted in late Nov/Dec. Brazilian soy production estimates will be very wide-ranging ahead of harvest.
- Just 62,000 contracts of March corn and 65,000 contracts of March soybeans have traded as of noon. Volume is likely to thin further on Friday. Crop inspections in Brazil in mid-Jan should help to provide clarity over production and potential changes in global trade flows in 2024.