Written Commentary
OPENING COMMENTS
Macroeconomics:
This morning’s job reports came in hotter than expected with almost 100K more jobs printed than the average estimate for December. The Average estimate was 165K and the payrolls came in at 256K. Bloomberg was the only forecaster who predicted a higher number at 268K. I suppose the holidays did offer job opportunities for companies like amazon and other delivery jobs. The Boeing strike was resolved ans some of those jobs came back. Unemployment dropped from 4.2% to 4.1% in another market beat. wages increased at the expected rate of 0.3%. The equity markets reacted poorly to the news due to the idea that a healthy labor market will result in fewer rate cuts by the federal reserve.
Ag Fundamentals:
REPORT DAY. The USDA WASDE, Quarterly grain stocks report and the wheat seedings report will all come out at 11:00 am CST this morning. Expectations are a slight cut to US corn production and an increase in ethanol usage-dropping the US ending stocks. Soybean production is not expected to change much and there is a scenario where we see an increase to US yields, US crush is expected to increase and South American production should also see an increase. World endings stocks are expected to increase for beans as well. Argentina has been the talk of the trade for the last couple weeks with dryness giving the soybean prices in the US hope, but they will likely see rain in the next 2 weeks that should relieve drought pressure. The USDA will most likely avoid cutting Argentina production significantly on today’s report.
Average Hourly Earnings report was as expected and slightly lower than last month.
Non-Farm Employment Change came in hotter than expected at 256K new jobs vs. the 164K estimate.
Unemployment Rate dropped from 4.2% to 4.1%. The stock market reacted negatively to this news while treasury yields jumped, all in anticipation of the Fed not needing to cut rates further.
Export & World News
South Korea issued an international tender to buy up to 120K MT of animal feed corn from the US, South America or South Africa.
Malaysian palm oil futures were up 95 ringgit overnight, at 4391.
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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