Written Commentary
OPENING COMMENTS
Macroeconomics:
The US dollar has dropped to 108.5 from it’s highs above 110.0 mostly due to the hot PPI and CPI reports that were released in the last 25 hours. Energy prices lead the move slightly higher with a 2.6% gain in energy prices in December. 4.4% higher for gasoline alone. Energy accounted for nearly half of the total inflation for the month.
Ag Fundamentals:
US Weekly ethanol production report will be out later this morning. Expectations are suggesting the EIA report will show a slight reduction in ethanol production from the week prior, estimates at 1.095 million barrels per day. Ethanol stocks are estimated to increase from 24.148 million barrels to 24.656 million barrels. A Bloomberg survey conducted on Mon/Tues this week suggests 203M soybeans were crushed in the month of December. That is just over 5% better than November and almost 4% higher than December 2023. Soybean oil stocks are expected to be lower year-over-year , estimated at 1.253 billion lbs vs. 1.36 billion lbs in Dec 2023. Brazil’s export estimates were increased across the board – corn, beans, wheat and meal, according to Anec. Brazilian soybean export estimates for January increased from previous 1.71 MT to 2.19 MMT, corn from 2.90 MMT to 2.98 MMT, wheat from 519K MT to 662K MT and soy meal from 1.43 MMT to 1.80 MMT.
Core CPI rose 0.2% to reach an annual 3.2% (which was 0.1% better than expected.) CPI m/m which includes food and energy was reported as expected, 0.4% up in December taking the annual inflation rate at 2.9%.
June 18th Federal Reserve Meeting is the next time the market expects to see a rate cut to federl interests rates. 45% probability of a 25 basis pt cut from 4.25-4.50% to 4.00-4.25%
Export & World News
Jordan state buyers are looking to buy up to 60K MT of hard milling wheat. Japan is in the market to purchase 132K MT of food-quality wheat. Yesterday, Taiwan has bought about 65K MT of animal feed corn which is expected to be sourced from the US.
Malaysian palm oil futures were down overnight 75 ringgit, at 4362
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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