Weekly Recap 1/12
Weekly Action:
Corn Mar24 down 14 at $4.48
Beans Mar24 down 30 at $12.27
KC Wheat Mar24 down 12 at $6.17
Hogs Feb24 up 2.10 at $71.925
Fats Feb24 up .70 at $171.425
Feeders Mar24 up 3.05 at $227.45
Corn Dec24 down 13 at $4.82
Beans Nov24 down 7 at $12.03
KC Wheat Jul24 down 12 at $6.24
New Crop Corn/Bean Ratio: 2.69
*Markets will be closed Monday for Martin Luther King, Jr. Day. Will open Monday evening.
Market Recap:
Corn basis has been relatively firm since Christmas as lackluster deliveries over the holidays have been followed with adverse weather to begin January. If your local markets have perked up for JFM or Jan/Feb it may be wise to explore cash marketing options. Some in the industry expect a lot of corn to be “flushed out” before spring bills/lease payments are due in early March.
Argentina reported a 211% inflation rate in December. This indicates Argentine farmers will hoard grain to combat the inflation and try to avoid the new 33% export tax.
The January WASDE was released this morning. This report is the final report for the 2023 crop. Managed money came into the report short 60k contracts of both soybeans and wheat. They were short over 200k contracts of corn.
The main highlights include:
Corn carryout 2.162 billion bu vs 2.131 in December (+31 mln)
Corn yield up 2.4 bpa to 177.3 which is an all-time record for yield per acre
On farm corn storage is up 16% from last year
Soybean carryout 280 million bu vs 245 in December (+35 mln)
Soybean yield up 0.7 bpa to 50.6 bpa
Brazil corn crop forecasted 127 mln tons vs 137 mln tons last year
Brazil soybean crop forecasted 157 mln tons vs 160 mln tons last year
Here is a graphic from Karen Braun (@kannbwx on X) showing the yields in each state and their changes from the December WASDE. Nebraska’s overall corn production increased 95 million bushels from December. (9.5 million acres x 10bpa)
The graphics here & here are from Phil Luce (@PhilWCC on X). They show new crop corn and soybean prices this time of year since 2015.
Weather:
Rains have been falling across Northern Brazil lately. Southern Brazil is expected to get a good shot of rain in the 10-day forecast.
Argentina is expecting a good round of rain which should keep crop conditions elevated.
Economy:
Things continue to stay exciting in the Middle East as the US and UK attacked some Houthi targets in Yemen, raising the risk Iran gets involved. This has rallied the crude 3-4% to end the week. There are reports the Iranian navy has seized an oil tanker.
Yemen is important as it borders one side of the Bab el-Mandeb Strait (known as the Gate of Tears). This connects the Mediterranean Sea to the Indian Ocean via the Suez Canal and Red Sea. A lot of oil and petroleum products use this route. This strait is only 14 nautical miles wide and has just a 2-mile-wide channel ships must use to navigate to and from the Red Sea.
The interest expense on US debt was $961 billion in 2023. The biggest line item currently in the US budget is $1.4 trillion for Social Security. This interest expense is $2.6 billion/day and $18 billion/week.
Morgan Stanley has agreed to a $249 million fine after an investigation into block trades that were big enough to impact market moves, resulting in $100 of illicit profits. No one will be criminally charged.
CitiGroup, the third largest bank in America, announced a $1.8 billion loss in Q4. They also announced intentions of dropping 20,000 employees (10%).
Something That Probably Means Nothing:
Rental car company, Hertz, announced it is reducing its electric fleet due to weak demand and high repair costs. They are shedding 20,000 electric vehicles and plan to replace with gasoline powered vehicles.
This represents nearly 1% of the 2.4 million electric vehicles owned in the US.
Quote of the Week:
“A good process produces good results.” – Nick Saban
Enjoy your weekend and stay warm!
