We kicked off the week with NAHB Housing Market Index at 9:00 A.M., Export Inspections at 10:00 A.M>, 3-Month & 6-Month Bill Auction at 10:30 A.M., and Milk Production at 2:00 P.M.US November industrial production rose at 0.2% but was slightly below expectations. US manufacturing output which accounts for 78% of total industrial production declined by 0.4%, marking the 4th consecutive month of year-over-year declines, which has not happened since February 2021 when the economy was recovering from the pandemic. Since 1960, negative industrial production have signaled financial recessions, but industrial production need to improve in 2024 to avoid a financial recession. The CBOT ag markets have started the week mostly lower, with Sunday night’s break led by KC Wheat-as back and forth nature of the US wheat futures continues. Additional rain will fall across the eastern section of the US HRW Belt this week. Chart patterns will have an outsized impact on daily price discovery, and March CBOT corn, March KC wheat, and January CBOT soybeans have been unwilling to break through initial resistance. Spot WTI (Feb) crude is up $1.80 a barrel at 7358. Modest risk premium is being added as vessel companies state the Suez Canal will be avoided amid recent attacks from Houthi in the Red Sea, and as Russia plans to cut daily crude production 50,000 barrels.
Image Source: Crude’s reaction to the Red Sea attacks and the reported mobilization of Hezbollah in Lebanon has been muted. On-farm Russian wheat stocks as reported by Rosstat remain large, with inventories in the key southern exporting region matching last year at just over 6.0 MMT’s, slightly below last year. Russian is buyable at $242/MT, basis fob, for nearby delivery, vs. US Gulf SRW at $266 and comparable German origin at $256. The relative abundance of Black Sea wheat keeps that market the global leader, pricewise. Wheat rallies will struggle above $650-660. March CBOT, nearby. Spot Paris milling wheat is up 1.00 euro/MT at 223.75. Malaysian palm oil overnight rallied 70 ringgits. Dalian corn is down $.15/Bu at $849, with Dalian meal down $7 at 55.30/MT. Chinese customs reported corn imports in November at 3.6 MMT’s, more than triple Nov 22. Year-to-date Chinese corn imports sit at 22.2 MMT’s, up 12% year-over-year. That China has been an active importer of feed/food grains at harvest is noteworthy. Other fresh input is lacking, and key fundamentally will be the performance of Brazilian rainfall Wed-Fri. The GFS and EU are each unwavering in their outlooks. The GFS has again trended slightly drier in Central/Northern Brazil overnight into Dec 27 and implies only modest jumps in soil moisture in major producing states Mato Grosso, Goias, and Mato Grosso do Sul. The EU solution features a normalization of Brazil rain. Ag Resources (ARC’s) bias today lies towards the drier GFS forecast given the forecast accuracy since early December. The Brazilian pattern remains abnormal. A choppy week lies ahead. ARC’s research strongly indicates breaks in wheat/corn are end user buying opportunities into late winter. Soybeans will hinge upon Brazilian weather into late January. In the overnight electronic session the March corn is currently trading at 479 ¾ which is 3 ¼ cents lower. The trading range has been 482 ¾ to 479 ¾.More By This Author:Don’t Mind That Man Behind The Curtain Dovish Fed? The Corn & Ethanol Report The Corn And Ethanol ReportGlobal Drought Monitor & Global El Nino Patterns. The Corn & Ethanol Report
