Written Commentary
MORNING COMMENTS
Macroeconomics:
This morning’s retail sales reports were mixed, but it was due to car sales. Core Retail sales (excluding car sales) came in lower than expected at 0.2% vs. the 0.4% estimate. Retail sales (including car sales) was reported hotter than expected at 0.7% vs. the 0.6% estimate. Motor vehicle &parts sales jumped up for the second month in a row to a new record high. Holiday spending is higher than last year, up 6% the first week of December compared to last year. The Fed will begin their December meeting today and should have a decision on whether to cut or keep the federal interest rate unchanged. No one is expecting a rise in rates so the choice comes down to -25 basis point cut tomorrow or they leave it unchanged until the end of January. The market has a -25 basis point cut priced in so if they do leave it unchanged, the market is likely to react negatively.
Ag Fundamentals:
FLASH SALE: 170K bushels of corn (6.693M bushels) to Mexico, 187K MT of soybeans (6.871M bushels) to Spain and 132K MT of soybeans (4.85M bushels) to unknown destinations this morning. Congress is meeting this week to come to an agreement on a bill that will include an extension of the 2018 farm bill and an enactment of E15 in the US fuel supply. A farm bill extension would allow for $10 billion in disaster assistance and financial support. Sen. John Hoeven from North Dakota wants the bill to be revised to $12 billion for economic relief and $16 billion for weather-related assistance. Congress will leave for the holidays in just a few days and will shut down on January 1st if they can not come to a decision. Eight new Midwestern states could offer E15 sales starting this summer on a year-round basis. This increase could mean an additional 30 million bushels of corn usage to the demand side of the balance sheet.
Farm Bankruptcies fell 2020-2023 due to both support from the farm bill and relief during COVID. Both cash payments and lowered interest rates in the early 2020s helped. Inflation, higher input costs, higher interest rates, and lower commodity prices have put more pressure on Ag businesses.
EXPORT & WORLD NEWS
South Korea bought 66K MT of feed corn from optional origins this morning. Algeria is in the market to buy up to 50K MT of durum wheat. Japan is seeking to buy up to 77K MT of food-quality wheat from the US and Australia. The Philippines issued an international tender to buy 60K MT of animal feed wheat as well.
Malaysian palm oil futures were down 33 ringgit, at 4725.
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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