CPI data shows inflation receding. USDA report today
Grain futures moved higher overnight as the Rosario Exchange in Argentina lowered its soybean output to 37 MMTs versus 49 previously in the USDA’s 49.5. They estimated corn production at 45 MMTs versus 55 MMTs previously, and if realized, exporter corn and soybean balance sheets will be adversely impacted. The Buenos Aires exchange has not officially adjusted its production estimates but has hinted a sub 40 MMT corn crop as possible if the bank weather fails to improve by February.
The CPI data out this morning confirmed that inflation is receding, with data coming in very close to expectations. This allowed gold to challenge 1900 while the US dollar declined to the 102.50 range as the Fed will likely keep the February interest rate increased to just .25%. Fed funds rates will make it to 5%, but the Fed is not in a hurry to get there. Crude oil challenged 79.00 before retreating.
The 11 o’clock data today from the USDA will create potentially large swings with the final production numbers, December 1 stocks, and wheat acreage numbers out for scrutiny. December 1 corn stocks report 11.1 Bil Bu, soybeans are at 3.1 Bil while wheat stocks are at 1.3 Bil. US winter wheat acreage is expected to be increased by at least 1.2 million acres over last year.
Better rain chances are evolving for Western Argentina today and tomorrow, but the core of the ag belt remains arid. Maximum temperatures through Sunday will reach 95+ degrees. Rain chances on the 10-day forecast are not pulling any moisture forward, with total rain accumulations no more than 1.00” in some areas.
Live cattle prices slipped yesterday but closed mixed, while feeder cattle were lower. Feeder cattle will experience volatility when the grain report is released. Cattle were sold in Nebraska and the IA/MN region at $157-158 live with dressed at $252. Total volume was light, with additional trade expected to be steady to $1 higher. Southern plains cattle were offered at $158-159 awaiting trade.