This week there are 5 key reports to watch that could have significant impacts on commodity markets the week of December 17, 2023. This Farms.com column tracks key events in commodity marketing impacting the agriculture industry! The series of article shares issues to watch the following week, issues that may have an impact on commodity prices in the coming weeks.
By Colin McNaughton
Farms.com Risk Management Intern
1. Next week's reports include the USDA grains inspected for export on Monday, December 18th, the EIA ethanol data on Wednesday, December 20th, and the USDA weekly export sales report on Thursday, December 21st. This week’s export sales report was impressive as wheat sales came in at nearly 1.5 mmt, the highest single week reported since September 2007. The big number came after China purchased over 1 mmt over multiple purchases throughout the week after concerns over crop conditions due to flooding in that country.
Corn and soybean sales were also strong, as corn reached over 1.4 mmt, with soybeans just under 1.1 mmt. Demand continues to remain strong as the year comes to a close.
2. The U.S. drought monitor update showed an improvement across the winter wheat areas as now just 32% of the crop is in areas affected by D1 drought or higher. The improvement came after a large reduction in the D1 drought on the eastern side of Washington, where the majority of their winter wheat crop lies. Just 1% of the winter wheat in Washington remains in drought, compared to 45% just 2 weeks ago, and 73% 4 weeks ago.
For U.S. corn and soybeans, the same can not be said. Conditions for both worsened as now 44% of corn and 48% of soybeans are affected by at least D1 drought. It is important to note that these numbers are much better off than last year at this time, but we are going in the wrong direction.
An update on Thursday, December 21st may show better conditions overall as HRW wheat areas are expected to see rainfall for the rest of this week, and the upper U.S. Midwest will see rains as well.
3. U.S. inflation for the month of November was 3.1% year-over-year. Inflationary data for Canada will be released on Tuesday, December 19th. Inflation for October came in at 3.1%, down from 4.0% seen in September following 2 straight decreases. The Bank of Canada still expects to see inflation return to 2% in 2024/2025, so no big dip should be anticipated for the upcoming report.
4. The Dow Jones Industrial Average is at all time highs and surpassed $37,000 for the first time in its history yesterday, closing at $37,140. This came after the Fed’s announcement of another pause on U.S. interest rates, but more importantly, 3 forecasted rate cuts in 2024, potentially as soon as March. Stocks have been held back due to the high rates over the past year and the pivot by the U.S. Fed is great news and investors are welcoming the news. It will provide some relief to farmers with lower interest rate payments.
5. Some important livestock data will be released next week as the USDA Hogs and Pigs quarterly report will be released on Friday, December 22nd. As of the September report, all hogs and pigs inventory was up 2% from June, and slightly higher than the year prior; but we could see for the first time the U.S. hog herd drop below 6 million pigs.
The breeding inventory was down 1% from the previous quarter and previous year. The Cattle on feed report will also be released on the same day. Cattle and calves on feed for the slaughter market in November were up 2% from 2022 at 11.9 million.
For daily information and updates on agriculture commodity marketing and price risk management for North American farmers, producers, and agribusiness visit the Farms.com Risk Management Website to subscribe to the program.