Weekly Market Update 12-19-24

Here is your weekly market update from the Garden City Co-op Grain Origination Team.

Trivia

1.  The movie Miracle on 34th Street is based on a real-life department store. What is it?

2. What did Frosty the Snowman do when a magic hat was placed on his head?

Answers at the bottom.

Market News

Merry Christmas from your GCC Grain Team!

Our offices will be closed at noon on Tuesday, December 24th, and all day on December 25th to celebrate Christmas.

Christmas Market Hours
Christmas Eve—early close, 12:05 pm CST – no overnight Christmas—Closed
12/26—Regular Open 8:30 am CST

 INTEREST RATE MARKET: The Federal Reserve prepared the market for its anticipated action and followed through yesterday with a “hawkish rate cut.” It lowered its benchmark interest rate by 25 basis points and reduced the reverse repo rate by 30 basis points, aiming to decrease reliance on that facility. The Cleveland Fed president was the only dissenting vote, wanting to keep rates unchanged. The Fed's statement echoed previous meetings, noting that risks to inflation and employment goals are roughly balanced. The August jobs report showed an unemployment rate of 4.253% and a headline consumer price index of 2.9%. Later that month, Fed Chair Jerome Powell indicated that inflation was approaching the 2% target while emphasizing concerns over the jobs sector. The bottom line is that fiscal stimulus is still in effect, as seen in the proposed continuing resolution to fund the government, which includes special interest programs to secure necessary votes for passage. The wealth effect encourages consumer spending, with record highs on Wall Street and increased home equity leading to more loan applications. Wage growth is strong, retail sales are robust, and consumer confidence is rising. Consumers have also voted for a president promising more tax cuts and deregulation, which are stimulative. Additionally, interest rates are below neutral, making the recent rate cut stimulative. While this doesn't guarantee inflation will return in 2025, it does heighten the associated risks, historically benefiting the broader commodity sector.  

EXPORT INSPECTIONS: Corn inspections indicated a solid week, with 44.5 million bushels shipped, aligning towards the higher end of estimates. This shipment volume remains above the five-year average, keeping us on track to meet USDA projections. As expected, Mexico was the largest shipment destination last week, followed by Japan, Spain, and Colombia in the top four. Wheat met the recent pace and came near the top of estimates of 11 mil bu. Rail shipments to Mexico and (PNW) loadings for Japan, Thailand, and Taiwan. (HRW) Wheat comprised most shipments to Mexico, Japan, and Thailand from the PNW, Mauritania, and Colombia from the Gulf. Beans saw 61.6 million by the lower end of the estimates but still in the middle. Milo saw a better week, with 5.8 million inspected, with China being the prime destination.

EXPORT SALES: Corn sales were steady this past week, falling within the expected range, with 46.2 million bushels sold & .1mil bu in new crop sales. Cumulative sales are still tracking ahead of USDA estimates, but weekly sales align with last year's figures and the five-year average. The typical buyers—Mexico, Japan, Colombia, Taiwan, and Spain—were active this week. Wheat sales totaled 16.8 million bushels, a nice improvement to the previous week, led by the Philippines and Venezuela. HRW sales were reported to Venezuela and Nicaragua. New crop contracts are nowhere to be found. Soybeans sold 52.3 million bushels, up from 43.1 million the previous week, with no new crop sales. Milo -2.3 million bushels.

MILO UPDATE: Dismal has been the word for the local milo market with basis really taking it on the chin. Exports remain incredibly poor, as highlighted by the chart below. Milo exports are trailing the seasonal pace needed to hit current USDA projections by 58.1 million bushels, or 26%, and this week’s net cancellation of 2.3 million bushels of sales only adds insult to injury. China is obviously the big player in this market, and they are content to wait and see how the tariff situation plays out once we have a new administration in the White House. If there is any type of Chinese export program, and that’s a big “if”, it looks like it will be February forward. With export demand non-existent, our local crop is having to find its way into local ethanol and feed markets – which seem to be flooded with bushels. This flood of bushels has really weakened the sellable market, and we are hearing that a lot of end user demand is covered for the next couple of months. All of this weakness in export and local demand has spilled over into lower posted elevator bids. However, corn futures have seen a few bumps in the last couple of weeks which has meant not a lot of change to milo cash price.  


WEATHER: Temperatures are expected to remain mild and consistent as we head into the holiday week, with daily highs in the 40s and 50s and nighttime lows dipping into the 20s. Dreams of a White Christmas are a long shot with the weather expected to be sunny through Wednesday. Moisture chances are scarce until the end of next week, with your post-Christmas Thursday and Friday forecasts including shots at precipitation and ice.

 

Trivia Answers

1. Macy's.

2. He began to dance.