Evening Report | January 10, 2024

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Barrage of USDA data coming Friday... Friday will be one of the busiest report days of the year for the grain markets as USDA will release its Annual Production Summary, monthly Supply & Demand Report, Quarterly Grain Stocks and Winter Wheat Seedings. Much of the focus will be on USDA’s “final” crop estimates for corn and soybeans. But Dec. 1 grain stocks have a history of providing market-moving surprises, especially for corn. With corn, soybeans and wheat struggling to attract buyer interest, bullish data is likely needed to put in market bottoms. The following pre-report estimates are from Reuters; Bloomberg for cotton.

Brazil extends soybean planting dates... Brazil’s ag minister extended the soybean planting dates in several states as dry weather delayed efforts and caused some replanting. Below is a list of the extensions granted:

• Mato Grosso extended 20 days until Jan 13.
• Mato Grosso do Sul extended 20 days until Jan. 13.
• Goias extended 10 days until Jan. 12.
• Tocantins extended 12 days until Jan. 20.
• Para was divided into three regions. Region One was extended until Jan. 14. Region Two was extended until Feb. 28. Region Three was extended until March 14.
• Piaui was divided into three regions. Region One was extended until March 9. Region Two was extended until Feb. 8. Region Three was extended until Jan. 28.
• Acre extended 20 days until Jan 18.

South American crop consultant Dr. Michael Cordonnier says the extended window could complicate the control of soybean rust because the spores multiply as the season progresses, so the later the soybeans are planted, the more the potential fungicide applications that will be needed to adequately control the disease.

Ethanol production remains strong... Ethanol production averaged 1.062 million barrels per day (bpd) during the week ended Jan. 5, up 13,000 bpd from the previous week and 119,000 bpd (12.6%) from last year. The reporting period included the final days of December, which was a strong month for ethanol production. Based on our calculations, December ethanol production was the strongest for any month since October 2021. With production margins remaining positive and the first days of the new year off to a strong start, January should be another big month unless there are major weather disruptions.

Pork, beef exports diverge... The U.S. exported 607.5 million lbs. of pork during November, up 35.3 million lbs. (6.2%) from October and 30.0 million lbs. (5.2%) more than last year. That was the largest November pork shipments total since 2020. Through November, pork exports totaled 6.174 billion lbs., up 6.8% from the same period last year, driven by a 9.2% just in movement to Mexico.

Beef exports totaled 229.3 million lbs. in November, down 12.2 million lbs. (5.1%) from October and 46.7 million lbs. (16.9%) less than last year. That was the smallest tally for any month since July 2020. Japan, China and South Korea, which account for about 60% of all beef exports, posted double-digit year-over-year declines. Through November, beef exports totaled 2.875 billion lbs., down 15.0% from the same period las year. Of the top five destinations, shipments increased only to Mexico.

House conservatives block procedural vote in opposition to spending deal... A group of House conservatives, dissatisfied with a spending deal reached by Speaker Mike Johnson (R-La.) with Democrats, blocked a procedural vote on Wednesday. This rebellion resulted in thirteen Republicans joining Democrats to vote against the rule for a set of unrelated bills, preventing the House from debating and voting on those measures. Rep. Blake Moore (R-Utah), the vice chair of the House GOP conference, changed his vote to oppose the rule just before the vote closed, allowing for the possibility of another vote on the rule in the future.

The conservatives’ opposition comes in response to Johnson’s recent deal on spending levels for the remainder of fiscal year 2024, which they believe does not cut spending enough. Congress faces upcoming shutdown deadlines on Jan. 19 and Feb. 2.

 Johnson’s agreement is largely in line with spending caps established in a debt limit deal made by then-Speaker Kevin McCarthy (R-Calif.) with President Joe Biden last year. It includes a $1.59 trillion overall spending limit, along with approximately $69 billion in adjustments to increase nondefense spending for most of fiscal year 2024. The deal also features an extra $10 billion in cuts to mandatory funding for the IRS and a $6.1 billion retrieval of unspent Covid-19 funds.

Conservative members of the House Freedom Caucus expressed their discontent with the deal, calling it a “total failure.”