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Top 5 key market movers to watch the week November 19 2023

Top 5 key market movers to watch the week November 19 2023

What impact will later levels have on energy and commodity prices?

This week there are 5 key reports to watch that could have significant impacts on commodity markets the week of November 19, 2023. This 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 Risk Management Intern

1.USDA’s second last Crop Progress report will be released on Monday, November 20th. The current report showed U.S. corn harvest jump 7% to 88% complete, behind the trade expectations of 90%, while still above the 5-year average of 86%. U.S. soybean harvest is winding down, up 4% from last week at 95% complete, also behind the anticipated 96%, but still ahead of the 5-year average of 91%. Winter wheat conditions saw a down tick as now 47% of the crop is considered good-excellent, compared to 50% last week. Conditions were predominantly dry, and will remain dry until the weekend, which could result in lower conditions in good to excellent next week.

2. Next week will be a short trading week for the commodity markets due to the U.S. Thanksgiving holiday on Thursday, November 23rd, so the weekly export sales report will be delayed until Friday, November 24th. This also means the markets will be closed on Thursday and will have an early close on Friday at 1:00 p.m. ET. The grains inspected for export report and the EIA ethanol data releases will be unaffected, releasing on Monday, November 20th, and Wednesday, November 22nd respectively. The recent weekly export sales report was very strong as both corn and soybeans were well above their weekly targets to meet the USDA’s final number. U.S. soybean sales came in at 3.9 mmt versus last weeks 1.08 mmt, as China largely increased their purchases, which totalled 2.6 mmt, but this news was known. Corn sales came in at 1.8 mmt, 81% higher than the prior 4-week average. Mexico was the number one buyer, but Japan was second with purchases of 532,000 mt. It’s good to see the U.S. expanding its customers for U.S. corn exports.

3. The U.S. drought monitor map showed no relief for winter wheat areas as dryness prevailed throughout last week. Forty-four percent of the U.S. winter wheat areas are affected by at least D1 drought, up from last week's 42%; 65% of Kansas winter wheat is now affected by drought, which includes 5% in extreme drought (D3). That’s up from last weeks 62%. Washington winter wheat is also very dry as 73% of the crop is in at least D1 drought, which includes 37% severe drought (D2). With a winter forecasted to have little precipitation, winter wheat starting this dry could be a problem as relief is not going to be common. With an El Nino weather forecast persisting into February of 2024 a mild winter with less than normal precipitation could see the dryness persist as well in the coming months.

4. The U.S. CPI and PPI came in this week for October and was below expectations. (Next week will have Canada’s inflation data released on Tuesday, November 21st.) Lower inflation provides a stronger case for a possible interest rate cut next year. Some experts are saying we could see a cut as early as March 2024. The narrative has changed from the “higher for longer” we were hearing for months, but a string of recent economic data has showed the economy is slowing down.

5. After a brief increase last week, the water levels of the Mississippi River have now receded to 7.5 feet below the normal mark. Projections indicate that the water levels will further decline to 10+ feet below normal by November 27th. Unfortunately, this recovery was short-lived, and it is anticipated that basis and freight rates will once again be affected. The drought affecting the Mississippi River is anticipated to persist throughout the winter.

Continuing with trade routes, October set a record as the driest month in Panama since record-keeping commenced in 1950. The resulting water scarcity is causing a significant decline in traffic through the Panama Canal. By February, it is anticipated that the canal will only accommodate around 18 ships per day, approximately half the number compared to the previous year. This predicament has widespread implications for various commodities and manufactured goods, with a particular emphasis on its critical impact on the energy sector. In the preceding year, nearly half of the goods, measured by weight, passing through the canal's locks were comprised of oil and gas-based products.

For daily information and updates on agriculture commodity marketing and price risk management for North American farmers, producers, and agribusiness visit the Risk Management Website to subscribe to the program.


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