Top 5 key market movers to watch the week of December 10 2023

Dec 07, 2023

US Exports continue their strong momentum

This week there are 5 key reports to watch that could have significant impacts on commodity markets the week of December 10, 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. As per usual, next weeks reports include the USDA Grains Inspected for Export report on Monday, December 11th, the EIA ethanol data on Wednesday, December 13th, and the weekly export sales report on Thursday, December 14th. U.S. exports continued their strong momentum corn and soybeans saw 1.2 mmt and 1.5 mmt in sales respectively. Wheat sales were not great but still above the 4-week average at 356 000 mmt this week. Next week is when we will see that number jump as China has purchased over 1 mmt of SRW wheat across three consecutive days earlier this week as floods in China have resulted in poor quality local wheat.

2. The U.S. drought monitor map and Ag in Drought report showed an improvement across the board in corn, soybeans, and wheat. Each saw a 1% decrease in growing areas affect by at least D1 drought but still well below last year. Kansas winter wheat continues to struggle as 63% of the crop remains in drought affected areas. The U.S. Midwest has not seen any snow coverage as crops remain without any solid relief. Conditions in Iowa remain the worst as the large D3 area remains at 27%. An update will be released next week on Thursday, December 14th.

3.Next week, a crucial U.S. inflation report will be released on Tuesday, December 12th. This comes after U.S. GDP growth in Q3 was hotter than initially anticipated at 5.2%. Inflation in the U.S. and Canada in the next 2-3 months could finally fall to the central bank targets of 2.0% and one reason why they should start easing interest rates in Q2 of 2024.

4. Along with the inflationary data, the U.S. Fed will meet next week on December 12th and 13th, and markets are expecting another rate pause. Powell’s comments last week lent support to the notion that the Federal Reserve, at the very least, has concluded its series of interest rate hikes, given that the successive increases since March 2022 have had a dampening effect on economic activity. Powell acknowledged that inflation is trending in a positive direction. Lower job openings and high unemployment are other indications that we are moving in the right direction towards lower interest rates in 2024 in a U.S. election year.

5. As there is no USDA crop progress port next week, eyes turn to South America. According to AgRural, 85% of the Brazilian soybean had been planted, compared to 91% at this time last year, and the slowest pace since 2009. Planting has been slowed by extreme dryness in the north and excessive wetness in the south. Brazilian first-season corn is 83% planted. The December Monsoonal rains have not showed up in full affect and the GFS is much drier. Consultancies continue to lower their forecasts for the Brazilian 24 soybean crop with some going as low as 150 mmt. CNONAB lowered their forecast today, down to 160.177, down 1.4% from November but still higher than last year.

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.

Video: Will the 2025 USDA December Crop Report Be a Market Mover/Surprise?

Historically, the USDA December crop report is a non-event or another dud report as the USDA reserves any final supply changes to the final report in January of the following year in this case 2026. But after the longest U.S. government shutdown in history at 43 days and no October crop report will they provide more data/surprise and make an exception?
Our China U.S. soybean purchase tracker is now at 26.6% or a total of 3.2 mmt but for traders it’s taking too long to unfold.
The final Stats Canada production report was bearish canola and wheat projection a record crop in both (it adds to the global glut of supplies) and bullish local corn and soybean prices in Ontario/Quebec thanks to a drought. It will not help the fund flow short-term, the USDA may need to offset it?
A U.S. Fed interest rate cut of another 25-basis point next Wednesday (probability 87.1%) could help fund flow and sentiment in stock and ag commodities into year end.
More inflows into Bitcoin this past week saw prices rebound back above 90,000 with support at 82,000 and resistance at 96,000.
A V-shaped bottom in cattle suggest the lows are in after Mexico reported another new world screwworm case. Lower weights, seasonal demand and higher U.S. beef select/choice values with a continued closure of the Mexican border to cattle will result in a resumption of higher cattle futures into yearend.
Australia is expected to produce its 3rd largest wheat crop ever at 36 mmt adding to the global glut of supplies.
Reports of ASF in hogs in Spain the largest pork exporter in Europe could see the U.S. win more pork export business long-term.
If the rains verify into next week of 3-5 inches for Brazil it would go a long way to fixing the dry regions from the last 2-months, but the European weather model has been wrong for the past 2-months!
Natural gas futures are surging to the 3rd price count as frigid hold temps set in.
CDN $ is also surging to end the week on a very resilient economy and better employment numbers suggesting no interest rate cuts next week.
Finally, the CFTC report showed funds were net buyers of soybeans but sellers of corn, canola and wheat. In real time the funds have gone back to selling as they take some profits.