Weekly Market Update 6-13-24

Jun 13, 2024


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

Trivia

  1. What planet is known as the “Red Planet” ?

  2. What muscle is the strongest muscle in the human body?

Answers at the bottom.

Market News


Interest Rate Market: The Fed only sees one cut for 2024, two fewer than expected, as inflation approaches its 2% goal, slower than expected. The rate stays unchanged at the 5.25%-5.5% range. However, after their June 11th and 12th meetings, policymakers anticipate a policy rate of 4.1% by the end of the year 2025, according to the median of their projections. The last time the FED released quarterly forecasts in March, most central bankers anticipated at least three 25-basis point rate cuts in 2024 & 2025. That would have put the rate at 3.75%-4% at the end of 2025, but a strong inflation rate at the start of 2024 has forced the U.S. to recalibrate.

It was not immediately clear how the data released on Wednesday, showing a rise in consumer prices in May from April, may have factored into their forecasts. The Fed has kept its target for the overnight bank-to-bank lending rate in its current range since last July in a bid to reduce high inflation in the economy without causing massive harm to the job market. Some policymakers feel we should not cut rates at all this year, while several believe that a single rate cut will be appropriate by year's end.

Russian Grain Union: The recent frost damage has affected between 15% and 30% of winter grains, with variations by region. The Agriculture Ministry's estimate includes all crops, such as grasses and fodder. Approximately 1 million hectares, which is 1.2% of the total sown area for the 2024 harvest, have been impacted by frost, with an additional 700,000 hectares suffering damage. Russia assures that its grain exports will not be affected and has declared an emergency in 10 regions to expedite insurance claims by farmers. The Agriculture Ministry maintains a forecast of 132 million tons for the 2024 grain harvest, but this may change due to persistent drought in some regions. Estimates from IKAR forecast 81.5 million tons of wheat, while Sovecon predicts 80.5 million. Russia plans to export 60 million tons of grain in the 2024/25 season, down from an estimated 70 million tons in the previous season, with 53 million tons being wheat.

EXPORT INSPECTIONS/ SALES: A total of 12.9 million bushels of wheat were inspected this week, on track with current USDA estimates; favoring the lower side. The majority of the HRW exports this week will be going to Mexico by rail with the second largest portion traveling to Nigeria from the Gulf. The Philippines and Taiwan will take the largest portion of HRS wheat this week, with additional shipments going by rail to Mexico. Taking the majority of the United States SRW, Mexico again leads the weekly export market. White wheat traveled to its normal Asian destinations much like last week and again no shipments of durum wheat were reported by the USDA. On par with USDA estimates, the US shipped 52.7 million bushels of corn this week, down from the previous week’s estimates. The largest portion of exported corn was traveling to Mexico and Japan; again, following an 18% weekly decrease in pace needed by USDA estimates. Soybeans saw a total of 8.5 million bushels inspected this week, with milo seeing a total of 7.1 million bushels inspected.

Sales again trending towards the middle of USDA estimates, O/C corn sales this week were 41.6 million bushels. New crop corn sales were recorded at 2.7 million bushels. Sales for both O/C and N/C remain above the historical average and remain 2% above total USDA targets. The majority of this week’s corn traveling to Japan, with smaller portions making their way to Colombia and Mexico. Old crop wheat sales were significantly above USDA estimates at 8.2 million bushels, with N/C wheat only seeing 0.8 million bushels in sales, significantly down from the 22.7 million bushes of N/C wheat sold last week. Soybean sales making a comeback this week, with 13.9 million bushels of O/C sold; the largest portion making its way to China. New crop sales being recorded at only 0.1 million bushels for the week. Old crop milo sales were 4.7 million bushels, while no N/C milo was sold. We remain 6% above the USDA total targets for the year.

June WASDE Recap: Overall, this report was a non-event.  U.S. balance sheets were left mostly unchanged and USDA world estimates still are ahead of trade expectations, with only modest reductions to foreign crops. With this report behind us, the market now awaits the June 28th planted acres and stocks report –  which is typically a major market mover. Your commodity recaps are below.

CORN: Both the old crop and new crop U.S. balance sheets were left unchanged this month, while the market was looking for modest declines. South America production was also left unchanged from May. Old and new crop world carryout both saw some slight decreases, with reductions in South Africa and the EU. SOYBEANS: New crop U.S. balance sheet was also left unchanged, while old crop carryout was increased 10 million bushels from a reduction in crush. Brazil’s bean production was down only 1MMT, with Argentina unchanged. Old and new crop both saw small declines in carryout. WHEAT: I sound like a broken record here, but old crop balance sheets were left unchanged for wheat. New crop U.S. carryout was down eight million bushels, with an increase in production more than offset by an increase in export demand. Old crop world carryout was increased slightly, but new crop was down 1.35 MMT, thanks to cuts in expected Black Sea production.



Weather: This afternoon looks sunny and hot, with a high near 101°F. A hazardous weather outlook was issued by the Dodge City National Weather Service, as heat index values could be over 105°F this afternoon and evening. We can expect a 20% chance of showers and thunderstorms later this afternoon, increasing to 30% throughout the evening/early morning hours. These storms could contain wind gusts over 60 mph (with isolated wind gusts over 75 mph possible) and are predicted to produce golf ball size hail. Friday appears to be partly sunny during the day, with a high near 92°F. Tomorrow evening you can expect to see a 50% chance of scattered thunderstorms and showers, with a low around 65°F. The National Weather Service in Dodge City predicts that storms on Friday again have the potential to be severe, mainly along and North of the line from Syracuse to Hays. Saturday appears to be our only chance of any precipitation this weekend, with a 20% chance expected after 1 pm, remaining throughout the evening and early morning hours. Sunday looks like it will be sunny with a high near 99°F, and a low around 70°F that evening. The remainder of the week appears to be dry, hot, and windy, with temperatures expected in the upper-90s during the day, cooling off slightly to the mid-70s in the evening hours.

Trivia Answers

  1. Mars
  2. Masseter Muscle (Jaw)