January 8 - Boeing's challenges drag on the Dow, while stocks otherwise firm back into positive territory, even as deflation remains the theme of the commodities. The VIX is trading near 13, while the dollar index trades near 102.2. Yields on 10-year Treasuries are trading near 3.98%, while yields on 2-year Treasuries are trading near 4.32%. The broader commodity complex is under pressure due to weak demand, with Algos adding sell orders on negative chart momentum. Crude oil prices are down by more than 4%, with 1% - 3% losses in the grain and oilseed sector.
The National Weather Service warns that an "extremely dangerous Plains blizzard" is expected to develop in the Plains of northeast New Mexico, eastern Colorado, the Oklahoma and Texas Panhandles, western Kansas, and southwest Nebraska over the next several days. Wind gusts as high as 60 - 70 miles per hour will create "ferocious" blizzard conditions with whiteouts expected. This is a region containing a large portion of our nation's cattle feeding, with winter storm conditions spreading over much of the cattle and hog feeding areas this week. These conditions are expected to negatively impact animal performance, resulting in lost animal weight, and even reduce slaughter schedules at packing plants for both beef and pork. More of our pork production is within contained facilities, but the cold conditions approaching are expected to impact those facilities as well. Live cattle and lean hog futures were both higher early today as a result, with the weather acting to remove excess meat production from the system this week. Those early gains then succumbed to the broader commodity deflation theme as the morning wore on, but weather continues to provide underlying support to the protein sector.
USDA inspected 24.8 million bushels of soybeans for export shipment in the week ending January 4, as shown below, along with 33.7 million bushels of corn, 18.0 million bushels of wheat, and 4.7 million bushels of grain sorghum. The portion of the above that was inspected for shipment to China included 12.9 million bushels of soybeans , 8.7 million bushels of wheat and 4.7 million bushels of grain sorghum. No corn was inspected for shipment to China during the week ending January 4th. Total corn shipments to all destinations remain quite volatile, in part due to the inconsistency of shipments to China. On the other hand, the graphic below tells the story of how the availability of cheap soybeans from Brazil has chewed into the normal strong export season we've come to expect and need in the fourth quarter of the calendar year.
Marketing year to date soybean export inspections total 880 million bushels, down from 1.111 billion bushels in the same week last year. The concern is that we're falling further behind as our prime export season is coming to an end. Marketing year to date export shipments fall short of the seasonal pace needed to hit USDA's target by 57 million bushels, with the deficit growing by 21 million bushels in just the past week. Marketing year to date corn export inspections total 504 million bushels, up from 394 million the previous year, and roughly matching the seasonal pace needed to hit USDA's target, despite the up and down nature of weekly shipments in recent weeks. Year-to-date wheat inspections fall short by 51 million bushels, but we're starting to narrow the gap.
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