January 11 - Stocks traded modestly lower after this morning's inflation data began to dash early rate cut hopes, led by higher shelter and healthcare costs. Yet, the VIX continues to trade below 13, indicating little in the way of panic on Wall Street, while the dollar index firmed with Treasury yields to trade near 102.6. Yields on 10-year Treasuries are trading near 4.05%, while yields on 2-year Treasuries are trading near 4.32% as the inverse narrows. Crude oil prices are 1.5% higher, while the grain and oilseed sector is mixed ahead of tomorrow's big USDA data dump. The protein sector remains supported by a series of winter storms that continue to reduce the supply of meat available to the market.
Exporters sold 19.2 million bushels of corn, 10.3 million bushels of soybeans, 5.2 million bushels of grain sorghum, and 4.7 million bushels of wheat in the week ending January 4. There's nothing impressive about those numbers, with the exception of grain sorghum, but then again, that's not necessarily unusual during the holiday period. Wheat exports were again disappointing, even though they included a cargo each of hard red winter and white wheat sold to China. Recent Chinese purchases have pushed marketing year to date wheat sales to all destinations 14 million bushels above the seasonal pace needed to hit USDA's target for the year, while actual shipments remain 51 million bushels below the seasonal pace, leaving USDA's target vulnerable to reduction if we don't see a bigger pickup in shipments soon. On the other hand, due to active Chinese interest, marketing year to date grain sorghum export sales exceed the seasonal pace needed to hit USDA's target by 46 million bushels, while actual shipments exceed the pace by 26 million bushels.
But traders will be focused primarily on corn and soybean sales and shipments. Marketing year to date corn export sales to date total 1.192 billion bushels, up from 866 million at this point a year ago. That exceeds the seasonal pace needed to hit USDA's target by 45 million bushels, while actual shipments are very close to the seasonal pace. The featured buyer of U.S. corn in the week ending January 4 was Columbia. That business was appreciated, but the bulls would prefer to see a larger buyer like Mexico or China topping the list, and roughly half of that Columbia purchase was already on the books as previously sold to "unknown destinations." It's a little different story for soybeans, where marketing year to date sales total a much larger 1.353 billion bushels, down from 1.629 billion at this point a year ago, but very close to the seasonal pace needed to hit USDA's target. This morning's weekly report included just 3 million bushels in net sales to China, including 2.4 million switched from previous sales to "unknown destinations," and including reductions of previous purchases of 2.9 million bushels. This is a concern as we approach the end of our peak shipping period, with marketing year to date shipments lagging the seasonal pace needed to hit USDA's target by 57 million bushels, and that number continues to grow on a weekly basis due to active Brazil shipments displacing U.S. supplies. Based on the above, we could see USDA cut its soybean export target by 25 million bushels tomorrow.
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