Grains –
Lots of data from NASS released yesterday after the close. We got the monthly Grain Crushing report and this showed corn used in ethanol production totaled 451.9 mil bu last month, down slightly form 455 mil bu the prior month. This is inline with expectations following the weekly EIA ethanol production updates. It is worth noting that the conversion factor in the past few months has been a bit light and this might lead to a little more corn use than previously expected. That said, I don’t think WASDE will be in a rush to raise their projection right now.
The Fats & Oils report showed a Nov soybean crush of roughly 170.7 mil bu, which might be a smidge smaller than expected following the NOPA release. Meal stocks rebounded from the low levels seen in Oct and are now higher YOY. Meal yield also improved, though it still isn’t necessarily anything to be proud of right now. I still do wonder if a lower meal yield might translate to higher crush down the road. For now, this report makes no argument for a change in the WASDE projection.
Lastly we got some Crop Progress reports from individual states and these provided some details on winter wheat conditions. In KS, G/E fell to 44% from 52% at the end of Nov. OK’s winter wheat condition dropped to 25% G/E from 53% at the end of Nov. CO was down to 40% from 47% previously. NE was down to 46% from 53%. IL, in SRW country, posted conditions of 69% G/E vs 70% at the end of Nov.
Financials –
The buzzword around financial markets these days is “inflation” and last night we got another solid inflation sigh from a somewhat unlikely spot…the EU. EU inflation rose to 1.1% in December, which is the highest level of inflation since 2013 and slightly above the average guess. While largely driven by the YOY differences in oil prices, this renewed confidence in accelerating inflation could shift debate over ECB policy. Recall the ECB extended their asset purchase plan at their last meeting but at a slightly lower monthly rate. The solid inflation reading out of the EU is supporting the euro and this is largely responsible for the weaker tone in the DX at the time of writing.
Otherwise I see very little new to report this morning. We’ll get the FOMC minutes this afternoon but these rarely are major market movers. We have major employment data out the next two days that will likely drive price action.
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