I remain intensively focused on the outlook for grain and fertilizer prices. The former is benefiting from lower U.S. final crop harvested acres and tighter ending stocks (following ongoing draught), while the later is declining along with the continued sharp drop in natural gas prices, and possibly second order effects of a falling dollar.
Additionally, the World Bank lowered its outlook for global and U.S. GDP, however, U.S. economic activity is reasonably steady (on balance) and inflation is declining as the Federal Reserve raises interest rates. Maybe a soft landing is a possibility after all. Food for thought.
The Watch List
- This Week’s Calendar
- Economic Reports: Fed Beige Book, Retails Sales, Housing Starts, Existing Home Sales. Events: Precision Vision Conference (Meister Media) in Glendale, AZ.
- Grain Prices
- Spot prices for Corn, Soybeans and Hard Red Wheat started 2023 down but have largely recovered. Reduced harvested acreage and lower ending stocks portend a bullish forward picture.
- Global GDP
- The World Bank cut its estimate of global growth to 1.7% in 2023, down from its prior 3% estimate. They are calling for 0.5% US GDP growth. Realistic? What will U.S. 4Q GDP reveal later this month?
- Russian Oil
- Sanctions go into effect on Russian oil products on Feb. 5. According to the WSJ, penalties will set two price limits on Russian refined products: one on high-value exports (diesel) and another on lower-value oil exports.
- Davos
- Global leaders gather for the World Economic Forum this week in Davos, Switzerland. Key areas of focus: Russia/Ukraine, inflation, global recession.
Numbers of Interest
Economic
6.5%: Consumer Price Inflation fell to 6.5% in Dec. from 7.1% in Nov., and down from the 9.1% peak in June. INFLATION CONTINUES TO DECLINE = good news!
-9.3%: Decline in the U.S. Dollar Index (DKY) past three months.
$31.4 Trillion: Nominal level of the U.S. debt ceiling, which Congress expects to hit this week. Get ready for political debates.
120%: Current level of U.S. debt-to-GDP, vs. 106% in 2019.
Agri-Food
13.73 billion: Revised WASDE estimate for U.S. corn production in bushels for 2022/23, down 200 million; as increase in yield more than offset by a 1.6 million acre cut to harvested area.
$186: Recent Purdue study found that consumers spent on average $121 per week on groceries and $65 per week on restaurants and other carryout meals in December 2022
5.8%: Percentage of U.S. auto sales in 2022 that were Electric Vehicles, up from 3.2% in 2021. Implications for ethanol?
Points to ponder
- U.S. Stock Markets Having Risen During the First Two Weeks of 2023
- Grain Prices Began 2023 in the Red But Have Mostly Recovered
- The World Bank’s Revised Economic Outlook Calls for U.S. GDP Growth of Just 0.5% in 2023
- Last Week’s CPI Report Illustrates the Continued Downward Trend in Inflation
- Fertilizer Prices Continue to Weaken Along with the Decline in Natural Gas Prices
- The latest Short-Term Energy Outlook released by the Energy Information Administration provided several key financial figures for the U.S. Fuel Ethanol sector.
- 56% of the U.S. is Experiencing Abnormally Dry Conditions, Western Kansas Especially (However, 7 Day Maps Show Moisture Shifting In)
- Weather and Climate Losses in 2022 Totaled $165 Billion
Kenneth Scott Zuckerberg is Lead Industry Analyst, Grains, Farm Supply & Biofuels, CoBank.
