As expected, the Fed raised interest rates 0.25% today and revised its forecast for 2018 GDP from 2.1 to 2.5 percent which may be attributed to the pending tax reform package. Fed also cut their estimate for unemployment to 3.9 percent for the next two years. Labor Department reported that CPI rose 0.4% in November. House and Senate have a tentative deal on the tax bill that include 21% corporate tax rate that President Trump has said he would sign.
Equites march on as Tax Bill passes reconciliation; Fed bumps rates as expected; Dollar gains
• Soy market posts new lows for the move, slipping below key moving averages, and leaving large soy spec longs on edge; Move driven by better than expected overnight rains in Argentina, with additional rains in the forecast (though models do disagree some on placement and amounts) • Weekly export sales data show corn and soybean sales at/below last week’s levels despite turn down in prices; Totals well behind year-ago tally’s, and continue to lag vs. USDA estimates
• Current US Export Sales Pace: Corn has reached 49% of USDA’s annual projection vs. 5-yr avg. sales pace at this point in the year of 54%; Soybean sales pace 62% vs. 76% 5-year avg.
• U.S. weekly ethanol production yesterday averaged 1.089-mbpd, down 2% on the week, but up 5% versus a year ago; Stocks at 22.374-mb +1% vs. LW, but + 17% versus a year ago
• Updated Drought Monitor shows 54.9% of US is currently experiencing some degree of abnormal dryness; That number though only slightly higher than a year ago at this time of 54.2% (too early to imply yield/trade/price movements)
• US CPC this morning indicated a greater than 80% likelihood of La Nina conditions remaining in place through the winter months, with an expected transition back to neutral conditions during mid-to-late spring.
• Oil trades both sides as market deals with conflicting headlines…IEA sees oil surplus in early 2018; U.S. shale firms attract plenty of capital, plan to raise output in 2018; OPEC announced in its latest monthly oil report that its November production fell to its lowest level in the last six months; OPEC sees balanced oil market by late 2018 as cuts erode glut
• US Domestic Crude Oil Production last week posts new record high (9.780-mbpd), and moves within reach of mythic 10-mbpd mark; Noted that pace of production increases is accelerating
• In a nutshell: OPEC cutting, while US Shale increasing, all with Funds sitting near record longs