PM Comments December 2 2024
Good afternoon. The 'wet blanket effect' of the US$ index was real on Monday, as a lack of fresh bullish fundamental input led to sideways/lower trade across most physical commodity markets to start the week. The soy complex was the downside leader on a wetter shift in the Argentine forecast for mid-month, while corn and wheat futures spent a majority of the day hovering near unchanged in what was still a holiday-reduced trading session in terms of volume.
CH closed at 4.32 1/2 on Monday, down 1/2 cent. CK was down 3/4 of a cent at 4.39. SF closed at 9.85 1/4, down 4 and 1/4. SH was down 5 cents at 9.91. WH finished at 5.47 1/4, down 3/4 of a cent. Inside day for WH. Products were lower, January soybean meal closed at 287.90, down $4/ton, and January soybean oil closed at 41.42, down 32 points. New contract lows for meal. Livestock markets were mixed to start the week, February live cattle closed at 187.92, down 70 cents, January feeders closed at 256.85, down $2.62, and February hogs closed at 87.95, up $1.62. Key reversal lower for feeders and an inside day for hogs. Outside markets are mostly higher, crude oil futures are up around 15 cents/bl, the Dow Jones index is down 180 points, and the US$ index is up 50-60 points. The S&P500 is up 10 points and the NASDAQ is up 225 points. New contract highs for the S&P.
Spreads were largely mixed to start the week, corn spreads were down a penny to up 2 cents, and soybean spreads were down a penny to up a penny. CZ/CH closed at -8, up 2 cents, and SF/SH closed at -5 3/4, up 3/4 of a cent. New high for the move for SF/SH at -5 1/2. Wheat spreads remained volatile, but traded inside of last week's ranges in all three markets.
For the month: December corn was up 12 and 1/4 cents; March corn was up 7 cents; January soybeans were down 5 cents; March soybeans were down 13 and 1/2 cents; and December Chicago wheat was down 38 and 1/4 cents.
Private exporters announced vis the USDA's daily export reporting system this morning 134,000 mt's of soybeans for delivery to China during the 2024/25 marketing year. This comes following large daily soybean sales to unknown destinations on Friday, and continues to illustrate the price-competitive position US soybeans are in on the global market in the short-term.
Weekly inspection data painted a similar picture, as soybean export inspections continue to seasonally hang in there despite the USDA forecasting full-year totals that are down substantially from the past 3-4 years. For the week ending November 28th, soybean inspections totaled 2.088 mmt's, which was down 1.4% from last week; current cumulative pace is now up 16% from last year. Corn inspections for the week totaled 936k mt's, which was down 7.2% from last week; current cumulative pace is now up 31% compared to last year. And lastly, wheat inspections for the week totaled 296k mt's, which was down 18.9% from last week; cumulative pace is now 32% ahead of last year. The big export inspection question remains what happens February onward with not only new export business, but also business already on the books that is not due to ship until after Trump takes office, and likely subsequently applies new tariffs. Sources indicate that at least a portion of the export books of both China and Mexico contain 'political bargaining purchases' that will be canceled before shipment should Trump go ahead with proposed tariff increases.
Other data on Monday included the monthly fats and oils report, and also the monthly grain crushing report from the USDA. Starting with the fats and oils report, the trade missed the mark by a good bit on the soybean crush number; USDA estimated soybean crush in October at 216 mil bu's, which was well above the average trade guess and was by-far a new record for any month; the figure was also up 16% from last month, and was up 8% from October of last year. The report also showed soybean oil stocks as of October 31st at 1.486 bil lbs, which was below the average trade guess; the figure compares to 1.501 bil lbs at the end of September, and 1.502 bil lbs at the end of October last year. In the grain crushing report, USDA estimated corn used for ethanol at 460.493 mil bu's, which was up from last month, but down slightly compared to both last year and pre-report estimates. Total corn consumption at 510 mil bu's was up 3% from last month, and up 1% from October of last year.
Lastly, CFTC commitment of traders data as of Tuesday, November 26th was released after the close today due to last week's holiday. The report showed a relatively quiet week of activity in corn, soybean, and wheat futures, while funds were large sellers of soybean oil contracts. Data showed in the week funds were sellers of a combined 17,186 contracts of corn futures/options, sellers of a combined 13,770 contracts of soybean futures/options, and were sellers of a combined 7,572 contracts of Chicago wheat futures/options. This now makes funds net-long 97,442 contracts of corn, net-short 81,472 contracts of soybeans, and net-short 59,118 contracts of Chicago wheat. In soy products, funds are now net-long 23,193 contracts of soybean oil (-32,866 on the week), and are net-short 75,416 contracts of soybean meal (-11,716).
Forecast changes for the Midwest were again minimal on Monday, though parts of Iowa and Illinois picked up measurable snowfall through the morning hours on Monday that was not expected. Lake effect snow continues to be probable for the Great Lakes region and into the northeast for the rest of this week, while rainfall picks up in the south and southeast starting Wednesday as a system pulls moisture in from the Gulf. Otherwise, the majority of the country's mid-section looks to hold in a mostly dry pattern for the next week to 10 days. Warm air briefly stretches into the eastern part of the country on Wednesday and also later through the weekend, but otherwise the east holds in a below average temp pattern while the west stays warmer than average. Week-two forecasts continue to be a mixed bag, with the only real agreement between the models being a wetter bias for the Gulf and areas in the southeast.
In South America, the Argentine rainfall forecast continues to ebb and flow but the overall pattern of improved rainfall in the north over the next week remains. Central regions see chances for light/scattered showers through mid-week before again turning off drier. The forecast for Brazil remains downright wet, as rainfall totals across the south-central part of the country are seen reaching upwards of 6" over the next two weeks. Aside from potential disease pressure as the season goes on, there remains little/no weather concern in Brazil, with a record 170 mmt crop still very much a possibility. And though Argentina has seemingly been a little more questionable weather-wise to this point, sources there indicate similarly that what rains have showed up have been timely and record production potential still exists here too.