AM Comments December 4 2024

Posted on Dec 04 at 07:01

Good morning. Fresh market-moving news remains largely absent at mid-week, as corn and soybean futures have so far continued the week's sideways trading pattern to start Wednesday. The soy complex again appears to the leader in the space, with both beans and bean oil being the biggest losers in the overnight session, while the feed grains follow but to a lesser degree. The situation in Korea has been the most prominent news headline this morning, but as we motioned yesterday, traders are unsure of what, if any, impact this will have on US ag pricing, and more specifically, what impact it will have on US exports; as of the latest export sales report, Korea has roughly 530k mt's of unshipped corn sales on the books, and about 30k mt's of unshipped soybean sales. Corn futures this morning are trading 1-2 cents lower, soybean futures are trading 5-6 cents lower, and the Chicago wheat market is down 3-4 cents. Products are lower, soybean meal is down around 50 cents/ton, and soybean oil is down 20-30 points. Outside markets are mostly higher, crude oil futures are up 10-20 cents/bbl, the Dow Jones index is up 170 points, and the US$ index is up 15-20 points. The S&P500 is up 15 points and the NASDAQ is up 130 points; new contract highs for both the NASDAQ and the S&P overnight.

 

Today's Reports: Monthly ADP Employment; EAI Weekly Ethanol Production/Energy Stocks

 

• Deliveries for Wednesday according to the CME Group include another 111 contracts of corn, 5 contracts of soybean meal, and 228 contracts of soybean oil.

 

• This morning's ethanol production report for the week ending November 29th is expected to show daily production in a range of 1.099-1.125 mil bbls, while stocks for the week are estimated between 22.169-23.096 mil bbls. If accurate, this would be the fifth consecutive week daily production has been over 1.1 mil bbls.

 

• Customs data out of the EU shows soft-wheat exports as of December 1 at 9.48 mmt's, which is up 372k mt's from the week prior but still behind last year's 13.8 mmt's. Line-up data, however, suggests this figure could be as much as 2 mmt's too low, while the group also continues to mention data is incomplete for several countries. The figure would imply total EU soft-wheat exports at 24-25 mmt's for the whole season.

 

• Private Ukrainian ag consultancy UkrAgroConsult said in a weekly update that wheat shipments out of Ukraine in the July-November period totaled 8.96 mmts, compared to 5.8 mmt's in the same period last year. This is roughly 55% of the government's full year export forecast.

 

• According to a weekly report from the Minneapolis Grain Exchange, stocks of US hard spring wheat on-hand in Minnesota and Wisconsin warehouses in the week ending December 1 were down nearly 24% from last year at 14.549 mil bu's.

 

• Statistics Canada (StatsCan) is set to release their quarterly production estimates at 7:30am central time Thursday morning; the trade expects wheat production to be unchanged from their previous estimate at 34.29 mmt's (+4% from last year), while canola production is estimated just slightly lower from prior at 18.51 mmt's (-3.5% from last year).

 

• Other notable Canadian crop estimates include barley production coming in just a fraction higher than in August but still being down nearly 14% from last year, while soybean production is estimated fractionally lower from August, but still up 2.5% from last year.

 

• According to an industry survey, Malaysian palm oil stocks in the month of November fell more than 4% to 1.8 mil tons; this is the lowest stocks level since July and is down nearly 25% from last year. Sources say heavy rains have disrupted harvest and transportation, causing the monthly decline in inventories. Production was seen down 5.6% on the month to 1.7 mil tons.

 

• Geopolitics will likely remain in the headlines on Wednesday, as the French government faces a no-confidence vote in parliament, and fallout out continues from the brief period of martial law that has been lifted in Korea. Add in the Middle East, Russia/Ukraine, and China/Taiwan, and you get what appears to be an ever-growing list of global boiling points.

 

• In the US, investor attention will be on Fed Chair Jerome Powell today, as he is set to do a New York Times interview later in the day. FedWatch this morning shows the odds of another rate cut in two weeks at 74%, which will have the trade attentive to whether or not Powell gives a clearer picture of what the central bank is thinking going forward.

 

• Light rains began across southeast TX late in the day on Tuesday, and lake-effect snow continued to impact parts of teh Great Lakes regions and further into the northeast. Otherwise, the majority of the country saw a dry day on Tuesday, and similar conditions are likely for Wednesday.

 

• A slow-moving system works its way out of the Gulf and into TX/LA through the day today, likely providing areas with up to a half inch of rainfall over the next 24 hours. This system looks to linger through the end of the week and into the weekend, and then will make its way north early next week, providing rainfall to a good majority of the eastern Midwest and mid-south.

 

• As we mentioned yesterday on this, the EU has rains impacting parts of MO/IL/IN and areas further to the north, while the GFS sees the storm working more south and east through TN/KY and into OH. This will be monitored going into the weekend over the next few days.

 

• Week-two forecasts continue to have little/no agreement, which is keeping confidence beyond the first part of next week low. The EU AI model this morning shows wetter than normal conditions across most all of the eastern half of the country, while seeing dryness in the southwest and the PNW; the ensembles see wet conditions in the PNW and up the East coast, but see average to slightly below average moisture elsewhere.

 

• No updates on the temp side, as things will briefly warm up across most of the country through the day today before sharply dropping back off by Thursday morning. The first part of next week coming out of the weekend continues to look more mild, while 10-15 day maps show avg to slightly above avg temps going into the back half of the month.

 

• Flipping to South America, Argentina was largely dry on Tuesday, while all but far eastern Brazil saw some sort of rains; best amounts were in the west and southwest where totals reached 1-2", while other areas received a more general 0.1-0.5". And forecasts through the end of the week show more of the same, as Argentina remains mostly dry and Brazil stays mostly wet.