PM Comments December 4 2024
Good afternoon. Mixed/choppy trade was again seen across the CBOT at mid-week on Wednesday, with soybeans and soybean oil pressing the downside and the feed grains again largely unchanged. Meal was able to trade higher on spread unwinding with oil, while Chicago wheat futures made new contract lows this morning before also closing higher on the day.
CH closed at 4.30, down 2 1/4. CK was down 2 and 1/2 cents at 4.35 1/2. SF closed t 9.83 3/4, down 8 cents. SH finished at 9.89 3/4, down 7 1/2 cents. WH closed at 5.48 1/4, up 3/4 of a cent. New contract low at 5.40 1/4. Products were mixed, January soybean meal closed at 291.90, up $1.50/ton, and January soybean oil closed at 41.42, down 72 points. Inside day for bean oil. Livestock markets ended the day lower, February live cattle closed at 188.32, down 75 cents, January feeders were down $2.35 at 256.95, and February hogs closed at 86.35, down $1.50. Hogs had a gap-lower start to open this morning. Outside markets are mixed, crude oil futures are down $1.20-1.30/bbl, the Dow Jones index is up 300 points, and the US$ index is unchanged. The S&P500 is up 30 points and the NASDAQ is up 240 points. New contract highs today for all three major stock indices.
Spreads were mixed in corn and lower in soybeans on Wednesday; corn spreads were up a penny and 1/4 to a penny lower, and soybean spreads were down a quarter cent to down 2 and 1/2 cents. CZ/CH closed at -8, down a penny, and SF/SH closed at -6, down a half cent. CH/CK made a new high for the move at -5 1/4.
USDA this morning announced a daily sales flash of 30,000 mt's of soybean oil for delivery to South Korea during the 2024/25 marketing year. There is no indication that this sale has anything to do with yesterday's political happenings, but instead more reflects the price competitiveness of US soybean oil on the global market. It remains that WASDE will seemingly need to adjust their soybean oil export forecast higher in coming reports.
Ethanol production data for the week ending November 29th took a small step back from recent weeks, and was seen at the lowest level since the week of October 11th. Daily production was seen at 1.073 mil bbls, down 4% from last week and down 6% from last year. Stocks for the week meanwhile were up 0.6% from last week at 23.003 mil bbls, which was the highest figure seen since the week of September 27th; this was also up nearly 8% from the same week last year. We estimate corn usage in the week at 106.0 mil bu, down from 110.6 mil last week. Cumulative corn usage in the marketing year has reached 1373.4 bil bu's, compared to the USDA's current full-year forecast of 5.450 bil bu's. The EIA report also showed crude oil stocks in the week down 5.073 mil bbls to 423.375 mil bbls, gasoline stocks up 2.362 mil bbls to 214.603 mil bbls, and distillate stocks up 3.383 mil bbls at 118.1 mil bbls. Implied gasoline demand for the week was estimated at 8.738 mil bbls/day, compared to 8.506 mil last week and 8.466 mil last year.
Otherwise, Wednesday was another day of mostly geopolitical chatter in the headlines. While stories through the first half of the week have been seen as mostly negative to the ag space, news out of Romania today may be possibly bullish to the grain space. Presidential frontrunner Calin Georgescu said that should he be the winner of a run-off Presidential vote on Sunday, he would be barring continued Ukrainian grain shipments through Romania, and would also be ending military aid to Ukraine. We will not get into the politics of military aid and spending, but the potential ending of Ukrainian grain imports through specifically the Romanian port of Constanta is an eyebrow raising development. In 2023, Ukraine shipped nearly 14 mmt's of grains through this port. While Ukraine has been having marginal success exporting grain through its own ports, increased military tensions in recent weeks has again brought the longevity of this situation into question.
Weather changes were again minimal for the US on Wednesday aside from the EU shifting to be more in line with the GFS model in regards to the location of coming rainfall for the eastern Midwest and mid-south early next week. Otherwise, rains return to the PNW over the weekend, while the rest of the country continues to see mostly dry conditions into next week. High temps fall back off into the teens and twenties through the end of the week before ridging returns to the central US, allowing seasonally warm air to return going into next week. The EU AI model's week-two output remains significantly wetter than either the GFS or EU ensemble models, which is keeping confidence beyond next week low.
Also not a lot of updates again to the forecast in South America; Argentina looks to remain mostly dry over the next week to 10 days, while beyond here, models see good rains returning to most all of the country's growing areas in the 10-15 day period. Brazil looks to receive heavy rains in the south of upwards of 6" over the next 3-5 days, while central/northern areas will also see rains, but amounts/locations will be more spotty. There remains next to no threat into the middle of December for production prospects in either Argentina or Brazil.