PM Comments December 5 2024
Good afternoon. Grain markets in Chicago finally came to life on Thursday, catching a bid through the morning session and having their best day of gains over the past couple weeks. Soybeans also closed higher on the day, but were not the upside leader for the first day this week, as the trade was seemingly more focused on the Russian situation and as likely profit taking emerged heading into the end of the week. Further confusion on renewable fuel tax credits also helped support markets, as sources from the US Treasury have refuted news headlines earlier in the week that additional guidance on the bill would not be issued before Biden leaves office in January. This has now become a total unknown, with nobody certain who is right.
CH closed at 4.35 Thursday, up 5 cents. CK was also up 5 at 4.40 1/2. Outside day higher for both. SF closed at 9.93 3/4, up 10 cents. SH was up 9 1/4 at 9.99. WH closed at 5.58 1/4, up 10 cents. Products were mixed, January soybean meal closed at 291.10, down 80 cents/ton, and January soybean oil closed at 42.31, up 89 points. Inside day for meal and outside day for bean oil. Livestock markets were mostly lower, February live cattle closed at 186.32, down $2.00, January feeders were down $2.02 at 254.92, and February hogs were unchanged at 86.35. Inside day for hogs. Outside markets are lower, crude oil futures are down 5-10 cents/bbl, the Dow Jones index is down 250 points, and the US$ index is down 60 points. The S&P500 is down 15 points and the NASDAQ is down 80 points. New contract highs again today for the S&P and the NASDAQ.
Spreads were mixed in corn and higher in soybeans; CZ/CH closed at -8 1/2, down a half cent, and SF/SH closed at -5 1/4, up 3/4 of a cent. Another new high for the move for CH/CK at -5.
USDA this morning again announced daily soybean sales flashes to China for the second time this year; private exporters announced 136,000 mt's of soybeans for delivery to China during the 2024/25 marketing year. This brings total outstanding sales on the books to China to 4.012 mmt's.
Weekly demand continued to stay strong as well, as this week's export sales report for the week ending November 28th showed corn sales that were above the upper end of trade expectations and soybean sales that were at the upper end of trade expectations. Corn sales for the week totaled 1.732 mmt's - featured buyers for the week were Mexico (392,400 mt's), Japan (357,700 mt's) and Korea (212,700 mt's); unknown destinations bought 283,600 mt's in the week. Soybean sales were seen at 2.313 mmt's - featured buyers for the week were China (669,700 mt's), Spain (352,400 mt's), and Mexico (181,000 mt's); unknown destinations were buyers of 432,700 mt's. And lastly, wheat sales for the week totaled 378k mt's - featured buyers were Mexico (151,900 mt's) and Korea (136,000 mt's). Of note, soybean meal and oil sales both came in within trade expectations; bean oil sales in the week totaled 19,500 mt's, and bean meal sales totaled 276k mt's.
Other data specific to the ag space on Thursday was fresh crop production estimates out of Canada, which we covered in depth in our mid-day commentary (click here to view). Only real headline from the data was that canola production came in below the lower end of trade guesses; otherwise, adjustments from previous estimates made in August were mostly minimal. All wheat production is seen up roughly 6% from last year, while corn production for grain is seen just 0.5% lower on the year, and soybean production is seen up 8.4%. As has been well-covered in the global veg oil discussion that has been ongoing for months now, a drop in canola production is seen as a positive for US soybean oil prices as bean oil is a direct substitute for canola oil. Accordingly, both soybean oil futures and canola futures rallied on Thursday.
Weather continues to be mostly a non-story across the US aside from the north and the northeast where lake-effect snow remains possible. The rain system moving up from the Gulf is still expected to provide moisture to the eastern Midwest and mid-south starting early next week, with totals reaching 2-4" through states along the Gulf coast. Elsewhere next week, rainfall looks to return to the PNW, while snow is also possible at elevation. Models also see a snow event for parts of KS/NE/the Dakota's/MN Monday, December 16th, but confidence this far out is low. Ridging will allow warmth to return in the west starting tomorrow, with the warmer air expected to work east through the weekend. The GFS is warmer into the end of next week than the GFS is, but neither show a return to the frigid temps seen this week in the short term.
The forecast for South America remains largely unchanged; best rains through the end of the week and into the weekend are seen in southern Brazil, where totals look to possibly reach upwards 6-8". Northern and eastern Argentina have chances at light/scattered showers, but otherwise, most of the growing regions look to remain on the dry side the majority of next week. Central Brazil looks to see several days of drier weather into next week, but models continue to show rains returning in the 10-15 day period. Amid plentiful soil moisture, a few days of sunshine will likely be welcome by most of the producers in these areas. Extreme heat also remains mostly absent, though the lack of cloud cover in central Brazil will allow things to warm up here a bit.