PM Comments December 9 2024
Good afternoon. CBOT markets were mostly quiet to start the week, as the attention in the ag space is on tomorrow's December WASDE report. Geopolitical headlines were plentiful coming out of the weekend, but none of them were necessarily specific to corn, soybeans or wheat futures, which led to another day of largely directionless trade.
CH closed Monday at 4.41 3/4, up a penny and 3/4. CK was up 2 and 1/2 cents at 4.47 3/4. SF closed at 9.90, down 3 and 3/4. SH finished at 9.95 1/2, down 3 and 3/4. Outside day for the beans. WH was up a penny and 1/2 at 5.58 3/4. Products were mixed, January soybean meal closed at 289.60, up $2.20/ton, and January soybean oil closed at 42.80, down 17 points. Inside day for bean oil. Cattle markets were higher to start the week, February live cattle closed at 187.02, up 85 cents, and January feeders closed at 255.80, down 2 cents. February hogs closed at 86.50, down 82 cents. Outside markets are mixed, crude oil futures are up 80-90 cents/bbl, the Dow Jones index is down 200 points, and the US$ index is up 10-15 points. The S&P500 is down 35 points and the NASDAQ is down 190 points. New contract highs again this morning for the NASDAQ before turning lower.
Spreads were mixed to start the week, corn spreads were down a penny to up a penny and a half, while soybean spreads were unchanged to down 3 and 1/2 cents. CZ/CH closed at -7 3/4, up a penny and a half, and SF/SH closed unchanged on the day at -5 1/2. CH/CK closed at -6, down 3/4 of a cent.
While overall sideways trading remains, it is worth noting that corn futures have quietly closed higher for three consecutive sessions and are nearly 20 cents off the lows made two weeks ago despite ongoing tariff talk between the US and its largest corn buyer, Mexico. Looking specifically at the March contract, the November high at 4.47 3/4 now becomes the next upside objective, with a close above this level likely leading to a test of the Fall high at 4.52 1/4. Action in the soy market has been less encouraging though, as January futures have barely been able to muster a 10-cent trading range in the past almost three weeks. The contract low at 9.73 1/2 has continued to hold on the bottom side in recent weeks, while the top side has been capped by the 20-day moving average since falling back below it the during the last third of November.
Export inspection data this morning for corn and soybeans continued to illustrate good demand on the global market for both crops, though the soybean number was down from last week. Corn inspections in the week ending December 5th were seen at 1.050 mmt's, which was up 11% from the week prior. Soybean inspections were seen at 1.622 mmt's, down 23% from last week, and wheat inspections were seen at 227k mt's, down a similar 24%. For the marketing year to-date, corn inspections are up 32%, soybean inspections are up 19%, and wheat inspections are up 30%.
Financial markets were similarly quiet to start the week for the most part, though the NASDAQ fell to losses of nearly 1% through the morning hours after making fresh contract highs overnight. News that China has opened an antitrust investigation into American AI-giant Nvidia surfaced early in the day, and was seen as mostly responsible for the sell-off in the index that began around 9am central time and lasted a little more than an hour. China Central Television, in a report released Monday, said the Chinese government believes Nvidia's purchase of Israeli networking company Mellanox in 2020 could violate the country's anti-monopoly laws, though no specific details on what laws were broken during the merger were given. The move comes just days after the Biden administration imposed another fresh round of restrictions on memory chip sales to China last week, and seems to indicate an escalation in the tit-for-tat chip war that is likely a precursor to a broader trade war between the world's two biggest economies.
And as we mentioned in both our morning and mid-day commentary, other news out of China to start the week was initially friendly to the markets to start out this morning, as sources indicated over the weekend a potential shift in monetary policy by the Chinese central bank for the first time in nearly 15 years. The Politburo (political bureau), who put out the weekend announcement, is a group of top Communist Party officials, and is typically viewed as China's main policymaking body. The statements come ahead of the Central Economic Work Conference, which is an annual meeting used to set key targets and policy intentions for the coming year and is scheduled for later this week.
Not a lot of updates to the forecast through mid-day on Monday, as the week will be a bit broken into parts. The first part, which will be early this week, consists of rains moving out of the Gulf and the southeast up the East Coast, with a transition to snowfall as early as this evening as temperatures get colder further to the north. This looks to remain the pattern for much of the day Tuesday and Wednesday as a slow moving low works north and east, with another hard-to-predict snow/rain line forecast near Pennsylvania as temps drop through the day on Wednesday. Then for the back half of the week, another system further to the north looks to provide light rain/snow to parts of MO/IA/IL Friday night and into the weekend, while heavier precip amounts will again be seen further to the east. On the temp front, cold Canadian air is again forced south starting Tuesday/Wednesday; as we mentioned this morning, highs in the northern Midwest will not reach zero degrees F on Wednesday, with similar cold expected slightly further south and east by Thursday. The cold spell appears to be short-lived though, as temps return to above average levels for most all of the country again by the weekend.
Expectedly heavy rains showed up in southern Brazil over the weekend, where satellite data shows totals reached 8-10" in parts of RGDS, Santa Catarina, Parana, and Sao Paulo. Lighter rains were also seen through western and northern areas, but totals/locations were light and scattered; west-central areas were mostly dry. Argentina was also mostly dry save for a few small pockets of rains northeast of Cordoba and also to the south in the state of La Pampa. Forecast-wise for this week, good rains are expected to continue in southern and south-central Brazil, with 5-day totals estimated in a range of 1-3" generally speaking, with some locally heavier amounts. Northern areas look to be more short-changed, but are still expected to receive some sort of moisture between now and the weekend. Argentina has trended wetter than was seen to end last week, with the best rains expected to stay in the north/northeast. Extended guidance again shows a dry down in southern Brazil possible the next 10-15 days, but nearly everywhere else looks to remain well-watered, keeping crop production concern low.
The December WASDE report is typically not a market-altering event, and the trade expects a similar outcome for tomorrow's data. As we mentioned last week, key will be whether any demand side adjustments are made on corn (exports, ethanol), and also whether any production estimates are seen in South America. Good luck with the numbers!