AM Comments December 12 2024
Good morning. Ag markets in Chicago are once again mixed in the overnight trading session, as Conab failed to offer any Earth-shattering news to the markets with its December crop report this morning. As another weekend approaches, choppy/technical trade remains most likely in the corn and soybean space as corn is perched against resistance and soybeans continue in their small-range trade that they've been in since before Thanksgiving. While the post-report pop in corn was nice, it's somewhat discouraging that a relatively surprising 200 mil bu increase in corn demand didn't do more than rally the market 7 cents; the bull camp needs to see a close above 4.52 1/4 to have confidence in this rally continuing. Corn futures this morning are trading unchanged to a penny lower, soybean futures are trading unchanged to a penny higher, and the Chicago wheat market is up 1-2 cents. Products are quiet/lower, soybean meal is down around 20 cents/ton, and soybean oil is down 5-10 points. Outside markets are also on the quiet side, but trading mostly lower; crude oil futures are up 5-10 cents/bbl, the Dow Jones index is down 70 points, and the US$ index is down 5 points. The S&P500 is down 15 points and the NASDAQ is down 100 points. No new highs overnight for the NASDAQ.
Today's Reports: Conab December Supply and Demand; Weekly Export Sales; Weekly Jobless Claims; Monthly PPI
- Another busy slate of deliveries for Thursday; the CME Group assigned another 278 contracts of soybean meal, as well as 401 contracts of soybean oil, 172 contracts of corn, 1 contract of oats, and 5 contracts of Chicago wheat.
- This morning's weekly export sales report for the week ending December 5th is expected to show corn sales in a range of 1.1-1.9 mmt's, soybean sales in a range of 1.5-2.2 mmt's, and wheat sales in a range 275k-600k mt's.
- Conab this morning expectedly did not make any large adjustment to either corn or soybean production in Brazil; soybean production was raised marginally to 166.211 mmt's, while total corn production was actually lowered slightly to 119.633 mmt's. Planted area estimates were adjusted higher by about 13k ha's for soybeans, and lower by about 30k ha's for corn.
- The Rosario Grain Exchange on Wednesday raised their estimate of Argentina's 2024/25 wheat crop by 0.5 mmt's to 19.3 mmt's, citing better than expected yields. This compares to the Buenos Aires Grain Exchange at 18.6 mmt's, and the USDA at 17.5 mmt's.
- India's Food Ministry on Wednesday said it was halving the wheat stockpile limits allowed by traders and wholesalers to 1,000 tons, while also limiting retailer stocks to 5 mil tons, and limiting processor stocks to 50% of their monthly capacity, which is a drop of 10%. The restriction is planned through the end of March.
- Industry sources on Thursday said vegetable oil imports into India in the month of November jumped to 1.63 mmt's, which is a four-month high and up more than 10% from last month. Same group said soybean oil imports were also up nearly 20% on the month, while sunflower oil imports were up more than 42%. Imports of palm oil were down 0.4%.
- Following half-point rate cuts in both Canada and, surprisingly, Sweden, the ECB today is widely expected to also cut another quarter point off its lending rate, which would drop it to 3%. This, along with an update to the producer price index later this morning, will likely drive investor sentiment on Thursday.
- Weather-wise, bursts of snowfall are expected to continue impacting parts of the northeast and eastern Midwest through the day on Thursday, while rain/snow is also seen impacting the PNW and parts of N CA. The rest of the country looks to see a couple days of drier weather, before a rain event is seen impacting the southwestern Midwest/Mississippi Valley through the day Saturday and into Sunday.
- Rainfall totals from this system look to be generally light, with the GFS model not forecasting more than 0.5-0.75" of rainfall into Monday morning. And temps will keep this moisture as rain and not snow, with highs through the Midwest on Saturday/Sunday reaching the upper 40's/low 50's.
- Week-two forecasts are in better agreement this morning on a coming pattern of dryness for most of the country through the week of Christmas, but extended outlooks are showing chances at a return to a more active pattern for the southeast and broader eastern half of the US the 26th/27th of December. 10-15 day temp guidance shows a cooler bias for the east and a warmer bias for the west as the active ridge/trough pattern looks to continue.
- South America saw mostly expectedly dry conditions through the day on Wednesday except for in central/east-central Brazil, where better than expected rains of up to 1.5" were seen in a small area near Brasilia. Southern Brazil and Argentina were largely dry.
- Forecast though remains largely unchanged; Argentina going into the weekend will see decent rains in the north and central areas, while Brazil sees good rains in all but its far northern growing regions. Question marks remain for Argentina moisture in the 10-15 day period, but as extreme heat looks to remain absent, crop stress will likely remain low or non-existent into the end of 2024.