PM Comments December 11 2024
Good afternoon. Ag markets again closed mixed on Wednesday after trading in the green for the majority of the session. Corn futures took out yesterday's highs early this morning as the 200 mil bu demand increase from the December WASDE provided more buying power early, but were unable to sustain the higher trade into the close with the March contract ending lower on the day. The big question now becomes whether a short-term peak was scored today, or if buying continues into the weekend to push prices above major resistance.
CH closed mid-week at 4.48 1/4, down 3/4 of a cent. CK closed at 4.55 1/2, up 1/4 of a cent. SF finished at 9.95 1/2, up 3/4 of a cent. SH was up 2 1/2 at 10.02 3/4. WH closed at 5.63 1/4, up a penny and a half. Products were mixed, January soybean meal closed at 291.10, down 90 cents/ton, and January soybean oil closed at 42.44, down 28 points. Inside day for meal. Livestock markets were mostly higher, February live cattle closed at 191.37, up $2.35, January feeders closed at 259.05, up $1.72, and February hogs closed at 84.37, down 20 cents. Highest trade since May 29 in live cattle and an inside day for hogs. Outside markets are higher, crude oil futures are up $1.40-1.60/bbl, the Dow Jones index is down 110 points, and the US$ index is up 20-30 points. The S&P500 is up 50 points and the NASDAQ is up 400 points. New contract highs again for the NASDAQ.
Spreads traded lower on Wednesday, corn spreads were down 3/4 of a cent to down 3 and 1/2 cents, and soybean spreads were down a half cent to down 4 cents. CZ/CH closed at -10 1/4, down a penny and 3/4, CH/CK closed at -7 1/4, down a penny, and SF/SH closed at -7 1/4, down a penny and 3/4.
This morning's ethanol production report for the week ending December 6th showed production that was similar to the week prior and still ahead of last year's pace as the seasonal slow-down for the year has yet to really kick in. Daily production was seen at 1.078 mil bbls/day, which was up just fractionally from both last week and last year. Stocks meanwhile were down 1.5% from last week at 22.648 mil bbls, but were up 5.6% from the same week last year. We estimate corn usage in the week at 106.5 mil bu's, again up just fractionally from last week. Cumulative corn grind for ethanol in the marketing year has reached an estimated 1.480 bil bu's, compared to the USDA's new full-year forecast of 5.500 bil bu's. Also included in the EIA report was petroleum stocks data for the week, which showed crude oil stocks declining 1.425 mil bbls to 421.95 mil, gasoline stocks increasing 5.086 mil bbls to 219.689 mil, and distillate stocks increasing 3.235 mil bbls to 121.335 mil. Implied gasoline demand was estimated at 8.810 mil bbls/day, compared to 8.738 mil last week and 8.859 mil last year.
Otherwise, most of the chatter on Wednesday revolved around yesterday's report, and more specifically, the bump in corn demand. Traders are wondering at this point whether yesterday's increases may have been a touch overdone, especially in the case of exports. Corn grind for ethanol has been strong through the first months of the marketing year, meaning the 50 mil bu increase here is likely warranted; but should Trump go through with proposed tariffs, global retaliation on US ag products would mean export pace would almost certainly slow the back half of the marketing year. We've mentioned this before in recent weeks, but regardless of what the US export pace is now, future outlook almost entirely depends on what the trade landscape looks like post-Trump returning to the White House. And on top of this, seemingly increasing crop sizes in South America are not helping the situation - not only will global buyers potentially not want to buy our products, they also won't have to due to the availability of alternative supplies in Argentina and Brazil.
The US East Coast again saw more rain and snow on Wednesday, as a slow-moving low pressure system works its way north into Canada. Rains will also again move into the PNW tonight into Thursday, where an active pattern is expected to last into at least the first part of next week. Mostly dry weather will be observed elsewhere into the end of the week, before another low moves north out of Texas, providing rainfall to the central part of the Midwest. The Plains and western Midwest areas of KS/NE/the Dakotas, and also the southwest, look to be the driest areas of the country through the weekend. Following a brief two-day cool down Thursday/Friday in the east, temperatures are again seen returning to above average levels through most of the country by the weekend and into early next week.
There were no updates to the South American forecast on Wednesday; things look to be mostly through Brazil and Argentina on Thursday, before rains are seen returning going into the weekend. In Argentina, best totals look to be in the north over the next 5 days, while central and southern areas will see more scattered precip. Brazil is expected to see good rains through most all of its growing areas through the weekend beginning on Friday. 10-15 day maps stay wet in Brazil, while showing dryness across Argentina.