AM Comments December 16 2024
Good morning. The last full week of trade before the Christmas holiday has again started quiet, with none of corn, soybeans or wheat able to carve out more than a 7-cent trading range. Products have been the main story overnight, with active spread trade being noted in the two; meal is up more than 1.5% to start the day, while oil is down more than 2% and back below the 100-day moving average. Looking at the big picture, ongoing market themes of large South American production figures, as well as a strengthening US dollar in relation to other world currencies and ongoing geopolitical tensions, look to continue largely dominating price direction through the holiday and into the new year. Corn futures this morning are trading 1-2 cents higher to start the week, soybean futures are trading 1-3 cents higher, and the Chicago wheat market is up 4-5 cents. Products are mixed, soybean meal is up $3-4/ton, and soybean oil is down 80-90 points. Outside markets are also mixed, crude oil futures are down 40-50 cents/bbl, the Dow Jones index is up 80 points, and the US$ index is near unchanged. The S&P500 is up 15 points and the NASDAQ is up 110 points.
Today's Reports: Weekly Export Inspections; NOPA Monthly Soybean Crush
- The CME Group for Monday assigned another 141 contracts of soybean meal for delivery, 18 contracts of soybean oil, 43 contracts of corn, and 13 contracts of Chicago wheat.
- Friday's CFTC Commitment of Traders report showed that as of Tuesday, December 10th, managed money traders were now net-long 165,890 contracts of corn (+77,670 on the week), net-short 58,320 contracts of soybeans (+13,897), and net-short 66,779 contracts of Chicago wheat (+2,607).
- In soy products for the week, managed money traders were buyers of just 872 contracts of soybean meal, and were also buyers of 8,092 contracts of soybean oil; this makes them now net-short 72,427 contracts of meal, and net-long 17,519 contracts of oil.
- NOPA (National Oilseed Processors Association) will releases its November soybean crush report this morning at 11am central time; the report is expected to show soybean crush in the month at 196.7 mil bu's, which would be down 1.6% from last month but up 4.1% from last year. Soybean oil stocks are seen at 1.123 bil lbs, up 5.1% from October.
- Russia's state statistics service (Rosstat) said in a report that Russian ag organizations' reserves of grain and legumes totaled just 31.1 mmt's, which is down more than 21% from last year. Wheat stocks were down nearly 25% to 18.7 mmt's, while corn stocks were down just over 4% to 3.8 mmt's.
- US federally inspected pork production in the week ending December 14th was seen at 555 mil lbs, which was down less than 1% from the week prior. Beef production in the week was seen at 527 mil lbs, also down less than 1% from the week prior. YTD pork production is up 1.1%, while beef production is down 0.5%.
- Russia has allegedly suspended wheat exports to Syria due to uncertainties over payment delays and the management of imports following the removal of Assad last week according to sources familiar. Ukraine has also said in the days since the political upheaval that it would be willing to step in and fill the export void.
- As we mentioned last week, equity markets around the globe this week will have their focus on interest rate decisions not only in the US, but also in Japan and England. While it is expected that the US Fed will further trim rates another quarter percentage point here in the US, investors expect the BoJ and BoE to hold steady on their respective rates.
- Weekend weather was active across most of the US; heavy snows were seen in the PNW and the broader northwest, especially at elevation, with snowfall stretching west into ID/MT/the Dakotas. In the east, 3-6" of snowfall was observed through WV/PA and into NY generally speaking, while lighter snow also fell through MN/IA/WI. Further to the south, rainfall of 0.1-1" impacted most of the southeast and mid-south, with heavier rains seen through parts AR/MO.
- For this week, models are in fair agreement on moisture continuing to impact mostly the same areas; several systems look to continue to providing snowfall to the upper Midwest and into the Canadian Prairies, while the eastern side of the Great Lakes will continue to experience lake-effect snow systems. A corridor through the south/southeast is expected to see rains of up to an inch, while the PNW will also continue to stay wet.
- Week-two forecasts, which now get to the end of the month, are again in fair agreement coming out of the weekend; the PNW is seen staying wet in all of the output solutions, while the rest of the country sees average to slightly below average precip chances. Week-two temp outlook has taken a pretty noticeable warmer shift over the weekend, which will be monitored this week; models see temps some 20 degrees F above average into the end of the month for nearly all of the US.
- Brazil saw good rains over the weekend, as nearly all of the country's growing areas picked up anywhere from 0.5-2.5" in the last 72 hours; Argentina saw similar totals in the far north/northeast, but just light/scattered precip was seen elsewhere.
- Forecast for this week shows a similar pattern for the next five days, as Brazil looks to stay well watered everywhere but maybe the far south and west-central parts of the country where rains are expected to be more scattered. Argentina sees light/scattered rain chances in the west, while decent rains look to keep falling in the far north. Extreme heat remains largely absent.