PM Comments December 16 2024
Good afternoon. Mixed trade was seen in the ag space to start the new week at the CBOT, as corn was able to trade higher for the second consecutive Monday, while lower bean oil trade lasted through the day session and pulled soybeans lower too. The idea of shifting global soybean business to the southern hemisphere over the next month, as well as domestic crush data that was a bit worse than expected this morning, led to the lower trade in the soy complex on Monday.
CH closed at 4.45, up 3 cents. CK was up 2 1/2 at 4.51 3/4. SF finished at 9.82, down 6 and 1/4. SH closed at 9.86, down 9 cents. WH closed at 5.50, down 2 and 1/4. Products were mixed, January soybean meal closed at 286.90, up 70 cents/ton, and January soybean oil closed at 41.72, down 89 points. Livestock markets started the week lower, February live cattle closed at 189.97, down $2.05, January feeders closed at 255.55, down $2.10, and February hogs closed at 83.55, down $2.05. New for the move in live cattle and outside days lower for both live cattle and hogs. Outside markets are mixed, crude oil futures are down 60-70 cents/bbl, the Dow Jones index is down 75 points, and the US$ index is down 10-20 points. The S&P500 is up 30 points and the NASDAQ is up 320 points. New contract highs again to start the week in the NASDAQ.
Spreads were mostly firmer to start the week, corn spreads were up a half cent to up a penny and 3/4, and soybean spreads were up 3 and 1/4 to down a penny and a half. CH/CK closed at - 6 3/4, up a half cent, and SF/SH closed at -4, up 2 3/4. New high for the move for SF/SH at -3 1/2 on Monday.
As we mentioned at the start, NOPA soybean crush data for the month of November was the main talking point in the markets on Monday, and was generally disappointing compared to trade expectations. The report showed soybean crush in the month at 193.185 mil bu's, which was down 3.4% from October's all-time record, but still up 2.2% from November of last year and the highest reading ever for that particular month. NOPA mentioned the figure could've been higher, but ongoing maintenance at a large facility in Des Moines, IA (ADM) capped the monthly crush rate. Soybean oil stocks as of October, 30th were seen at 1.084 bil lbs, which was also below the average trade guess as lower crush during the month combined with strong exports led to a limited building of stocks. The data would appear to be friendly bean oil, but prices mustered all of just a 15-point bounce when the report was released Monday morning, and still closed around 2% lower for the day.
Other data on Monday included export inspection data for the week ending December 12th, which showed corn and soybean inspections for the week that were within trade expectations, though towards the upper end in corn. Corn inspections were seen at 1.130 mmt's (up 6.8% from the week prior), soybean inspections were seen at 1.676 mmt's (-3.5%), and wheat inspections were seen at 298k mt's (-20.2%). Cumulative marketing year pace is now 31% ahead of last year in corn, 19% ahead of last year in soybeans, and 29% ahead of last year in wheat. Of note, this week's corn inspection figure was the largest in at least the last six years for this specific week.
Otherwise, the trade is increasingly developing a more holiday-like feel seemingly by the hour, with corn seeing just a 2-cent trading range past 10am central time this morning, and soybeans seeing just a 7-cent trading range in the same time period. We would see the thinning volume as a two-fold issue this year, as not only is the Christmas holiday season fast approaching, but so too is Trump's return to the White House on January 20th; this combination is leading to few in the space having any desire to take on large new risk positions until more is known on Trump policy. However, we would also think that should this continue being the case, it seems likely market activity would pick up for a period this Spring once that money decides which way it's going to go. While funds are beginning to get into a decent sized long position in corn, it is still small potatoes compared to the 300k-400k contract long positions they regularly carried in 2021 and 2022; and similarly, a 60k contract position in beans is also next to nothing. The point in this is to advise caution in getting overly complacent with the markets the next several weeks, as opportunities likely present themselves for both the bulls and the bears through late Winter and into the early part of Spring.
Not a lot of forecast updates at mid-day on Monday, as the week continues to look rather active weather-wise. The PNW is seen continuing to receive nearly daily chances of rain/snow from now through the holiday next week, while the northern tier of the Midwest and into Canada will see snow chances and the southeast and mid-south will see rain chances through the middle of this week; the mid-section of the country and Plains will be mostly dry. Week-two maps again trended wetter at mid-day through the Midwest after showing dryer biases coming out of the weekend, while on the temp side, both the EU and GFS models are seeing temperature outlooks that are some 20+ degrees F above average for almost all of the eastern two/thirds of the US the last week of December. The progressive ridge/trough pattern looks to remain active, with no pattern able to be sustained for longer than a few days.
Forecast in South America trended slightly wetter in Brazil at mid-day on Monday, but was otherwise also largely unchanged from what was seen coming out of the weekend. Argentine rainfall will favor the northern/western areas this week with the south and the east short-changed, while Brazil looks to see a few drier days to start the week in the south, before rains are seen returning here by the end of the week and into the weekend. As we mentioned this morning, extreme heat remains almost entirely absent save for a small pocket in eastern Argentina, which looks to limit crop stress even if moisture were to turn off for a few days.