AM Comments December 18 2024
Good morning. Markets are again mixed to start Wednesday trade as the soy complex is lower and the grains are marginally higher. Bearish technical considerations have taken hold in the soy space after making new contract lows in both the beans and the meal on Tuesday. As the market sat just above the contract lows made in Fall, the amount of resting orders just below this level was likely significant, and these orders are now being worked through yesterday and today. Otherwise, there continues to be a lack of fresh market-moving news specific to the ag space; today's Federal Reserve interest rate decision is likely to dominate headlines through the afternoon today and into tomorrow, with trader interest increasingly turning its attention elsewhere the rest of the week. Corn futures this morning are trading unchanged to a penny lower, soybean futures are down 13-14 cents and have again made new contract lows, and the Chicago wheat market is up 1-2 cents. Products are lower, soybean meal is down around $3/ton, and soybean oil is down 90-100 points. Outside markets are mostly higher, crude oil futures are up around 60 cents/bbl, the Dow Jones index is up 170 points, and the US$ index is unchanged. The S&P500 is up 20 points and the NASDAQ is up 40 points.
Today's Reports: EIA Weekly Ethanol Production/Energy Stocks; Fed Interest Rate Decision
- This morning's weekly ethanol production report for the week ending December 13th is expected to show production for the week in a range of 1.071-1.080 mil bbls, while stocks are seen between 22.498-22.970 mil bbls.
- Private ag consultancy SovEcon on Tuesday cut its forecast for Russia's 2025 wheat crop by 3 mmt's to 78.7 mmt's, which would be the lowest level since 2021.
- China's state grain buyer Sinograin on Wednesday said that it would stop selling imported corn from its reserves, a move that is seen as part of larger efforts to support local corn prices that currently sit near the lowest levels in the last five years. The group also said earlier this month that it would be increasing purchases and storage of domestically grown corn.
- According to a note posted to the Malaysian Palm Oil Board's website, the tax on crude palm oil leaving the country will be set at 10% in January, which is the maximum under the current agreement. The tax structure starts at 3% when FOB prices are in the 2250-2400 ringgit/ton range and maxes at 10% when prices exceed 4050 ringgit/ton.
- US ethanol producers scored a potential political win on Tuesday, as sources familiar to the matter said that a stopgap government-funding measure was nearing approval and would include language that would allow the sale of E15 year-round through the US. Preliminary text also includes $100 bil in disaster aid and would extend government funding into March. Notably, the bill does not mention anything about an extension of biofuel blending credits or new guidance on 45Z tax credits.
- As we've mentioned ad nauseum all week, today's interest rate decision from the Fed will dominate headlines after 1pm central time. Traders hope whatever decision is made is received positively by the markets, as the Dow is currently on it's longest losing streak in terms of days since the late 70's.
- US weather again remains largely unchanged for the rest of the week and into the weekend. The southeast/mid-south will continue to see rains through the weekend, while a snow event is expected through the upper Midwest beginning today and working west through the end of the week. Snow in the PNW will stay north in Canada for a couple days to end the week, before again dropping back into the Cascades and Sierra Nevada's by the first part of next week.
- Week-two forecasts show well above average precip chances in the PNW the last week of the month, while the eastern half of the US is also generally seen with a wetter bias and the west-central part of the country has equal chances of wet and dry. Temperature outlook into the end of the month continues to show extremely warm temps throughout most all of the country, with highs seen some 15-20 degrees F above average.
- In South America, Argentina saw good rains in the far south on Tuesday, while the rest of the country was dry. Southern and south-central Brazil were also dry, while areas in the east-central and northern parts of the country saw rains of trace amounts to 1 inch with some locally heavier totals.
- Forecast here also remains largely unchanged overnight, as northern and western parts of Argentina will see the best rains through the end of the week, while precip through Brazil looks to be widely scattered over the next 72 hours. South-central Brazil into Paraguay looks to have the best rain potential through the day on Friday. 10-15 day maps show dryness across most all of Argentina, which will need monitoring.