AM Comments December 20 2024

Posted on Dec 20 at 07:13

Good morning. Happy Friday. Grain markets are trading higher in Chicago to start the last trading day of the week, with new lows being avoided for the first time since Tuesday. Today will likely be a mostly macro day, as the looming government shutdown just days before Christmas looks to dominate headlines through the day on Friday and into the weekend. Otherwise, the ongoing themes of large South American crop sizes and unknowns regarding future US ag policy will more or less control trading into the end of the year. The countryside likely becomes quiet following today, as mid-week holidays the next two weeks look to keep activity subdued. Corn futures to start Friday are trading 2-3 cents higher, soybean futures are trading 6-8 cents higher, and the Chicago wheat market is up 1-2 cents. Products are mixed, soybean meal is up $4-5/ton, and soybean oil is down 15-20 points. Outside markets are mostly lower, crude oil futures are down 20-30 cents/bbl, the Dow Jones index is down 200 points, and the US$ index is down 25-30 points. The S&P500 is down 50 points and the NASDAQ is down 280 points. New contract highs again overnight for the $ index before turning lower.

 

Today's Reports: Monthly PCE Price Index; December Cattle on Feed; CFTC Commitment of Traders

 

• The Buenos Aires Grain Exchange said in their weekly crop report on Thursday that soybean planting advanced 11.5% in the last week to 76.6% complete, while corn planting advanced 10.2% to 65.8% complete. Both are now above both last year and the five-year average, while corn planting pace is near the top end of the range of the last ten years.

 

• Conditions were largely unchanged from last week for both crops; corn was seen being rated 98% normal or good/excellent, while soybeans were rated 99% normal or good/excellent. The report also showed wheat harvest in the week had advanced 12.2% to 76.1%.

 

• Staying in the livestock sector, the USDA's quarterly hogs and pigs report is due out on Monday; the report is expected to show the December 1 hog inventory at 75.61 mil head, which would be up just 0.2% from last year. Breeding inventory is seen 0.1% higher at 6.007 mil head, while market hogs are seen increasing by 0.2% to 69.609 mil.

 

• Cash sources are indicating China has remained active in forward soybean purchases this week; after purchasing 750k mt's of soybeans for Jan-Mar shipment last week, the country's state buyer Sinograin has purchased an additional 500k mt's this week for Mar-April shipment.

 

• Chinese customs data released earlier in the week showed soybean imports from the US in the month of November totaled 2.79 mmt's, while Brazilian imports in the same month totaled 3.94 mmt's; total imports for the month were seen at 7.15 mmt's. Cumulative imports through November stand at 97.09 mmt's, which is on pace to set a new annual record; of this total, the US has accounted for 17.88 mmt's (-9% from last year), while Brazil has accounted for 71.7 mmt's (+10%).

 

• European ag association Coceral said on Thursday that they see combined grain production out of the EU and UK at 297.8 mmt's, which would be up roughly 7% from this year. The group cited an increase in planted area, as well as a return to normal yields after adverse weather affected the 2024 crops, as reasons for the increase. The European Commission sees total grain production just in the EU at 255.8 mmt's.

 

• The USDA's monthly livestock slaughter report. released yesterday afternoon, showed November cattle slaughter at 2.57 mil head, down 5.8% from last year, while hog slaughter for the month was seen at 10.84 mil head, down 2.6% from last year. Beef production for the month was down 2.7% at 2.217 bil lbs, and pork production for the month down 2.2% at 2.334 bil lbs.

 

• Barge shipments down the Mississippi River in the week ending December 14th totaled 902k tons, which was up nearly 24% from last week. Corn shipments at 472k tons were up 110% on the week, and soybean shipments at 415k tons were down 15%. STL barge freight rates were down 8 cents/short ton at $15.56.

 

• A Trump-backed spending bill was voted down by Republican members of the US House of Representatives late on Thursday, increasing the odds that at least a partial government shutdown occurs at midnight tonight.

 

• Other news out of the Trump administration on Thursday included fresh tariff threats on the EU, as the President-elect again took to social media to post that the group of countries must purchase US oil and gas to make up for the trade deficit it currently has, adding, "Otherwise, it is TARIFFS all the way!!!" This put stocks in Europe on track to have their worst week in months, a sentiment shared by those in the US.

 

• Snowfall looks to continue impacting the northern/northeastern Midwest through the day on Friday and into Saturday, with another system seen sweeping through this area and the broader Great Lakes region next Monday/Tuesday. Snow also resumes in the PNW through the day on Saturday and looks to last at least through the first part of next week.

 

• The rest of the country sees a mostly dry weekend forecast, with temperatures staying cool in the east through Sunday with a significant warm up occurring thereafter into the Christmas holiday. And there has been no shift in the extended range forecast, as models continue to show this heat lingering in the east at least through January 4th.

 

• Satellite data shows Argentina saw mostly dry conditions again on Thursday, while Brazil saw steady rains of around a half inch in the south, with lesser, more scattered totals seen in the north and central regions. Forecast through the weekend shows a few days of continued dryness in Argentina and southern Brazil, while central and northern Brazil look to see average to slightly above average precip.

 

• Have a good weekend!