PM Comments December 20 2024
Good afternoon. Happy Friday. Corn and soybean futures ended the last full week of trading in 2024 on a higher note, as buying was present right from the get-go this morning. Meal futures also came along for the ride, and could actually be classified as the leader to the upside on a percentage basis. Open interest data for the day would indicate a lot of the buying was likely fund related, as declining open interest in soybeans was presumably a product of short covering, while rising open interest in corn would indicate funds adding to their net-long position ahead of the weekend.
CH ended the week at 4.46 1/4, up 5 and 1/2 cents. CK was up 5 and 1/2 also at 4.51 3/4. SF closed at 9.74 1/2, up 11 1/2 cents. SH was up 12 and 3/4 at 9.79 1/4. WH closed unchanged at 5.33. Products were mixed, January soybean meal closed at 294.50, up $10.40/ton, and January soybean oil closed at 39.48, down 53 points. Inside day for bean oil. Livestock markets ended the week in the green; February live cattle closed at 188.40, up $1.85, January feeders closed at 255.60, up $1.12, and February hogs closed at 85.92, up $2.30. Outside markets are sharply mixed, crude oil futures are up 10-15 cents/bl, the Dow Jones index is up 480 points, and the US$ index is down 60 points. The S&P500 is up 60 points and the NASDAQ is up 175 points. Outside day higher for all three of the major stock index futures, and an outside day lower for the $ index. Gold futures were also up $35-40/oz to end the week.
Spreads were mixed to end the week, corn spreads were unchanged to 2 and a half cents higher, and soybean spreads were down a penny and a half to up 2 and a quarter cents. CH/CK closed unchanged on the day at -5 1/2, and SF/SH closed at - 4 3/4, down a penny and 1/4.
For the week: March corn was up 4 and 1/4 cents; May con was up 2 and 1/2 cents; January soybeans were down 13 and 3/4 cents; March soybeans were down 15 and 3/4 cents; and March Chicago wheat was down 19 and 1/4 cents.
USDA this morning, for the fourth consecutive day this week, announced a daily sales flash. Private exporters reported 150,000 mt's of corn for delivery to Colombia during the 2024/25 marketing year.
As was anticipated this morning, ag-specific news was mostly lacking on Friday, and we expect this trend to continue through next week as traders turn off their screens for the holidays. Aside from the ongoing political struggle going on with the US spending bill, the general themes of large South American crop production, uncertain future ag policy, and declining Chinese economic activity will largely drive price action into the first part of 2025. Early soybean harvest has just started to begin in parts of northern Brazil, which means the US export window is quickly closing. While the crop sizes themselves will likely be priced in over the next 6-8 weeks, especially in the case of beans, it is this shifting of global business to the south that will continue to impact prices into US spring. Interesting to watch for will be how the Brazilian logistic system handles a 170+ million ton soybean crop, and whether the US is able due to politics to capitalize on any of these potential short-comings.
Circling back to the spending bill, there has been no further progress made as of this writing on Friday afternoon. Sources familiar with the matter have indicated a proposal to separate the bill into individual smaller bills, which would increase the odds of avoiding a government shutdown. However, as of the middle of the afternoon on Friday, there had still seemingly not been a lot of progress made. House Speaker Mike Johnson told reporters that there would be no government shutdown near 1:30pm central time, but gave no further details. One possible outcome being talked about on social media is a temporary shutdown that would possibly only last a few hours and be resolved by the time the holiday-shortened work week kicks off on Monday.
Otherwise, what ag news there was came out largely after the close, and included both the December cattle on feed report and also the CFTC commitment of traders report. First for the cattle on feed report, data was fairly uneventful and came in almost exactly as the trade had anticipated. The US feedlot herd as of December 1 was seen at 11.982 mil head, compared to 11.966 mil last month and 12.016 mil on December 1 last year. Placements in November were seen at 1.796 mil head, while November marketings were seen at 1.725 mil head; both figures were down from both last month and last year. The marketing figure was about 1% higher than what the average trade guess was, but otherwise, the report doesn't look to have an overly large effect on the market next week. To view the full report, please click here.
Commitment of traders data as of Tuesday, December 17th, showed a fairly slow week of activity by the funds in corn, but a lot of activity in all the other markets. For the week, managed money traders were sellers of a combined 6,475 contracts of corn futures/options, sellers of a combined 17,933 contracts of soybean futures/options, and sellers of a combined 20,621 contracts of Chicago wheat futures options. In soy products, funds were sellers of 16,544 contracts of meal futures/options, and were sellers of 14,881 contracts of soybean oil futures/options. This now makes funds net-long 159,415 contracts of corn, net-short 76,252 contracts of soybeans, net-short 87,401 contracts of Chicago wheat, net-short 88,971 contracts of beans meal, and net-long just 2,639 contracts of soybean oil. Of note, this is a new record net-short position by the funds in bean meal, and this is the smallest net-long the funds have had in bean oil since the week ending September 24th.
Snow showers will hang around the northeast through the remainder of the day on Friday and through part of Saturday before clearing out by the end of the weekend. As this system exits, another one then enters the northwest providing a mixture of rain and snowfall, with several subsequent systems then seen moving through the area next week. As has been forecast the last few days, rains are then seen returning to the mid-south/southeast next Tuesday/Wednesday as these areas look to see several days of weather into the last week of the year. Extended forecasts again were unchanged at mid-day, and continue to show wetter than average conditions through most all of the country beside the far southwest into Mexico. On the temperature front, cool air looks to hang around the eastern half of the US for another few days through the weekend before ridging allows warm conditions to been throughout most all of the country starting Monday/Tuesday and lasting at least through the end of the week and weekend.
South America's forecast through the weekend also remains largely unchanged from what was seen this morning. Argentina is expected to be mostly dry for the next 72 hours save for a small band in the east-central part of the country, while dryness is also expected for most of southern Brazil and into Paraguay. The rest of Brazil is expected to see average to slightly above average precip in the period, with totals seen ranging from 1-2" generally with some locally heavier amounts possible. Argentina sees light rain chances then early next week, before things again dry out through Christmas. It is the forecast in Argentina that will be the most watched over the next 10 days, as Brazil continues to see steady rains through almost all of the growing areas.
Have a good weekend, and enjoy some time off next week for those that are taking it!