PM Comments December 23 2024
Good afternoon. Happy holidays. Christmas week started with mixed trade in Chicago, as grain markets were mostly higher and soybean and meal markets were mostly lower. The passing of new government funding late last week produced strength in the dollar index throughout the day on Monday, which in-turn helped to keep things mostly limited as far as the upside in corn and soybeans was concerned.
CH closed Monday at 4.47 3/4, up a penny and a half. CK was up a penny and 3/4 at 4.53 1/2. SF finished at 9.69 1/2, down 5 cents. SH was down 3 and 3/4 at 9.75 1/2. WH closed at 5.40 1/2, up 7 1/2 cents. Products were mixed, January soybean meal closed at 289.50, down $5/ton, and January soybean oil closed at 40.23, up 75 points. Reversal day lower for meal following new highs this morning, while oil had an outside day higher. Livestock markets were mixed, February live cattle closed at 187.45, down 95 cents, January feeders closed at 256.60, up $1.00, and February hogs closed at 84.37, down $1.55. Outside markets are trading mostly higher, crude oil futures are up 5-10 cents/bbl, the Dow Jones index is up 20 points, and the US$ index is up 50 points. The S&P500 is up 30 points and the NASDAQ is up 170 points. Inside days for all three of the major stock index futures and also the $ index.
Spreads ended Monday mixed, corn spreads were down a quarter of a cent to up two and a quarter cents, and soybean spreads were down 5 cents to up a half cent. CH/CK closed at -5 3/4, down a quarter of a cent, and SF/SH closed at -6, down a penny and a quarter.
The rumored soybean business to China the back half of last week showed up via daily sales flashes this morning, but volumes were seen as slightly disappointing in relation to what cash sources had rumored. Private exporters reported 132,000 mt's of soybeans for delivery to China during the 2024/25 marketing year, and also announced 132,000 mt's of corn for delivery to unknown destinations during the 2024/25 marketing year. This marks the fifth consecutive session with daily sales flashes going back to last week.
Export inspection data for the week ending December 19th was average for the week, and showed totals that were at the upper end of trade expectations for both corn and soybeans. Corn inspections in the week were seen at 1.122 mmt's, which was down just under 1% from last week, while soybean inspections were seen at 1.747 mmt's, up 4.2% from last week. Wheat inspections for the week totaled 404k mt's, which was up more than 35% from last week. Of note, the wheat inspection figure was above the upper end of trade expectations, and was also the highest weekly total since the end of September.
The stop-gap government funding bill that was approved by both the House and the Senate and then later signed by President Biden over the weekend continued to dominate most of the headlines in the markets on Monday. It appears President-elect Trump's demands for a lifting of the federal debt ceiling was the main hold up to the bill house Republicans voted down late last week, with the approved version appearing to be similar to the prior with the exception of the debt limit provision. For Midwest farmers, the bill was a win in terms of the $10 billion allocated to combat low commodity and high input prices, but was seen as a disappointment from the standpoint the elusive year-round waiver for the sale of E15 ethanol blends was once again left out of the text after being rumored to be included in the bulkier version that was offered last week. Speaking to the payments, legislation says the USDA should make payments within 90 days of the law's enactment, which would be the end of March; dollar amounts are rumored to be in the ballpark of $43/acre for corn and $28/acre for soybeans, with a total cap of $250,000/farm. On top of this $10 bil, the bill also included an additional $20.8 bil in agricultural disaster assistance, bringing the total allotment for the ag community to $30.8 bil. Also in the legislation was a widely-expected extension of the 2018 Farm Bill, which technically expired in the Fall of 2023.
Otherwise, weather, and specifically weather in South America, remains the other topic of discussion for ag traders. Starting with weather in the US, forecasts began to show the end of the mild air that has been forecast for the back half of the month for several days now, as ridging is expected to revert back to the east and the west as opposed to being located over the central part of the country by January 3rd/4th. Though the pattern turns cooler, models for now see the bulk of the cold air remaining confined to Canada, unlike the last cold air outburst that occurred mid-month. On the precip side, both the PNW and also the eastern half of the US look to continue receiving fairly steady rain/snow events over the course of this week and into next, with several systems expected to make their way over the Rockies in the west and then work north and east through the central part of the Midwest. Week-two precip maps again fell out of agreement over the weekend, with the EU AI outlook showing wet conditions in the far northeast and in a band from the northwest the northern Plains.
There were no mid-day updates for the South American forecast, as Argentina continues to look mostly dry save for small, local areas over the next 7-10 days, while all but far southern Brazil will continue to see normal/above normal moisture. As we've mentioned several times over the past month, the forecast has continually underperformed on Argentine rainfall going back to early November, which leads to doubt the current two-week outlook for near total dryness for all but the country's far western regions. The dryness will allow temps through central and east-central Argentina to increase to slightly above average levels over the next week, but otherwise, extreme heat remains largely absent.
Of note for tomorrow (Tuesday), we will write morning comments like normal and then will be sending afternoon comments early in place of our mid-day commentary following the early close of the grain and oilseed markets at 12:05pm central time.