PM Comments December 24 2024
Good afternoon. Happy holidays. Christmas Eve trading was largely uneventful on Tuesday, with corn and soybean markets seeing light volume and small trading ranges during the shortened day session. As we go into holiday mode, we wish everybody a very Merry Christmas and hope you're able to enjoy spending some time with loved ones this holiday season!
CH closed at 4.48 1/2, up 3/4 of a cent. CK was up a penny and 1/2 at 4.55. SF closed at 9.75 1/4, up 5 3/4. SH was up 5 3/4 also at 9.81 1/4. WH closed at 5.35, down 5 1/2 cents. Inside day for March Chi wheat. Products were mixed, January soybean meal closed at 292.90, up $3.40/ton, and January soybean oil closed at 39.84, down 39 points. Livestock markets closed mostly lower, February live cattle closed at 187.37, down 7 cents, January feeders closed at 255.85, down 67 cents, and February hogs closed at 84.37, which was unchanged. Outside markets are higher, crude oil futures are up 70-80 cents/bbl, the Dow Jones index is up 180 points, and the US$ index is up 20 points. The S$P500 is up 60 points and the NASDAQ is up 280 points.
Spreads were mixed, corn spreads were down a penny to up a penny, and soybean spreads were unchanged to 2 cents lower.
What traders remained present for Tuesday's trading session saw little reason to push values in any direction, as there simply wasn't a lot of activity in the market place. Key for the rest of this week/month/year from a chart standpoint on the corn side will be whether prices can push above recent resistance made just above $4.50, while it is important for soybeans to be able to hold the recently made contract lows just below $9.50.
South American production remains the overarching theme in the marketplace into the start of 2025, with record crop potential in Argentina and Brazil keeping rallies somewhat limited on top side. Along with this, the ongoing uncertainty regarding the incoming Trump administration and what it might mean for US ag policy also is limiting the upside, as fund traders don't like uncertainty and would prefer to have at least some sort of understanding of what US ag trade might look like in 2025 and beyond before building any sort of sizeable new positions whether they be long or short.
Reuters reported overnight that China had launched a 10-year long plan to boost consumption of cereal grains and develop the industry through higher production standards, research and international cooperation in an effort to improve domestic food security. The plan, jointly issued by the National Food and Strategic Reserves Administration along with other government departments, is the latest in a string of other similar moves by China's government to dry and decrease dependence on foreign foodstuffs.
Global vegetable oil prices are expected to remain elevated into the new year, as Indonesia's government is still planning on increasing the country's blend rate in biodiesel production from 35% to 40% starting on January 1. Industry experts say the move could lead to a 10-15% increase in the price of crude palm oil through 2025 if the plan proceeds as expected. Following the declines in production this season that already have led to rising prices, there are some in the industry who feel implementation may be gradual, with full adoption possibly delayed until 2026.
Weather-wise, the PNW looks to see a rather active Christmas Eve/Christmas Day as an atmospheric river is expected to bring heavy rains/winds/snowfall to the region through the evening tonight and then also again tomorrow night. Further to the east, light rains and possibly some freezing rain will impact parts of the mid-south and southern Midwest into tonight and through the day on Wednesday. The rest of the country sees mostly dry and mild conditions, with temp anomaly maps showing highs that are 5-10 degrees F above average, meaning a white Christmas is unlikely for most. Into the New Year, the biggest and most watched forecast feature will be the return of cooler air to the central US beyond January 2nd/3rd, which the models remain in good agreement on through the day on Tuesday.
South American forecasts have continued to underperform on rainfall, and this was again the case on Monday as better-than-called-for rains fell across a majority of the country's southern production areas. Models through the end of the week see rainfall chances in the northwestern part of the country, but we would not be surprised if rains keep falling further to the south also. Due to recent moisture, concern remains nearly non-existent regarding a drier than desired two-week forecast. And in Brazil, there continues to be no signs of a premature ending of the monsoon season, which means crops here should continue to be well-watered. Southern Brazil will be on the dry side into January, but like Argentina, recent boosts in soil moisture the last 3-4 weeks have kept concern levels mostly low save for a few local areas.