PM Comments December 30 2024
Good afternoon. Active trading was seen through the ag space on Monday despite volume still being largely curtailed due to the holidays. Markets made a brief effort at an end-of-year rally overnight and for about the first 45 minutes of the day session this morning with new highs from last week, but selling then quickly emerged to knock corn and soybeans back to technical reversals by the time the final bell rang.
CH closed Monday at 4.52 1/4, down a penny and 3/4. CK was down a penny and 1/2 at 4.60. SF was up 2 cents at 9.82. SH closed at 9.91 3/4, up 2 cents. All four contracts had outside days lower. WH finished the day at 5.48 1/4, up a penny and 3/4. Products were higher, January soybean meal closed at 302.60, up $1.70/ton, and January soybean oil closed at 39.72, up 20 points. Livestock markets were mixed, February live cattle closed at 190.30, down 35 cents, January feeders were up 25 cents at 261.62, and February hogs closed at 81.62, down $2.52. This the lowest close in Feb hogs since the middle of October. Outside markets are mixed, crude oil futures are up 40-50 cents/bbl, the Dow Jones index is down 400 points, and the US$ index is up 10 points. The S&P500 is down 70 points and the NASDAQ is down 300 points.
Spreads were mixed/lower to start the week, with corn spreads a half cent lower to a half cent higher, while soybean spreads were unchanged to down two and a quarter cents. CH/CK closed at -7 3/4, down a quarter of a cent, and SF/SH closed at -9 3/4, unchanged. SH/SK closed at -11 1/4, down a half cent.
USDA this morning announced flash export sales of 23,000 mt's of soybean oil for delivery to India during the 2024/25 marketing year. Of note, this brings total US export commitments to 549.6k mt's through the first four months of the 2024/25 marketing year, which is nearly 50k mt's above the current USDA forecast of 500k mt's.
With the rest of the world still largely on holiday for the rest of this week, newswires continued to again be mostly silent. Argentine weather remained the biggest talking point on Monday, with it unclear whether this has been the reason for the holiday rally over the past several days or if it's just a product of money flows; the action though has nonetheless provided the US farmer with an opportunity to catch up on sales as the tax year flips in another couple days. In the case of corn, board prices are at their highest levels since the beginning days of last Summer; bean prices have not come along to the same extent, but even they're some 40+ cents off the lows made less than two weeks ago. Amid record crop prospects from our biggest export rival and a pending resumption of President-elect Trump's trade war, we see the market action through the holidays as notable at the very least.
What news there was on Monday included regular weekly export inspection data, and also delayed CFTC commitment of traders from last week after the close. Inspection data for the week ending December 26th came in within trade expectations, but otherwise not anything notable. Corn inspections for the week totaled 878k mt's, which was down just over 23% from last week; cumulative inspections now total 15.359 mmt's, which is up 29% from last year. Soybean inspections in the week were seen at 1.569 mmt's, which was down 11.6% from last week; cumulative inspections at 28.596 mmt's are up 23% from last year. And lastly, wheat inspections for the week were seen at 338k mt's, which was down 16.7% from last week; cumulative inspections at 12.283 mmt's are up 27% from last year.
The commitment of traders report was also fairly uneventful for the most part, though funds were again noted sellers in bean oil which flipped their position from a net-long to a net-short for the first time since the end of September. 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 wheat futures/options. This now makes funds as of Tuesday, December 24th net-long 159,415 contracts of corn, net-short 76,252 contracts of soybeans, and net-short 87,401 contracts of Chicago wheat. Of note, this is the largest the fund net-short in Chicago wheat has been since the middle of April earlier this year. In soy products, managed money traders in the week sold 7,400 contracts of soybean meal futures/options, and also sold 22,199 contracts of soybean oil futures/options; this makes them now net-short 96,371 contracts of meal, and net-short 19,561 contracts of oil. This is again a new record short position by the funds in meal.
Weather will become a much louder topic through the Midwest and broader eastern half of the country over the course of the next week to two weeks, as models are continuing to trend even colder on the temp side, and several rounds of potentially heavy snow are forecast for an area from Nebraska/South Dakota all the way up and into the East Coast over the next two weeks. The northwest also looks to continue seeing an active weather pattern, while rains are forecast to return to the southeast by the middle of next week. Week-two forecasts, which would be for January 7th-13th, then show a return to drier weather for all but the northern Plains, with much below average precip anomalies noted for both the West Coast and a majority of the Mid-south.
South American weather forecasts continue to show rain chances for western and southern Argentina over the next roughly 48 hours before dryer conditions are then seen returning. Otherwise, updates on Monday were minimal elsewhere. The bulk of Brazil looks to continue receiving average to above average rainfall, with the only noticeably dry spots being in the far southern part of the country. Heat is continuing to build in Argentina, as the lack of rainfall allows temperatures here to creep into the upper 80's/lower 90's. As we mentioned at the top, it is the hot/dry forecast for Argentina that will continue to garner market attention in the short-term, though there remains little credible yield concern as of today.
As a reminder, tomorrow (Tuesday) is the first notice day for January futures contracts. For trading hours this week, tomorrow will see a normal day of trade through the day session, but there will be no markets tomorrow night, Wednesday, or Wednesday night for the New Years holiday, with a hard reopen set for 8:30am central time Thursday morning. The remainder of Thursday trade into Friday will then be normal, with markets returning to their regular Monday-Friday schedule for the week following.