PM Comments December 27 2024
Good afternoon. Happy Friday. Markets remained in holiday trading mode to end the week on Friday as the majority of traders are still away from their computers and volume continues to stay largely subdued at the CBOT. Looking to next week, markets will again see a mid-week closure on Wednesday for the New Year holiday, with attention then turning to the USDA's January WASDE update the following week. Remember, it is the January WASDE where final production estimates are made for the 2024 corn and soybean crops, meaning the supply side of the balance sheet could potentially be in for some surprises.
CH ended the week at 4.54, up 1/4 of a cent. CK was up a penny at 4.61 1/2. SF closed at 9.80, down 8 cents. SH finished at 9.89 3/4, down 7 1/2 cents. WH closed at 5.46 1/2, up 5 1/2. Products were mixed, January soybean meal closed at 300.90, down $4.80/ton, and January soybean oil closed at 39.52, up 5 points. Livestock markets closed mostly higher, February live cattle closed at 190.65, up 55 cents, January feeders closed at 261.37, up $2.07, and February hogs closed at 84.15, down 5 cents. This the highest trade in Jan feeders since July. Outside markets are mixed, crude oil futures are up 40-50 cents/bbl, the Dow Jones index is down 350 points, and the US$ index is down 10 points. The S&P500 is down 65 points and the NASDAQ is down 280 points.
Spreads were again mixed to end the week, corn spreads were down a half cent to up 2 and 1/4, and soybean spreads were down a half cent to down 3 cents. CH/CK closed at -10 1/2, down 1/2 cent, and SF/SH closed at -9 3/4, down 1/2 cent also. SH/SK closed at -10 3/4, down 1/2 cent as well.
For the week: March corn was up 7 and 3/4 cents; May corn was up 9 and 3/4 cents; January soybeans were up 5 and 1/2 cents; March soybeans were up 10 and 1/2 cents; and March Chicago wheat was up 13 and 1/2 cents.
This morning's weekly export sales report for the week ending December 19th, delayed a day to the holiday this week, was a little bit of a mixed report - corn and wheat exports were good and above the upper end of trade expectations, but soybean exports were the lowest level of the marketing year, and were below the lower end of trade expectations. Corn sales for the week were seen at 1.711 mmt's; featured buyers were Mexico (608,900 mt's), Colombia (363,900 mt's), and Japan (204,800 mt's), while unknown destinations bought 163,200 mt's. Soybean sales for the week were seen at 978,400 mt's; featured buyers were China (410,600 mt's), Spain (259,500 mt's), and Egypt (102,600 mt's), and unknown destinations had 356,800 mt's assigned out/rolled/canceled. Lastly, wheat sales for the week were seen at 612,400 mt's, which was the highest figure since the last week of June earlier this Summer; featured buyers for the week were Mexico (132,400 mt's), Thailand (126,100 mt's), and Japan (120,500 mt's). Also of note in this week's report were 125k mt's of 2025/26 soybean sales, along with 12,600 mt's of 2025/26 wheat sales and 10k mt's of 2025/26 corn sales. Weekly bean oil sales were up significantly from last week and also well above expectations at 40.4k mt's.
As the federal holiday fell on a Wednesday this week, EIA ethanol production/stocks data was also delayed until today. The report for the most part was in line with both recent data and also trade expectations for both stocks and production, but came out later in the day than usual when frankly, with it being a holiday week Friday, there likely weren't many still around to see it. Daily production in the week ending December 20th was seen at 1.107 mil bbls, which was up just 0.4% from last week but up 3.4% from last year. Stocks for the week were seen at 23.074 mil bbls, which was up 1.9% from last week and up 0.7% from the same week last year. We estimate corn usage in the week at 109.4 mil bu, while cumulative usage for the marketing year is estimated at 1.689 bil bu; the USDA's full marketing year forecast is 5.500 bil bu. In the report, EIA also showed crude oil stocks in the week down 4.237 mil bbls to 416.779 mil, gasoline stocks up 1.63 mil bbls to 223.667 mil, and distillate stocks down 1.694 mil bbls to 116.461 mil. Implied gasoline demand was estimated at 9.008 mil bbls/day, compared to 8.927 mil last week and 9.168 mil last year.
Other news on Friday included a statement from China's commerce ministry that it would be launching an investigation into the country's beef imports following a recent sustained drop in prices to multi-year lows. Applications submitted by cattle and livestock trade groups said that a sharp increase in imports between 2019 and 2023 had seriously damaged the domestic livestock industry, adding that official data shows beef imports in the four years increased by nearly 65%. A lack of buying by a Chinese consumer who has been hurt by a slowing economy has also contributed to the decline in domestic prices according to sources familiar with the matter. The US is not a major exporter of beef or livestock to China, with Brazil, Argentina and Australia accounting for just under 70% of their total imports in 2023.
Weather forecasts again saw little change for the US going into the weekend this afternoon. Both the PNW and the majority of the eastern half of the US will continue to see active weather through the weekend and early next week, while the mid-section of the country stays on the drier side. Outlooks for beyond next week continue to be a bit of a mixed bag, which is keeping confidence into the new year low. Better agreement is seen on the temp side, where it appears likely the eastern half of the country will again see cooler than normal temps after next Tuesday/Wednesday, while the west mostly holds in a warmer pattern.
Models in South America added some moisture in the week 1 for period for all but east-central Argentina, but totals look to be light/scattered if they verify at all. There were again no changes through Brazil. As we mentioned yesterday, though the current forecast is not ideal, sources indicate soil moisture levels could currently go roughly 30 days before real problems begin to exist, and this is obviously a good ways off. We will continue to monitor the situation going forward, but concern over yield loss due to the current dryness does not exist today.
Have a good weekend!