PM Comments December 31 2024
Good afternoon. Happy New Year's Eve. Grain markets closed higher on Tuesday in thinning volume as the end of 2024 draws near. Corn and soybean futures were able to push out to new highs again, but a specific reason for the rally aside from the Argy weather story that has been talked about the last few days was again mostly lacking. With fund traders still sitting on a net-short position in the beans, we would assume profit taking/book squaring as the month/quarter/year all come to a close also had something had to do with the day's action.
CH closed Tuesday at 4.58 1/2, up 6 and 1/4. CK was up 5 3/4 at 4.65 3/4. SF closed at 9.98 1/4, up 16 1/4. SH was up 18 3/4 at 10.10 1/2. WH closed at 5.51 1/2, up 3 1/4. Inside day for Chicago wheat. Products were higher, January soybean meal closed at 307.60, up $5/ton, and January soybean oil closed at 39.78, up 6 points. Inside day for bean oil also. Livestock markets were mixed/higher, February live cattle closed at 191.60, up $1.30, January feeders closed at 263.02, up $1.40, and February hogs closed at 81.30, down 32 cents. New high for the move in feeders and new low for the move in hogs. Outside markets are mixed, crude oil futures are up 80-90 cents/bbl, the Dow Jones index is down 50 points, and the US$ index is up 30-40 points. The S&P500 is down 20 points and the NASDAQ is down 130 points. Crude oil traded to its highest level since mid-October today, the Dow had an inside day, and the $ index made a new contract high.
Spreads were mixed, corn spreads ended the day up a quarter cent to up a penny and 3/4, and soybean spreads were up a penny and 3/4 to down 3 cents. CH/CK closed at -7 1/4, up 1/2 cent, and SF/SH closed at -12 1/4, down 2 and 1/2 cents. SH/SK was down a half cent at -11 3/4.
For the month: March corn was up 15 and 1/2 cents; May corn was up 16 cents; January soybeans were up 8 and 3/4 cents; March soybeans were up 14 and 1/2 cents; and March Chicago wheat was up 3 and 1/2 cents.
For the year: spot corn futures were down 12 and 3/4 cents; spot soybean futures were down $2.95 and 1/4 cents; and spot Chicago wheat was down 76 and 1/2 cents. Spot soybean meal was down $78.40/ton, and spot soybean oil was down 8.06/lb.
Biggest news for the last trading session of 2025 was the EIA's monthly petroleum supply report for the month of October; the report showed US biodiesel and renewable diesel capacity in the month both unchanged from last month, while ethanol capacity was up marginally to 18,310 mil gallons. Soybean oil usage for biofuel production jumped to 1.227 bil lbs, which was up 14% on the month and up more than 15% from October of last year; this was also the 3rd highest monthly usage rate on record. Combined biodiesel and renewable diesel production was up more than 4% on the month to 460 mil gallons, which is the second highest reading ever behind only June of this year. Other items of note in the report included an update on yellow grease usage (used cooking oil), which showed the monthly figure at 604 mil lbs, up 17 mil lbs from September; tallow usage for renewable fuels was up 98 mil lbs to 592 mil lbs.
Weather forecasts through mid-day on Tuesday show another small system working through the central Midwest Thursday/Friday, before the big low pressure system coming out of the northwest barrels through the country beginning in the west Friday/Saturday and reaching the Midwest by Sunday into Monday. Model runs are seeing significant fluctuations in exact snowfall amounts/locations, but the latest updates show the heaviest snowfall through parts of eastern Nebraska and into southern Missouri. The other big forecast feature continues to be the coming blast of cold air, which the models remain in good agreement on. The freeze line is seen stretching all the way as far south as northern Florida, with many places through the Midwest seeing possibilities at record low temps January 8/9/10. The cold is expected to hang around at least through mid-month in the east, with 10-15 day maps showing no signs of a pattern shift at least through January 15th.
In South America, models are showing chances at light/scattered precip in central and south-central Argentina over the next 72 hours, while slightly better chances are seen in the west and northwest. Southeast Brazil also sees better rain chances than were forecast yesterday, but the bulk of this rain looks to fall in more urban areas and will stay primarily east of the crop growing areas here. The rest of Brazil continued to see little updates, as the forecast pattern continues to show regular monsoonal rains through at least the middle of January. While we continue talking about dryness in Argentina, it is important to note that overall production estimates out of Argentina, Brazil, and Paraguay are currently estimated to be up by 20 mmt's total compared to last year; this means theoretically, Argentina could trim 10-15 mmt's (20-30%) and overall production would still be up year/year.
Looking to 2025, ongoing themes of global geopolitical tensions, along with the return of Donald Trump to the White House, will presumably dominate the commodities landscape through at least the first part of the year. Ongoing economic turbulence in China also looks to continue having an impact on trade, as this impacts everything from grains to energy products to currencies. Wars in Ukraine and the broader Middle East don't look to see quick resolutions, while the situation in Taiwan also continues to simmer; and on top of all this, the entry of North Korean troops onto the side of the Russian's in Ukraine has also added a new twist. Specifically for the ag space, trade/tariffs will obviously be at the forefront of most discussions once Trump's second term officially begins January 20th, but the ongoing likelihood that corn and soybean production will be record large in South America also will continue to be a major market theme, and will likely keep the higher prices seen over the past several years since Covid from returning. Other stories include weather issues in a host of the world's top producers of coffee and cocoa causing prices in these markets to rise to record levels in 2024, as well as the ongoing renewable fuels discussion, which is the biggest wild card for the year.
As 2024 comes to a close, we wish everybody a healthy and prosperous 2025 and are looking forward to another great year!