PM Comments January 3 2025
Good afternoon. Happy Friday. Ag markets saw a major sell-off to wrap up the opening days of 2025, as the first sizeable move of the New Year has come to the downside. Meal futures were the leader on a percentage basis, having traded some 4%+ lower during the morning hours, while wheat markets made new contract lows yet again throughout the morning and into the afternoon. New headlines to cause the drop were non-existent as market participants attributed the action to a combination of the ongoing themes of profit taking/technical selling and weather forecasts in Argentina.
CH ended the week at 4.50 3/4, down 8 3/4. CK was down 9 cents at 4.58 1/4. SH closed at 9.91 3/4, down 20 3/4. SK was down 21 and 1/4 at 10.03 3/4. WH finished at 5.29 1/4, down 16 1/2 cents. Products were lower, March soybean meal closed at 308.60, down $11.30/ton, and March soybean oil closed at 39.93, down 34 points. Livestock markets were mixed/lower, February live cattle closed at 194.05, up 45 cents, January feeders closed at 264.82, down $1.65, and February hogs closed at 80.77, down 37 cents. Live cattle traded to their highest level since October of 2023 today. Outside markets are mixed, crude oil futures are up 70-90 cents/bbl, the Dow Jones index is up 330 points, and the US$ index is down 40-45 points. The S&P500 is up 75 points and the NASDAQ is up 350 points. Inside day for the Dow, while all three of the main stock index futures look to end their current losing streaks; inside day for the $ index also.
Spreads were mixed Friday, corn spreads were up a quarter of a cent to down 3 and 1/4, and soybean spreads were down a half cent to up 2 and 3/4. CH/CK closed at -7 1/2, up 1/4 of a cent, and SF/SH closed at -10 3/4, up a penny and 3/4. SH/SK closed at -12, up a penny.
For the week: March corn was down 3 and 1/4 cents; May corn was down 3 and 1/4 cents; January soybeans were up a penny; March soybeans were up 2 cents; and March Chicago wheat was down 17 and 1/4 cents. WH/WK again made new lows for the week at -12 1/2 before closing at -11 3/4.
Corn prices dropped right back below the old long-standing resistance on Friday, in what was seen as a bearish chart development as the market could manage just 4 trading sessions above the previous double top near 4.50. It appears as though at least momentarily there seems to some be some sort of fair value near this level, which we expect will be a bit of a gravitational point next week ahead of the WASDE report on Friday. From there, price direction becomes a matter of whether the USDA does enough to get carryout below 1.5 bil bu's by either adjusting yield lower, or adjusting disappearance higher on the quarterly stocks report. Remember, stocks are already down nearly 400 mil bu from estimates over the Summer. On the soybean side, we again don't see a lot of note happening other than possible upward adjustments to production in Brazil. Global stocks and stocks/use continue to be cumbersome at best, which along with possibly the biggest crop ever out of Brazil, will act to keep the upside relatively limited for the time being.
This morning's weekly export sales report for the week ending December 26th showed totals for all three of corn, soybeans and wheat that were both well below trade estimates and also down sharply from the week prior, possibly also attributing to the selling in the grain and soy markets. Corn exports for the week were seen at 777k mt's, which was down 55% from last week and the second lowest total of this marketing year. Featured buyers for the week were Mexico (292,500 mt's), Japan (179,100 mt's), and Colombia (160k mt's). Soybean sales were seen at 485k mt's, which was down nearly 51% from last week and was the lowest figure of the current marketing year. Featured buyer for the week was China, who booked 617,700 mt's, while unknown destinations assigned out/canceled 667,300 mt's. And lastly, wheat sales in the week were seen at 141k mt's, which was down 77% from last week and was also the lowest weekly figure of the current marketing year. Featured buyers for the week were Korea (35,900 mt's), Thailand (29,700 mt's), and Nigeria (27,500 mt's). Of note, meal sales for the week were almost right on trade expectations at 203,800 mt's, while bean oil sales were above trade expectations and similar to last week at 38.1k mt's. There were no sales for 2025/26.
Otherwise, the other ongoing theme of a lack of guidance on renewable fuel credits will be the other story that lingers in the background well into 2025. Renewable fuel producers/refiners are now officially in the dark, as past legislation has expired and there has yet to be any announcement on what incentives will be provided by 45Z. As long as this issue continues, trade in both the meal and oil markets, as well as oilshare and spreads, likely stays volatile. Exports are the other factor providing increased volatility at least on the oil side, as current commitments at roughly 1.3 mil lbs are already above the USDA's entire full year forecast of 1.1 mil lbs, which they just raised last month.
US weather forecasts again were little changed, with there continuing to be disagreement amongst the models on exact snowfall amounts/locations for the Midwest Sunday/Monday. Once this system moves through, things look to then be mostly dry for a few days in the east before another low pressure system moves in off the northwest and works its way eastward through the country into the end of next week/weekend. Temperatures look to remain well below average in the east for another 10 days, before the AI model continues to try and bring back warmer air into the mid-section of the country beyond January 13th. This will be the biggest thing to watch for over the next 48 hours, as the week-two precip outlooks are in fair agreement on average to above precip through the central Plains and into the northern Plains, while the eastern half of the country sees generally drier than average conditions.
Mid-day weather for Argentina was like the overnight runs in keeping with additional light/scattered rains in the south early next week, while areas to the east and northeast remain dry. Also not a lot of change for Brazil going into the weekend, with only the far southern state of Rio Grande do Sul expected to stay dry. Conditions through the rest of Brazil look to remain ideal, with average to above average rainfall expected to continue through at least mid-month. There is beginning to be more and more talk of a 170+ mmt soybean crop in Brazil, which as we've mentioned previously, will help to offset any potential losses that might occur in Argentina. We also reiterate that yield damage doesn't likely occur from the current forecast unless it persists past the middle/end of the month.
Have a good first weekend of 2025 and stay warm!