AM Comments January 6 2025
Good morning. Ag markets are recovering some of the losses seen on Friday to start the week this as week, as traders look to return from a couple weeks of holiday disrupted trade for the first full trading week in 2025. News over the weekend remained largely limited, but a sharply lower US $ to start Monday has helped lift values early on. As we mentioned to end last week, key over the next several days will be first the USDA's January WASDE report on Friday, and then Conab's Brazil crop update for the month next week on the 14th; most feel the soybean production estimate should surpass the 170 mmt mark, but by how much is the big question. Otherwise, technical trading looks to continue being the other dominant feature, with the corn market still trading near right near old long-standing resistance. Corn futures this morning are trading 5-6 cents higher, soybean futures are trading 13-17 cents higher, and the Chicago wheat market is up 7-8 cents. Products are higher, soybean meal is up $3-4/ton and soybean oil is up around 70 points. Outside markets are mixed, crude oil futures are up 40-50 cents/bbl, the Dow Jones index is up 150 points, and the US$ index is down 95-100 points. The S&P500 is up 40 points and the NASDAQ is up 200 points.
Today's Reports: Weekly Export Inspections; CFTC Commitment of Traders
- The CME Group for Monday assigned another 279 contracts of soybean meal for delivery, and also 16 contracts of soybean oil and 66 contracts of soybeans.
- CFTC commitments of traders data for the week ending Tuesday the 31st was delayed from Friday to today due to last week's New Year's holiday, and will be released after the close this afternoon. Traders see funds having further added to their net-long position, while some measure of short-covering is expected to be seen in the soybeans.
- The Buenos Aires Grain Exchange's weekly crop update showed as of January 2nd, soybean planting had advanced to 92.7% complete, while corn planting seen at 87.4% complete. Wheat harvest advanced to 94.7% complete. Notably, the report also showed soil moisture condition for soybeans dropping 7% from last week in the optimal category, while corn saw a similar 6.5% drop.
- According to data compiled by a private biofuels advisory group (AEGIS Hedging), renewable diesel producers ramped up production in October to 77% of total capacity, which was the highest level since July. Similarly, biodiesel producers operated at 89% of capacity in the month, the highest level since June of 2023. The group cited rising utilization rates and improving margins as reasons for the jump.
- Headline political news over the weekend had nothing to do with current President Biden or incoming President Donald Trump, but instead focused on Canada, where a source familiar with the matter said that Prime Minister Justin Trudeau was expected to resign in the coming days, but added that no official decision has been made; Trudeau has been in power since 2015, but has recently fallen out of public favor.
- Otherwise, key in the equity markets this week aside from anything political will be Friday's non-farm payrolls report, which is expected to show a roughly 160k increase in hiring in December. If realized, that would bring the annual monthly hiring rate for 2024 to about 180,000, which would be a new four-year low. Also of note this week will be the minutes from the December Fed meeting, which are due out Wednesday.
- Weekend snows showed up largely as expected Sunday/Monday for a decent sized swath of the Midwest, with a nod to the forecasting models being warranted this morning for their accuracy; accumulation of 6-12" was seen from northeast OK through N MO and into S IL/IN and then further east into KY/WV. Heaviest totals according to satellite were seen in OK, and also from lake effect snow in western NY.
- This system is expected to continue providing snow/rain/ice for the East Coast through the morning this morning, before exiting into the Atlantic by tonight. The rest of the week then looks to see a few days of drier conditions save for light snow chances in the northeast, before another large system gathers out of the Gulf and again works its way through the mid-south and southern Midwest into this weekend.
- As cool air will be present well into the south, models see this system having the potential to put down measurable snowfall through a wide part of northeast TX and then east through the very northern parts of MS/AL/GA Thursday/Friday/Saturday this week. High temps in these areas don't look to reach much above 40 degrees F, with high's at the Gulf seen in the low/mid 50's.
- Week-two outlooks coming out of the weekend continue to show a drier bias for a lot of the country January 14th-20th, with average to maybe slightly above average precip seen for a narrow band stretching N from W TX through the Plains and up the eastern side of the Rockies. On the temp side, the EU AI model continues to run warmer than the ensembles, but is slightly cooler than was seen to end last week.
- Satellite data shows eastern and southeastern Argentina largely missed rains over the weekend, while the western half of the country picked up decent moisture of 0.1-1"; heavier totals were seen in the far northwest, and also in a small pocket in the center-south. Brazil continued to see good rains everywhere but the far south.
- Forecasts added some very light/scattered precip for southern Argentine growing areas over the weekend, but otherwise continue to offer the same general pattern as was seen to end last week; northern and northeastern parts of Argentina, as well as southern Brazil, look to continue on the dry side, while the remainder of Brazil sees average to above average precip.
- As a reminder for this week, markets at the CBOT will see an early 12:15pm central time close on Thursday, January 9th, to honor the death of former President Jimmy Carter. The proceedings will also delay the release of the regular weekly export sales report to Friday.