PM Comments January 8 2025
Good afternoon. Ag markets traded to lower closes on Wednesday, as fresh tariff threats from President-elect Trump mixed with rumors of better rain forecasts in Argentina led selling to emerge into the close of the session. Wires early this morning reported that Trump was considering declaring a national economic emergency in order to provide legal justification for his much-publicized "universal tariff" plan, but as has been the case with other related headlines of late, nobody but Trump himself knows exactly how likely this is or what will actually end up happening once he takes office in another 12 days. For this reason, we see it likely that markets become more numb to such news between now and then.
CH closed mid-week at 4.54, down 4 cents. CK was down 3 and 1/4 at 4.62 1/2. SH finished at 9.94 1/2, down 2 and 3/4. SK closed at 10.06, down a penny and 3/4. WH was down 6 and 1/4 at 5.36 1/4. Products were mixed, March soybean meal closed at 300.80, down $2.70/ton, and March soybean oil closed at 41.59, up 34 points. Livestock markets were mostly lower; February live cattle closed at 193.70, down $1.87, March feeders were down $2.95 at 264.97, and February hogs closed at 79.47, up 30 cents. Hogs made new lower lows for now the seventh consecutive session. Outside markets are mixed, crude oil futures are down around 90 cents/bbl, the Dow Jones index is up 40 points, and the US$ index is up around 50 points. The S&P500 is near unchanged and the NASDAQ is down 10 points.
Spreads ended Wednesday mostly lower, corn spreads were down 3/4 of a cent to down 2 and 3/4, and soybean spreads were down a penny to down 3 and 3/4. CH/CK closed at -8 1/2, down 3/4 of a cent, and SF/SH closed at -7, down 2 cents. SH/SK closed at -11 1/2, down a penny. CH/CK traded to its lowest level since the first of November today at -8 1/2.
USDA this morning for the second consecutive day announced daily sales flashes; private exporters reported sales of 120,000 mt's of soybeans for delivery to unknown destinations during the 2024/25 marketing year.
USDA this morning also published its monthly state level crop progress report, which details weather and crop summaries for 44 states and the New England area and is released through the winter months in place of the regular weekly crop progress report. Notable in the report was that many states in the Midwest including Illinois, Indiana, Kentucky, Michigan, Missouri, and Ohio saw above average precipitation amounts in the month of December, though topsoil and subsoil moisture levels remain one of the main concerns for producers in these areas. Across the I-states, subsoil moisture levels were seen mostly as adequate, but in Illinois, 32% was either short or very short, while Indiana registered a similar 30%; data was not reported for Iowa. To view the USDA's full report, please click here.
Also out this morning was the weekly ethanol production report for the week ending January 3rd, which was as expected on the production side but saw a jump in stocks to the highest level since May of last year. Daily production in the week averaged 1.102 mil bbls/day, which was down just under 1% from last week but up more than 5% from the same week last year; the number was a new four-month low albeit marginally. On the stocks side, inventories in the week were seen at 24.148 mil bbls, which was up just over 2% from both last week and the same week last year. We estimate corn usage in the week at 108.9 mil bu's, up from 104.5 mil the week prior. Cumulative usage in the marketing year has reached 1916.95 bil bu's compared to 1861.36 bil bu's last year and the USDA's full-year forecast of 5.500 bil bu's. The EIA report also showed updated petroleum stocks figures; crude oil stocks in the week were down 959k bbls to 414.642 mil bbls, gasoline stocks were up 6.33 mil bbls at 237.714 mil bbls, and distillate stocks were up 6.071 mil bbls at 128.938 mil bbls.
This afternoon's FOMC minutes from the December Fed meeting didn't offer a lot of Earth-shattering insight, but showed that officials anticipated the path towards the long-standing 2% inflation target may become more arduous in the year ahead due to possible changes in trade and immigration policy from the incoming Trump administration. The minutes also showed that a "vast majority" of the 19 officials present favored the quarter-point cut, but added some saw merit in keeping rates unchanged, indicating the final decision was still a close call. Other notable headlines from the minutes included an easing of concerns over a cooling labor market, and also mention that recent high inflation data and better spending were factors that would likely continue to influence future policy decisions.
Mid-day weather for the US was again mostly unchanged other than minor adjustments to the path of the winter storm set for the southern Midwest and mid-south beginning later tomorrow and lasting into the weekend. The GFS continues to see the heaviest snowfall amounts in northeast Texas and into southern Arkansas, where totals could reach 6-8" in some places. The rest of the storm's path is expected to receive a more general 1-4". Elsewhere, the rest of this week and into the weekend expects to see light/scattered snow in the northern Plains and stretching into the Great Lakes area, while moisture also again works its way into Oregon and Washington in the PNW. There were no updates to the temperature forecast from the overnight runs, while week-two precip guidance continues to show a wet bias stretching from the southwest/New Mexico north through Colorado and into northern Plains. The eastern half of the country sees average to slightly above average precip chances, while there is good agreement on moisture for the southeast and dryness for the northwest.
Argentina's week two forecast re-added all the precip in the northern and central part of the country in today's 12Z run, but was otherwise unchanged in the short term. The rest of this week will see good rains in the far western part of the country, with lighter/scattered rains expected through the south-central growing areas. Brazil is expected to seeing near ideal weather in the north and central parts of the country, while Rio Grande do Sul and other southern areas see the same forecast as northern Argentina; dryness looks to remain in the short term, before good rains are forecast in the week two period. Of note, a climatologist from the Buenos Aires Grain Exchange told Reuters that he expects rains to arrive to the region by mid-January according to their models, with 2-3" forecast for January 16th-22nd.
As a reminder, CBOT ag markets will close early at 12:15pm central time tomorrow in remembrance of former President Jimmy Carter. The stock market and stock index futures will be closed for the entirety of the day session, while metals, energies and currencies, among some other products, will see normal trading hours. Ag trade will resume at 7pm central time tomorrow evening. Note we will not send out our regular mid-day commentary tomorrow, and will send our afternoon commentary shortly after the markets close.