PM Comments January 9 2025
Good afternoon. Expectedly quiet trade unfolded in Thursday's shortened trading session, with corn and beans both closing within a few cents of unchanged for the day. Volume was holiday-like, with March beans unable to surpass the 70k contract mark and March corn barely able to surpass 120k contracts.
CH closed Thursday at 4.56, up 2 cents. CK was up 2 also at 4.64 1/2. SH closed at 9.99, up 4 1/2 cents. SK was up 4 at 10.10 3/4. WH finished at 5.34, down 2 and 1/4. Products were mixed, March soybean meal closed at 299.30, down $1.50/ton, and March soybean oil closed at 42.76, up 1.17. Outside day higher for bean oil.
Livestock markets were higher, February live cattle closed at 197.60, up $3.90, March feeders closed at 268.30, up $3.32, and February hogs closed at 81.77, up $2.30. Hogs had a gap-higher start to the session this morning, while feeders made new contract highs and live cattle made new highs for the move.
Crude oil futures are up 70-80 cents/bbl, while the US$ index is up 10-15 points. The stock index futures were all marginally lower when they halted trading at 8:30am central time this morning.
Spreads were mostly quiet, with CH/CK trading from -7 3/4 to -8 1/2, while SH/SK traded -10 1/2 to -11 3/4.
Along with the delay in regular weekly export sales this morning, the closing of USDA's offices on Thursday also meant there were no daily export announcements this morning.
News was otherwise lacking on Thursday, as the shuttering of the stock market and the closure of government offices provided a lack of macro influence. Going into the weekend tomorrow, price action will be largely determined by what the USDA has to offer in its 11am central time data dump.
It seems this is the first report in a while where not all of the trade is positioned on the same side of the fence, which could produce fireworks through the closing hours of tomorrow's session. There are questions surrounding final corn yield estimates, with some in the trade seeing a possibility at a higher yield figure, while others think the trend of falling yields seen before the December report will carry into the final number tomorrow. The addition of the quarterly stocks figure adds on even another layer, with cash markets through the Fall and first part of Winter hinting at possibly a tighter stocks situation than is anticipated.
Soybeans could also see a yield surprise out of tomorrow's report, but the range of pre-report estimates would lead one to believe the odds are less likely than corn. Otherwise, this will likely be another report where the focus lies in South America, as the trade does not expect any noticeable updates to either crush or exports on the demand side. Most interesting likely will be whether USDA decides to increase production estimates in Brazil, and if so, by how much. And in Argentina, we see the dryness as too recent to cause any significant downward adjustments here at this point.
Also now expected tomorrow and unrelated to WASDE or any of the other USDA reports is preliminary guidance from the Biden administration on clean fuel tax credits, otherwise known as 45Z; Reuters, citing sources familiar, said guidance would be issued on Friday, but added that the final decision on the policy would lie with the incoming Trump administration. The news lifted bean oil futures to gains of more than 2%, while the rest of the space was otherwise quiet.
Back to South America, farmer group Aprosoja-MT reported yesterday that farmers in Mato Grosso had begun soybean harvest, though no official percentage progress estimate was given. Last year, the state had harvested 6.46% of its soybean production by January 12th. Mato Grosso is Brazil's number 1 producing state, accounting for just under 30% of the country's total production annually.
Other news of note through the morning Thursday included reports that the International Longshoremen's Association and the United States Maritime Alliance had reached a tentative deal on a new six-year labor contract, averting further possible strikes and supply chain disruptions. Notably, these are the same groups that had disputes over labor contracts earlier this Fall, when ILA President Harold Daggett went viral on social media after appearing in a video discussing the situation.
In cash markets, sources are reporting that a train derailment at ADM's St. Louis facility has stopped all traffic going in or out of the facility as of mid-morning, noting that further updates would be provided if any changes occur.
As we mentioned this morning, the biggest weather feature through the rest of the week and into the weekend remains the winter storm event for the Dallas metro area and the broader mid-south and southeast, where 2-8" of snowfall is expected for an area from the TX/OK border east to the Carolina's. Models see a brief warm up in temps for the central part of the US the middle of next week, but much cooler than average air is then seen returning shortly after.
Weather focus in South America remains centered on Argentina, where short term forecasts continue to show broadly dry conditions for all but the far west of the country with improving precip elsewhere into the end of the month. Conditions in Brazil remain for all but the far south, which is in a similar weather pattern to what is being seen in northern and northeast Argentina.
Markets will reopen this evening at the normal 7pm central time, and will then see normal trading hours for the remainder of the week and into the weekend on Friday.