Market Watch with Austin Schroeder
December 20, 2024
The Grinch
We all know about the story of The Grinch from the old Dr. Seuss book and the several movie renditions (of which my kids are obsessed with all three). The mean old Mr. Grinch, who likes no one wanted to steal Christmas from the Who’s down in Whoville. However, by the end of the story the Grinch’s heart grow three times in size, and he is full of the Christmas spirit. Well, for the commodities, the Grinch this year has taken the formula of a bear. Despite a comeback on Thursday and Friday, most of the commodities ended with some sort of weakness since last Friday. However, the late week’s action gave us hope that their hearts are starting to grow.
Corn again had some back and forth action this week, as March managed another weekly gain of 4 1/4 cents. USDA daily export sale announcements totaled 455,400 MT to Columbia and Mexico this week. EIA data showed ethanol production back up over the 1.1 million barrel per day mark to 1.103 million bpd in the week of 12/13. Stocks of ethanol were down 12,000 barrels to 22.636 million barrels. Export Sales data saw 2024/25 corn sales back up from the previous 11-week low to 1.175 MMT for the week ending on December 12. That took export commitments to 36.3 MMT, which is 58% of the fresh US export forecast and still ahead of the average sales pace of 55%. CFTC data via the Commitment od traders report tallied spec funds in corn futures and options trimming back 6,475 contracts from their net long as of Tuesday. By December 17, they were net long 159,415 contracts.
Wheat felt more pressure this week, as all three markets were in the red. Chicago March down another 19 1/4 cents (-3.49%) on the week, as some wetter weather is expected to make its way to SRW country. March Kansas City posted a loss of 12 1/4 cents (-2.2%) this week. MPLS March was 8 1/4 cents (-1.38%) back lower since last Friday. Russia has issued an export quota on wheat of 10.6 MMT for the Feb 15 through June 30 period, well below the 29 MMT grain export quota from last year. The weekly Export Sales report showed US wheat export business improving back up to 457,933 MT during the week of 12/12. That took export sale commitments to 16.3 MMT, which is now 71% of the USDA forecast for exports and still lagging the 78% average selling pace. The weekly Commitment of Traders report from CFTC tallied spec traders adding back 20,622 contracts to their CBT wheat net short as of December 17 to 87,401 contracts by Tuesday. In KC wheat, they did the opposite, trimming 3,369 contracts from their net short as of December 17 to 33,067 contracts.
Soybean bulls gave a valiant effort after a downside breakout this week, but still closed the week with 13 3/4 losses in January. January bean meal got some late week resurgence on a drier Argentina forecast, up $8.30/ton. Soybean oil was the weak spot for the complex, 313 points (7.35%) lower it the January contract. NOPA data from Monday showed November crush among members at 193.19 mbu, below estimates but a November record. Bean oil stocks were up 1.47% from last month at 1.08 million lbs. There were a few daily soybean export sale announcements totaling 546,200 MT to unknown destinations and Spain this week, with another 120,000 MT of meal sold to Columbia. This week’s Export Sales report tallied 2024/25 soybean bookings at 1.42 MMT, an improvement from last week. That took the accumulated shipped and unshipped sales to 38.7 MMT. That is 78% of USDA’s expected export total for the marketing year, now above the 77% average pace. Commitment of Traders data showed managed money adding back 17,932 contracts to their net short position in soybean futures and options as of 12/17. That position stood at 76,252 contracts by Tuesday.
Live cattle were in retreat mode this week, as February was down $3.625 (-1.89%). Cash trade was slow this week with $191 in the South and the North steady at $195. Feeders were the followers again this week up $2.05 (-0.8%) in the January contract on the week. The CME Feeder Cattle Index was back down 44 cents week/week to $262.15. Wholesale boxed beef prices were mixed this week, as the Chc/Sel spread narrowed to $29.94/cwt. Choice was down 54 cents (-0.2%) to $315.89, while Select was $2.05 higher (0.7%) to $285.91. Monthly Cattle on Feed data showed a total of 1.796 million head of cattle placed during November, which was down 3.7% from last year. November marketings were down 1.48% at 1.725 million head. December 1 on feed inventory was down 0.28% at 11.982 million head from 2023. Weekly beef production was up 1.4% from last week and 1.8% above last year at 534.7 million lbs. Year to date production is down 0.5% on 3.6% fewer head sent to slaughter. CFTC Commitment of Traders data showed spec funds adding 8,040 contracts to their net long at 134,348 contracts in live cattle futures and options as of Tuesday. In Feeder cattle, managed money added 712 contracts to their net long as of 12/17 to 20,578 contracts.
Hogs managed to sneak out some gains this week, as February was up just a nickel, helped by the Friday rally. The CME Lean Hog Index was back up 29 cents this week at $84.21 as of December 18. USDA’s Pork Carcass Cutout was up $2.67 (2.8%) this week to $97.28. The loin, picnic, and ham were all reported lower, with the belly up $23.02 and the driver to the upside. Pork production totaled 557.7 million lbs this week, back up 1.1% from last week and 6.6% above the same week last year. On the year, production is up 1.2%, with hog slaughter up 0.8%. The large managed money spec traders in lean hog futures and options cut back another 8,451 contracts to extend the pullback from their recent record net long as of 12/17. They took their net long to 122,308 contracts by Tuesday.
Cotton futures continued their slide this week after falling back below the 70 cent level, with March down 121 points this week. Cotton Ginnings data tallied 1.748 million RB of cotton ginned in the first two weeks of December, taking the total to 11.425 million RB by 12/15, up 13% from the same point last year. Thursday’s Export Sales report tallied cotton sales back up from last week at 194,895 RB of cotton sold in the week of 12/12. Shipments were back down to 128,573 RB, a 5-week low. Commitments are now at 7.2 million RB, which is 68% of the USDA forecast, compared to the normal sales pace of 75% of USDA’s export projection by now. The FSA Adjusted World Price for cotton was down another 113 points this week, to 55.09 cents/lb. Friday’s Commitment of Traders data showed managed money adding back 7,034 contracts to their net short in cotton futures and options as of 12/17. They took that net position to 29,257 contracts as of Tuesday.
Market Watch
Next week will be limited on trade due to the holiday. However, it will kick off with cattle traders reacting to the Cattle on Feed report from Friday afternoon. Assuming the government funding bill gets passed and there is no shutdown next week, we will see the Export Inspections report on Monday morning per normal. The quarterly Hogs & Pigs report will be out that afternoon, as well as the Cold Storage report. The markets will close early on Tuesday, as well as being closed on Wednesday in observance of Christmas. We will get a hard open on Thursday morning. EIA’s weekly Petroleum Status Report should be published on Thursday morning. On Friday, FAS will release the weekly Export Sales report, delayed due to the holiday. January grain/soy options also expire on Friday.
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There is a risk of loss in futures and options trading. Similar risks exist for cash commodity producers. Past performance is not necessarily indicative of future results.
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