Market Watch with Austin Schroeder
January 17, 2025
Deviation from the Mean
We are about to embark on the second Trump administration, starting next week. Leaving politics out of it, the biggest change from the last 4 years that we are likely to see is the reemergence policy or executive actions presented at the drop of a Truth Social post (or Tweet). This deviates from the historical pattern of official press releases or the reports citing sources, i.e. not necessarily the way things have been done in the past. The one thing to expect will likely be the unexpected. Of course, while this does deviate from the past set precedent, the market has a frame of reference to look back on from his first four years. Just like the markets deviate from the mean, they are also mean reverting. While there will still likely be a few market shock factors, they may know what to look for this go ‘round.
Corn continued its climb this week as March was up 13 ¾ cents. EIA data showed ethanol production slipping back another 7,000 barrels per day to 1.095 million bpd in the week of 1/10. Stocks of ethanol continue to build, this time by another 860,000 barrels to 25.008 million barrels. Export Sales data showed 2024/25 corn bookings bouncing from the previous holiday week at 1.024 MMT for the week ending on January 9. That took export commitments to 40.27 MMT, which is 65% of the new US export forecast and still ahead of the average sales pace of 61%. CFTC data indicated managed money spec traders in corn futures and options increasing their net long position by 38,882 contracts as of January 14, taking their net long to 292,228 the largest since May 2022.
Wheat posted mixed trade across the three markets this week. Chicago March was the strongest, up 8 cents (1.51%) on the week. March Kansas City posted a 3 1/4 cent (0.59%) loss this week. MPLS March was just 3/4 cent (1.13%) lower than last Friday. The weekly Export Sales report showed US wheat export business back up to 513,424 MT during the week of January 9. That took export sale commitments to 17.705 MMT, which is now 77% of the USDA forecast for exports and still lagging the 85% average selling pace. Commitment of Traders data showed spec funds adding 5,756 contracts to their nets short position in CBT wheat futures and options as of January14 to 94,393 contracts. In KC wheat, they were at a net short of 37,606 contracts, an increase of 5,748 contracts as of Tuesday.
Soybeans had a back-and-forth week as March was up 8 ¾ cents since last Friday. Bean oil was up another 11 points, as meal was down $1.10/ton on the week (-3.34 %). USDA reported private export sales of 528,000 MT of soybeans to China for 2024/25 delivery this week. NOPA data showed a total of 206.6 mbu of soybeans crushed in December, an all-time record for any month. Bean oil stocks were 1.24 billion lbs at the end of December, down 9.11% from the year prior. This week’s Export Sales report tallied 2024/25 soybean bookings at 569,142 MT, back up from the previous MY low. That took the accumulated shipped and unshipped sales to 40.891 MMT. That is 82% of USDA’s expected export total for the marketing year, above the 81% average pace. Commitment of Traders data indicated spec traders in soybean futures and options flipping to a net long of 34,833 contracts as of January 14. That was a move of 63,445 contracts in that week and the first net long in over a year.
Live cattle pulled back this week, even as cash remained steady, with February down $2.025 (-1.02%). Cash trade was steady this week, reported at $200-201in the South and live sales of $202-205 in the North. Feeders were up another $1.15 (0.42%) on the week in the January contract. The CME Feeder Cattle Index slipped back down $1.49 week/week to $277.06. Wholesale boxed beef prices were higher again this week, as the Chc/Sel spread narrowed to $13.86/cwt. Choice was up $0.85 (0.3%) to $333.69, while Select was $5.69 higher (1.8%) to $319.83. Weekly beef production was up 2.9% from last week and 3.7% above the same week last year at 527.0 million lbs. Weekly Export Sales data showed a total of 9,732 MT of beef sold for 2025 delivery in the week of January 9. Export shipments totaled 14,640 MT in that week, a 3-week high. Large managed money spec traders in live cattle futures and options added 3,965 contracts to their net long as of last Tuesday, to 147,421 contracts.
Hogs were back down $1.425 this week, a 1.73% gain. The CME Lean Hog Index was back up 60 cents this week at $81.19 as of January 15. USDA’s Pork Carcass Cutout was back down 76 cents this week. The butt, ham, and belly were the primals reported lower, down $2.68 and $6.08 respectively. Pork production totaled 571.7 million lbs this week, back up 4.2% from last week and 0.3% larger than the same week last year. Export Sales data indicated a total of 30,257 MT of pork shipped in the week of January 9. Shipments were tallied at 38,180 MT, the largest since last April. Commitment of Traders data showed specs adding 6,408 contracts back to their net long position as of January 14 to a net position of 103,598 contracts.
Cotton was back up 59 points this week, taking back much of the previous week’s losses. The weekly Export Sales report tallied cotton sales back up this week to 316,248 RB of cotton sold in the week of January 9. Shipments were a MY higher at 224,825 RB. Commitments are now at 8.068 million RB, which is 78% of the new USDA forecast, compared to the normal sales pace of 82% of USDA’s export projection by now. The FSA Adjusted World Price for cotton was back down 68 points this week, to 53.98 cents/lb. CFTC Commitment of Traders data showed managed money spec traders adding 3,744 contracts to their net short position as of 1/14 at 43,086 contacts.
Market Watch
Next week starts a day late, as the markets and government will be closed for Martin Luther King Jr. Day on Monday. That is also inauguration day, with President-elect Trump set to be sworn into office. The weekly Export Inspections report will be pushed back to a Tuesday morning release. Due to the holiday, the EIA will release their weekly Petroleum Status Report on Thursday. Friday morning, USDA will release their Export Sales report, with the Cold Storage and Cattle on Feed reports out that afternoon.
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