Latest / Closing Market Report / Jan 03 | Closing Market Report

Transcript

Jan 03 | Closing Market Report · Closing Market Report

• 0:00
  Todd Gleason: From the Land Grant University in Urbana Champaign, Illinois, this is the Closing Market Report for the 3rd day of January 2025. I'm Todd Gleason. Coming up, we'll talk about the commodity markets with Mike Zuzolo. He's at Global Comm Research dotcom out of Atchison, Kansas. I'll update you on the agricultural news for the day.
• 0:18
  And Eric Snodgrass from Conduit AG will be here to discuss the weather forecast in Argentina, Brazil, and the forecast over the weekend for the United States as well. Then we'll turn our attention to Commodity Week. If you can stay with us for the whole hour, you'll hear all of that with our panelists, including Matt Bennett from agmarket.net, Naomi Blohm of Total Farm Marketing, and Chuck Shelby of Risk Management Commodities on this Friday edition of the ag programming that comes to you from Illinois Public Media. It is public radio for the farming world. The Closing Market Report was established in January of 1985, celebrating 40 years, 10,000 episodes, and more than 30,000 interviews.
• 1:06
  announcer: Todd Gleason services are made available to WIL by University of Illinois Extension.
• 1:11
  Todd Gleason: March corn for the day settled at $4.50 3 quarters of ascent. It was down 8 3 quarters. The May at 4.58 and a quarter 9 lower in December. New crop at 4.40 3 quarters, down 5 3 quarters.
• 1:23
  The March soybeans, the most active now at 9.91 3 quarters, down 20 and a quarter. The May at $10.3 3 quarters, 21 and a quarter lower. And November beans at 108 and a quarter, down 19 and a quarter¢. Bean meal, $11.30 lower. The bean oil, down 34¢.
• 1:41
  Wheat futures, soft red, 16 and a half lower at 5.29 and a quarter. And the hard red at 5.39, down 12 3 quarters, both of those in the March contracts. Live cattle futures, 45¢
• 1:53
  higher
• 1:53
  at a $194 and a nickel. Feeders at 26417 and a half, down 2 dollars 2 and a half cents, and lean hogs at $80.77 and a half cents. 37 and a half cents lower. Crude oil, $74 up $87 for the day. Diesel fuel or heating oil, 6 and 6 tenths of a cent lower rather just 6 tenths of a cent lower.
• 2:13
  Gasoline, down 3 tenths, rather up 3 tenths of a cent for the day. Mike Susla, globalcommercesearch.com is not available this afternoon. So Kurt Kimmel has made himself available. Thank you, Kurt, from agmarket.net. How are things going on this Friday for you?
• 2:30
  Curt Kimmel: Well, not too good if you wanted the market to go up here, but, but we're doing well. We're waiting for the cold weather to come in and and see how much snow, everyone receives. But, no, to the marketplace as we started there, a lot of optimism coming into the New Year. I think we need to change the, wordage from maybe the bears have Thanksgiving, the bulls have New Year's, and they definitely had, New Year's for the green here for a little bit. We finished the month, December, closing out with the monthly price reversal to the upside.
• 3:05
  Then, of course, on Thursday's trade there, we followed through with some buying interest here, making things look fairly, good on the technical scale. But when you look at the big picture there, we were up against some downtrend resistance lines. We moved up to some resistance levels, and the market just kinda stalled on itself here. And, all of a sudden, we started to give it back, some gains. You can view this week's highs as some fairly decent resistance that technically supports just a couple pennies below Friday's close here.
• 3:40
  And the significance of that is we've got some, retracement levels, moving averages below the marketplace, and the concern is to kinda keep an eye on the market Sunday night. Hopefully, we'll have a little positive news to have a steady firm trade open up versus a gap lower or or move below, the lows we established here today. So, technically, we're in a critical area we need to hold to, keep the the bull in place, Todd. Fundamentally, this morning's selling interest also stimulated from the weekly export sales report. Since we had a holiday here Wednesday, the weekly export sales report, came out here this morning.
• 4:23
  Wheat sales were expected to be between 205,100,000 tons. They came in a 140. Corn was expected to be 8 100 to 1.4. It came in at 777. Soybeans, they expected 500 to 1.2.
• 4:39
  It came in at 484. So, even the meal and, was lower. Bean oil was fairly decent, so the sales slows down. But that's gotta be expected during a holiday trade also.
• 4:50
  Todd Gleason: Yeah. So you talked a lot about the technicals on the corn side for the soybeans. They've been flirting with the 20 and the 50 day. The January contract had traded above that all 4 trading days this week. It closed below that on Monday on 20, which is the lowest one, and today as well on Friday below that.
• 5:10
  The March, however, still above it as its settlement price. How what are you seeing technically in that marketplace, and is there concern with the soybeans?
• 5:21
  Curt Kimmel: Yeah. The way we we we roll down here, you can do some, for those that like to do a little math problem stuff, you do some simple retracements from the last low to yesterday's highs. You know, on the March beans, we closed at 91 3 quarters. 38% downs, 89 3 quarters. Halfway back down to the lowest established in December is 9, 81a half.
• 5:46
  So if we don't hang any giddy up here, 1st part of next week, a lot of tech issues be looking for about another 10¢ down. Stops will, come in at last Thursday's lows there at 86 3 quarters. You know, that's kind of an area that, will be watched also. Now if you wanna be optimistic, you can look at that soybean chart and say we're developing a head and shoulders bottom. We're pulling back here trying to complete the right shoulder.
• 6:21
  So once the selling interest dries up and everybody gets to where they wanna be, if we can hold these lower levels here, The technicians will probably say, it's gonna be awful dry in Argentina. Let's giddy up.
• 6:33
  Todd Gleason: What are you telling producers when they call? Are they saying, hey. I need to make a sale so I can pay some bills at this point. It's now January, or are they just collecting on what they've already made as it's related to sales and those are coming into the marketplace?
• 6:48
  Curt Kimmel: All the above. Plus, there was actually quite a bit of grain move here just right before Christmas. This last half of December, we saw the commercial side of the business be quite active on, picking up some in inventories. Some of these end users are actually priced out to the end of March, 1st April, on on on coverage because producer took advantage of this higher move above 4.50 in the March futures and same thing on the beans above, $10 in through here. But, no, I think you gotta push green out the door, collect some money here to be able to pay some bills, down the road.
• 7:27
  Options, we've been doing some strategies here, some covered positions to have some reownership. If something happens later on in June July, the weather forecast turns out like some of them are looking for, but it's gonna be all hard to get real bullish until we see some US weather, develop in late June to early July.
• 7:46
  Todd Gleason: And one last thing, earlier in the week, the hogs and pigs report was out. It showed that pigs per litters still continues to bump up. That's probably going to cause prices to be a bit lower, and maybe in the second, 3rd, and possibly Q4 of this year. What are you thinking about in terms of hogs or livestock?
• 8:05
  Curt Kimmel: Yeah. We've got, ample supplies here. We'll see how the economy goes, see how the demand, goes. Thing on the meat sector in general is the imports from the southern hemisphere, particularly beef. We're seeing a a fairly large increase of beef coming in, and that's warranted with these higher prices in through here.
• 8:30
  But, that's gonna help probably cap the market here as we move higher.
• 8:35
  Todd Gleason: Thank you much, Kurt. Kurt Kimmel is with agmarket.net. In today's agricultural news, we'll start in Argentina where the Buenos Aires Grain Exchange raised its corn planting estimate this week while trimming the pegged soybean area for the 2024, 25 season. The corn crop now seen covering about 16,300,000 acres up from the prior estimate of 15.56. The Exchange says the new forecast was a correction of the previous one.
• 9:04
  The soybean planted area now seen at 45,460,000 acres. That's a reduction of about a half a 1000000 acres from the previous estimate. The Exchange says farmers are sowing less on lower soybean prices, and many are planting alternatives. Soybean and corn compete usually for the same acres in Argentina much as it does here in the United States. Argentina is one of the world's top corn exporters and the number one exporter of soybean byproducts to international markets.
• 9:33
  Argentina's farmers have sown 85 percent of their soybean acres and about 81 percent of their corn crop. From Buenos Aires Argentina, let's move to Washington DC where the 45z clean fuel tax credits, which are key to expanding ethanol use in aviation fuel, may have to compete for dollars with President-elect Trump's efforts to preserve his 2017 tax cuts. Will there be a so far unfinalized 45 z credit for sustainable aviation fuel? Our Renewable Fuels Association head Jeff Cooper says that will depend a lot on funding to renew the Trump 2017 tax cuts.
• 10:12
  Geoff Cooper: How are you gonna pay for, those tax cuts? And and and, you know, frankly, we think that's why, Trump and and others are already looking for for for pay for it.
• 10:23
  Todd Gleason: Cooper says more Republicans are supporting inflation reduction act programs like the 45 c, including by forming a senate sustainable aviation fuel caucus last year.
• 10:34
  Geoff Cooper: They're seeing investment, or big plans for investment in their districts and states, as a result of some of these IRA provisions.
• 10:42
  Todd Gleason: However, the president-elect and some GOP lawmakers are targeting the IRA with its EV tax credits and other clean energy incentives. Cooper says efforts are underway to convince mister Trump to keep 45 z and other biofuel credits.
• 10:57
  Geoff Cooper: People in his his orbit are are pointing some of these things out to him and and we're, hopeful and expecting that, you know, that the Trump administration would not just throw the whole IRA out the window and and claw back any unspent funding, that they would take a more surgical and and more discerning approach, to the program.
• 11:17
  Todd Gleason: All the more reason, Cooper says, amid the uncertainty for the Treasury to finalize 45 z rules sooner rather than later. And that's a look at today's agricultural news. You're listening to the closing market report from Illinois Public Media, markets and weather for the farming world since 1985, 10000 episodes and more than 30,000 interviews.
• 11:54
  Earlier this week, the United States Department of Agriculture released the hogs and pig report. It put the December 1 inventory at 75,800,000 head nationwide. That's down about a percentage point from last quarter, but up half a percent from last year. It was the size, however, of the September through November crop that really captured the trade's attention, says University of Missouri agricultural economist, Jason Franklin.
• 12:20
  Jason Franken: The main surprise is a record September to November pig crop up more than 2% from a year ago and just above the upper end of the range of pre report expectations as a marginal cut in sows farrowed was more than offset by 11.92 pigs per litter, up more than 2% from last year's record for the period, continuing the upward trend in pigs per litter. While this level of productivity growth took the trade by surprise in part because it's difficult to continually break records by large margins, further productivity growth is feasible as Denmark is recently averaging around 15 pigs per litter.
• 12:53
  Todd Gleason: While there are more pigs per litter coming, it's the number of market ready hogs that drives the nearby prices. Those numbers came in about as expected from USDA and frankincense are neutral the marketplace. The number of pigs under a £120 is up from last year, and that makes the midterm market outlook just a bit bearish. Still, there are about 0.8% more hogs weighing under £180 than a year ago. Those will go to market between January March, implying similar supplies as last year for the period overall.
• 13:27
  That's when things turn bearish, says Franken.
• 13:31
  Jason Franken: The greater than anticipated increases in inventories of lighter weight hogs stems from the unanticipated record September to November pig crop, which also indicates bearishly higher slaughter levels for April through June. Respective slaughter levels should be similar to last year for July through September and higher for the remainder of 2025 given farrowing intentions for this winter nearly identical to actual farrowing a year ago and those for spring at about 1.4% higher and more than expected. However, this all depends on whether current trends in pigs per litter persist.
• 14:03
  Todd Gleason: It is the number of pigs per litter that is driving the supply side of the market. As for consumption, USDA estimates per capita domestic pork consumption at £50.5 per person for 2024 and forecast the number rising to £50.9 this year. That figure still below the pre COVID level of £52.1. Projected pork exports are revised downward too, reflecting expectations for higher hog and pork prices to persist through the year. Even so, the total exports for 2025 are anticipated to be about 3% higher than a year ago.
• 14:45
  Let's turn our attention now to the weather forecast. We're joined by Eric Snodgrass. He's at Conduit AG. Hi. Thanks for being with us, Eric.
• 14:53
  You're traveling again as usual, flying out of a hair today, I guess. Yeah. I suppose that's that's a good thing. We'll talk about that because there might be some issues, by Sunday. But let's begin with what, the month of December look like here in the United States.
• 15:09
  Eric Snodgrass: Yeah. So on on the whole, December is gonna go down as a warmer than average December for not only the Midwest, but really out in the Western United States. And and then on top of that, while we made some recovery in moisture across, parts of the ice states and really a lot of the corn belt, there's still drought in places that I'm concerned about. And one of those places would be the northern plains, and I'm very concerned about parts of Arizona, New Mexico, California, Southern California, and Mexico. And I know that feels like, just a half a world away, but honestly, if we continue to watch drought build into the southwestern United States and into Mexico, that's going to be something that will be suspicious of moving North and East, which will be toward us come next year.
• 15:46
  So if there's just another thing to be on the lookout for, December just continue to keep those areas, drier. So, yeah, I think it's important we understand those soil moisture issues and that we made a little bit of a recovery, but we have a long way to go.
• 15:59
  Todd Gleason: A long way. Will that be, partly alleviated this weekend in Kansas and Missouri and Illinois and other places?
• 16:06
  Eric Snodgrass: Yeah. I mean, it's kinda funny. You know Arlen Suderman quite well, and he and I have been chit chatting all this week because we're heading to the same place to do a a a event early next week. And Arlen was like, when should I get out? I'm like, you need to leave before Saturday because the snow is gonna start there.
• 16:20
  It's gonna be in parts of Nebraska, spread into Missouri, gonna come into southern the southern, you know, I I would say that if you're north of 70 excuse me. If you're north of 80, limited chances of snow, but if you're, you know, where we are here in Mohammed and South, the chances of snow are significantly higher. Of course, we got a winter storm watch out. There's a pretty good chance that there's gonna be a wide swath of 6 plus inches, but we're gonna really struggle with getting these precipitation totals right for two reasons, Todd. The first is the speed of the system is very fast in one of the models, very slow in another.
• 16:50
  So as you can imagine, the GFS which is slower, it wants to put down 20 inches of snow in Springfield for example. European scooting it all along and it's less than half of that amount. So watching the system set up on Saturday and Saturday night will tell us how much snow we get on Sunday as it goes across. So I hate to say this to you, Todd, but if you want my snowfall forecast for Mohammed, I'm gonna say 3 to 10 inches somewhere in there based on the speed of the system. Now real quick, what I really don't like is to the south of us, there's gonna be a mixture of sleet and freezing rain, and we could really hit cities like Saint Louis over to Evansville pretty hard.
• 17:25
  But we'll see a pretty good swath of snow out of this. There's gonna be plenty of moisture in it. There's up to an inch of liquid in the whole thing. So I like it. It's gonna be bringing in some, some moisture.
• 17:34
  And here's the other thing. When it's done, it's gonna be around for a while because our temperatures are gonna bottom out for several days after that. So, yeah, lot of exciting stuff going on right now.
• 17:43
  Todd Gleason: How cold next week?
• 17:45
  Eric Snodgrass: I don't think you wanna know, but, we're gonna struggle to get out of the teens in most of the days. And we wonder if the temperatures are biased a little too warm in the model simply because every time you have snow cover on the ground like this, the the atmosphere is much, much more capable of dropping temperatures especially overnight. So don't be surprised if there's a few mornings we woke up close to 0 Fahrenheit before dawn.
• 18:06
  Todd Gleason: You started our conversation by talking about, drier conditions to the southwest. Yeah. Is there still concern, and I'm sure there is, about what drought and dry conditions might look like in the United States once we get into the growing season?
• 18:20
  Eric Snodgrass: Yeah. I I I think the farther east you go, so take the Mississippi River and just keep going east, the better the chances are that there's not gonna be a drought scenario developing. But I'm worried about the plains, both north and south. I'm worried about the drought in Mexico like we started off talking about. And, you know, with La Nina probably at its peak right now, it's pretty common that following one of these, we tend to have drier risks throughout the corn belt.
• 18:41
  So I think it's gonna be a west versus east issue, west being drier, east being wetter as we get into spring and summer of 2025.
• 18:48
  Todd Gleason: The commodity markets have been paying a lot of attention to the hot and drier weather in Argentina, particularly what do you know about things happening in South America today?
• 18:57
  Eric Snodgrass: Well, I I think what they're, this is me being critical here, Todd, but I think what they're what they're looking for is some sort of story. Because right now in Argentina, sure, it's dry, but they've had pockets of storms that have come through lately. So did it really do a lot of damage? I mean, the NDVI values are still above historic averages. And even though it's dry in the forecast for probably the next couple of weeks, I've seen dry forecasts and had storms pop up in the middle of them.
• 19:21
  It's middle of summer down there so we gotta remember that can happen. Southern Brazil is also dry but not a story because of how wet December was. Not gonna be an issue. And we keep the center west region very wet for a while. So I'll just finish with this, Todd.
• 19:34
  They're predicting some of the models that it's gonna be dry to probably about 17th to 20th. That's a that's a good 2 week stretch of dry weather. Every long range forecast I've got right now breaks that all down at the end of January, bringing rain back into those dry spots. And if that does happen, any sort of little gain we get on a weather scare out of Argentina is gonna be, you know, evaporating pretty quickly as we work our way into February. So that's what I know today, Todd.
• 19:59
  Todd Gleason: Hey. Thank you much. I appreciate it.
• 20:01
  Eric Snodgrass: Yeah. You bet. Have a good one.
• 20:02
  Todd Gleason: You too, and have a safe flight, Eric. Eric Snodgrass is with Conduit AG. That's Conduit dot hag online. You've been listening to the Closing Market Report on this Friday afternoon. It is a production of Illinois Public Medium.
• 20:15
  It's public radio for the farming world.