We kicked off the day with Fed Barkin Speech at 7:00 A.M., Trade Balance, Exports, & Imports at 7:30 A.M., Redbook YoY at 7:55 A.M., ISM Services PMI, JOLT’s Job Openings, ISM Services Business Activity, ISM Services Employment, ISM Services New Orders, ISM Services Prices, and JOLT’s Job Quits at 9:00 A.M., 42-Day Bill Auction at 10:30 A.M., 10-Year Note Auction at 12:00 P.M., API Energy Stocks, LMI Logistics Managers Index, and Total Vehicle Sales at 3:30 P.M.

The delayed Commitment of Traders report showed a week of buying in the primary agriculture markets for the week ending Dec 31. Funds bought 67,859 contracts in corn, 25,436 contracts in soybeans, and 31,429 contracts in soybean meal. Funds bought 3,054 contracts across all w wheat exchanges, 626 contracts in live cattle, and 1,614 contracts in feeder cattle. Funds sold 9,015 contracts in feeder cattle and 13,044 contracts in lean hogs , at the beginning of the year, the funds in the corn market of 228,806 contracts is the largest since 2022. The funds net short position in soybeans of 42,447 contracts is the most since 2018, and the funds short position in wheat of 147,766 contracts is the most since 2028.

Photo by Jesse Gardner on Unsplash

South American Weather pattern Discussion

The arrival of La Nina and the rapid development of heat/dryness in Argentina/Brazil provides the first weather threat of the season, but Ag Resources (ARC) is cautious trimming South American row crop production. Long range guidance maintains this La Nina event will be rather short-lived. Equatorial Pacific warming is forecast in Jan-Feb, with neutral ENSO probable in spring. The return of needed rain to Arg/S Brazil is anticipated in late Jan/early Feb, and most recently published 16-30 day guidance features near normal precipitation in Argentina Jan 20-Feb 3 – which would be timely for corn and soybeans planted in late November and December. Additionally, the lack of La Nina/El Nino implies normal US weather during and just after planting.

Lagging Chinese Ag Imports Number Crunch:

ARC and myself with many other analysts & traders chief concern with respect to ag prices in 2025 is the loss of Chines import demand – which can’t be fully replaced by Mexico or other growth countries in SE Asia. Recall population contraction is at the core of China’s economic woes and unfortunately this is a generational issue that will be difficult to solve over the next decade. Volume graphics showed that 2020-2021’s bull market was in part sparked by the arrival of bulk Chinese demand for US products. The value of imports in 2023 was $29 billion. The value of US exports to China through October 2024 sits just at $18 billion- down $4.4 billion (19%) from Jan-Oct a year ago. Even in quantity terms, the tonnage of US ag products shipped to China in 2024 through October is down 4 million tons at 28.1 million. Lagging Chinese ag imports go deeper than just political preferences. Most concerning is that official export data and vessel counts from the US and South America indicate that actual Chinese demand is in fast retreat, with no quick fix.

CBOT Corn Recovers, Fails to Score New High; USDA/Argentine Weather Key Drivers into Mid-Jan:

Global corn markets ended firm as the major weather forecasting models agree that a pattern of net soil moisture loss persists in Argentina & across Southern Brazil into Jan 20^th. Whether rain is allowed to return thereafter is critical, while much of the trade awaits NASS’s final US yield and Dec 1^st stocks before engaging in new positions. In the short run, breaks will be limited until Argentina’s weather pattern shifts, but ARC’s long-term strategy remains centered on rewarding rallies. Of note is that managed fund net length on Dec 31^st expanded to 229,000 contracts, up 68,000 on the previous week and the largest since February 2023. Notice also this rests at the upper end of history and is subject to liquidation if South American weather improves, or NASS’s report on Friday lacks bullish surprises. China’s absence from the market and probable expansion of US acreage in spring prevents supply fear. Be prepared to add sales on further rallies.

More By This Author:

Brazil Soybean Exports in Full Swing Next 2-Weeks. The Corn & Ethanol Report
End Of The Run For Upside 2025 Grain Prices? The Corn And Ethanol Report
Grains Remained Firm On Tuesday. The Corn & Ethanol