Perspective: Mid-Day Commentary for December 27

By: Arlan Suderman, Chief Commodities Economist

Fri, 27 Dec 2024, 17:41

Perspective: Mid-Day Commentary

Arlan Suderman

Chief Commodities Economist

December 27 - It's not a Santa Claus rally we're seeing on Wall Street today, but rather tax-related profit taking ahead of the end of the year, and an opportunity for many fund managers to show a profit on their year-end books. It's not that the selling is large, but rather that the selling has a larger impact on the market when overall trade volume is thin, as it is particularly so during the holiday period. The VIX firmed to trade near 18 as a result, while the dollar index continuing to consolidate near 108.1. Yields on 10-year Treasuries are trading near 4.61%, while yields on 2-year Treasuries are trading near 4.31%. Crude oil prices are modestly higher as the again trade near the upper end of the trading range that has largely contained prices over the past couple of months, while the grain and oilseed markets are mixed.

Corn prices saw profit taking today following yesterday's surge through chart resistance at the 200-day moving average to trade to their highest level since summer, although lingering optimism and the turning chart signals continued to provide support beneath prices. That also provided support for wheat to bounce off support levels as we approach the end of the year. Meanwhile, soybean prices were down today as we again focused on the approaching Brazilian harvest and the great uncertainty of demand for soyoil for biofuel production as we turn the calendar to 2025 in the absence of solid 45Z guidelines.

Exporters sold 67.4 million bushels of corn in the week ending December 19, the largest of the past 27 years that I've kept records for this week of the year. They also sold 35.9 million bushels of 2024 soybeans, along with 22.5 million bushels of last year's wheat crop during the week. No grain sorghum sales were made during the week. Mexico was the featured corn buyer during the week at a net 24 million bushels. That brings marketing year to date corn sales to Mexico to 587 million bushels, up 44 million from this point last year. Marketing year to date sales of U.S. corn to all destinations totals 1.497 billion bushels, up 339 million bushels. So, while sales to Mexico continue to grab the headlines, that's not the whole story. Marketing year to date corn export sales to South Korea total 45 million bushels, up 28 million from the previous year's pace. Sales to Japan total 193 million, up 29 million bushels from the previous year's pace. Sales to Spain total 28 million bushels, when none had been sold to Spain at this point last year. Sales to Panama at 24 million bushels are double the previous year's pace, while sales to the broader European Union total 47 million, up 46 million from the previous year's pace. The Spain/EU sales reflect weaker availability from Ukraine. Sales to Columbia total 137 million bushels, up 47 million bushels. But sales to "unknown destinations" total 297 million bushels for the year to date, up 173 million bushels. Might those be sales to China? Perhaps so, but I don't see any evidence of that at this point. Rather, we're seeing a host of buyers building ownership at multi-year lows. That said, we're seeing that cash buying maintain momentum, even as prices rise, suggesting that end users see the possibility of even higher prices down the road if crops falter in South American over the coming six months.

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