Guest Commentary by Matt Zeller, Senior Market Intelligence Analyst
January 7 – Dow Jones Futures are indicating a slightly higher open this morning after a slight losing session yesterday, with the equities markets steady overall. President-elect Trump yesterday walked back the walk-back regarding potential import tariffs, leaving the trade thoroughly confused about the scope of said policies, and the U.S. dollar waffling around both sides of unchanged so far this week. The Euro is stronger on higher eurozone inflation data for December, with the Canadian dollar looking higher on the potential joining of the Prime Minister race by a former central banker. The 30-year Treasury is ticking higher after a 14-month high yesterday with the 10-year still elevated as well; the VIX index is slightly higher as well but still at relatively subdued levels.
U.S. economic data was negative across the board yesterday; the U.S. trade balance for November is expected at -$78.3 billion this morning, down from -$73.8b in October; the deficit has choppily grown since last August, but the economy is non-plussed as the country buys more things from abroad than it sells, very simply. JOLTS job openings for November are seen mostly steady this morning, at 7.74 million, but private and public employment figures are on tap through the remainder of the week as well – employment and payrolls numbers are expected lower with jobless claims seen slightly higher tomorrow.
The International Longshoremen’s Association is set to resume talks today with the United States Maritime Alliance in an effort to avoid a second strike a week from tomorrow – perilously close to the January 20 Trump inauguration. The longshoremen want to avoid automation in their contract while the employers say a pay raise is contingent on advancing the use of semi-automated cranes. Studies have shown that production gains from automation at ports are generally limited, and much better at ports with stable cargo volumes; only around 4% of global ports use automation at this point.
WTI crude is recovering this morning after rising to a fresh nearly three-month high just a tick shy of $75 per barrel yesterday, then quickly finishing the session in the red. The trade continues to note global supply disruptions in Russia and Iran. The Shandong Port Group yesterday banned U.S. sanctioned oil cargoes from its ports, restricting movement in major eastern terminals. Tomorrow’s weekly DOE Report is expected to show a seventh straight week of stocks draws, but only barely so, and after the last six weeks have shown just a combined draw of less than 15 million barrels. Stocks are near recent low levels for this comparable week of the year, though, despite production continuing to run near record levels.
The grains are looking ahead to Friday’s slew of USDA data, mostly consolidating values so far this morning, though corn is loathe to move too far off highs in case any bullish volatility arises from any of these upcoming reports. Our trade estimates sheet should be out shortly; StoneX yield estimates are still on the high end of the trade range for corn and soybeans with most of the trade looking for further slight declines in both yield and production compared to November. Soybean ending stocks are likely to be estimated steady-to-lower, with corn carryout for 2025/26 likely cut more significantly; we are estimating only a slight cut in corn carryout this month thanks to that higher production number, while most of the trade is likely at a -50 to -60 million bushel move or more. Both ethanol use and exports have been running extremely strong through the end of the calendar year. December 1 stocks are often good for a volatile wrench in the market on this Jan report date; StoneX sees slightly year-over-year increases in 12/1 corn and soybean inventories. South American production is generally on the back burner this year with trade estimates mostly steady-to-higher there, at least so far. And don’t forget annual winter wheat seedings; the official StoneX estimate there is 34.380 million acres, a million higher than last season, with increases spread across HRW, SRW, and white winter wheat areas year-over-year.
