As previously mentioned, the holiday markets typically exhibit minimal activity, a trend that was more pronounced during pit trading but still influences computerized trading due to traders taking time off and a general lack of interest in minor news during this period.
Finding noteworthy small news items can be a challenge, with the upcoming U.S. Department of Agriculture export report on Dec. 29 being one of the few anticipated updates. However, the wide range of predictions for this report diminishes the significance of the anticipation, as the market’s reaction or lack thereof will provide clarity post-release. At present, the outlook suggests a relatively uneventful outcome.
Corn and Soybeans
Recent reports of rain in South America, with more forecasted, hold significance as the corn market’s activity has been driven partly by exports and primarily by dry conditions in South America. Price fluctuations were observed mid-week on Dec. 27 and 28, with a marginal decrease in corn futures and a slight increase in soybeans on Dec. 28.
However, these fluctuations did not carry significant weight, as soybeans relinquished their gains during night trading. Corn futures remained relatively stable overnight, with March corn futures at \(4.74 1/4 and soybeans hovering just above \)13 at \(13.09 in January. Despite a loss of 11 1/2 cents on soybeans on Dec. 25, the price remained above \)13.
Traders are expected to transition soybean trading to the March contract as January contracts reach their first notice day. With March futures showing nearly a six-cent improvement over January, a positive shift in the basis could signal a bullish trend and potentially result in a six-cent increase in cash price.
Encouragingly, the 2024 crop is outperforming the 2023 crop, with December ‘24 corn futures aiming to surpass \(5.15, currently resting slightly above \)5 at $5.05.
Wheat
While wheat futures reached a high of \(6.49 1/2 in March on Dec. 6, they were trading at \)6.31 1⁄4 on the Friday morning overnight session. Dec. 26 saw a trading price of $6.39 1⁄4, marking a 20-cent increase for the day. This volatility indicates fluctuations but no substantial net gains.
Noteworthy wheat-related news emerged from Ukraine this week, specifically concerning the Alternative Grain Corridor. This area, crucial for transit, witnessed a ship heading towards Ukraine for loading encountering a mine for the first time, resulting in injuries to two sailors. The incident could potentially impact shipping operations and associated costs, including insurance rates.
The 6- to 11-cent declines in soybean futures on Dec. 28 may be attributed to rainfall in South America or apprehensions leading up to the Dec. 29 export report.
Outside Markets
In the quest for actionable news, attention turns to the external markets that influence agricultural prices. West Texas Intermediate crude oil experienced a 75-cent decline on Dec. 29, aligning with the trend that has driven down gasoline prices, hovering around \(72 per barrel. This price point is close to the \)70 threshold targeted by the government for replenishing the Petroleum Reserve, a move that could potentially impact market dynamics.
Conversely, the U.S. dollar’s value, nearing its lowest point since July, has been on a downward trajectory for two months. This decline is attributed to signals from the Federal Reserve indicating a halt in interest rate hikes and a possible reduction. While a weaker dollar theoretically renders U.S. agricultural exports more competitive, it also diminishes the currency’s status as the world’s reserve currency.
The current value of the dollar stands at 90 cents against the Euro, with the DSY index slightly above par at 101% compared to a basket of global currencies.