Both locations closing at 7pm today 

Oct 4, 2024   

Good afternoon. Ag markets in Chicago ended the week lower as farmer hedge selling dominated trading on Friday. As illustrated in today's CFTC report, managed money has trimmed net-short positions down to nearly nothing, meaning buying power via short covering likely becomes less intense in the coming days. And aside from the election, there is another USDA report just one week from today that will act to keep new managed money positions subdued in the meantime.

CZ closed Friday at 4.24 3/4, down 3 1/2 cents. CH was down 4 1/4 at 4.41 3/4. SX closed at 10.37 3/4, down 8 1/4. SF was down 8 1/2 at 10.56. WZ finished at 5.89 3/4, down 13 3/4. Products were lower, December soybean meal closed at 330.50, down $2/ton, and December soybean oil closed at 43.97, down 56 points. Livestock markets ended the week mixed, December live cattle closed at 187.00, up 60 cents, November feeders closed at 249.27, up $1.15, and December hogs closed at 76.15, down 25 cents. Outside markets are trading mostly higher, crude oil futures are up 60-70 cents/bbl, the Dow Jones index is up 320 points, and the US$ index is up 50 points. The S&P500 is up 50 points, and the NASDAQ is up 250 points.

Spreads were mixed to end the week, corn spreads were down a penny and a half to up a penny and 1/4, and soybean spreads were up a quarter cent to down a penny and 1/4. CZ/CH closed at -17, up 3/4 of a cent, and SX/SF closed at -18 1/4, up 1/4 of a cent.

For the week: December corn was up 6 3/4 cents; March corn was up 6 3/4 cents; November soybeans were down 28 cents; January soybeans were down 27 cents; and December Chicago wheat was up 9 3/4 cents.

USDA this morning announced daily sales of 116,000 mt's of soybean for delivery to China during the 2024/25 marketing year; and USDA also announced 198,000 mt's of corn for delivery to unknown destinations during the 2024/25 marketing year. For the week, USDA reported 352,000 mt's of soybean sales and 393,000 mt's of corn sales on the daily reporting system.

Aside from hedge selling, other bearish input on Friday came in the form of an ADM announcement that they would be idling their only soybean processing plant in the state of Iowa for several weeks to preform maintenance. The announcement comes right as harvest is set to be in full swing over the next couple weeks, which has not thrilled farmers in the area. Meal prices at the Gulf rose on the news as a product supplier will be removed from the market, but in a statement to Reuters, ADM officials said "We forecasted for this project and have plans in place to ensure we can meet customer needs throughout this timeframe." The facility crushed roughly 5 mil bu's of soybeans per month on average according to sources familiar.

As mentioned earlier, this afternoon's CFTC report showed another heavy week of fund buying across the ag space in the week ending October 1st. For the week, managed money traders were buyers of a combined 63,000 contracts of corn futures/options (now net-short 67,699 contracts), buyers of a combined 40,091 contracts of soybean futures/options (net-short 34,886), and sellers of a combined 3,517 contracts of Chicago wheat futures/options (net-short 22,953). In soy products, funds were buyers of 34,660 combined contracts of soybean oil futures/options, and were buyers of a combined 44,949 combined contracts of soybean meal futures/options; funds are now net-long 15,803 contracts of soybean oil, and are net-long 103,209 contracts of soybean meal. Note the change in soybean oil to net-long.

Stock index futures, as well as the US$ index, got a pop from this morning's jobs report and unemployment data and held onto those gains through the day on Friday. Non-farm payrolls were up 254,000 in the month of September, which was well above economists expectations. Data for August was also revised higher to 159,000. Furthermore, the unemployment rate fell to just 4.1% in September, which was 0.1% lower than the trade was looking for. The data all but extinguished hopes of another 50-basis point rate cut at the Fed's November meeting, with the CME's FedWatch tool this afternoon showing a nearly 96% chance a 25-basis point cut, and a 4% chance of no cut at all.

Spotty rains through Iowa and Illinois were better than expected on Friday and look to possibly slow the harvest efforts in these areas marginally going into the weekend. Totals were light for the most part though, with some producers in western Illinois and eastern Iowa thinking they'd be able to return to their fields by this afternoon even. Otherwise, the rest of the Corn Belt looks to be running just about full speed ahead this weekend and into next week as dry weather prevails. The 12Z GFS run continues to be dry in the week-two period, as there remains no indicated pattern shift. A brief spell of cool air drops through the eastern US early next week, but otherwise temps look to remain average to above average for most of the country into October 19th.

Mid-day weather changes for South America were minimal at week's end; forecasts continue to call for rainfall of around 1-2" for Argentina the first part of next week, with rains then expected to make it further north into Brazil by the end of the next week and into the weekend. Week-two forecasts continue to run wetter than the short-term versions, but confidence is growing by the day in the start of Brazil's monsoon season. As we mentioned this morning, whether there are any shifts in this forecast over the next 48-72 hours will likely key price direction in the ag markets during the first half of next week.