As I have said before, there is little to expect in the holiday markets. This trend was perhaps stronger when the trading was done in the pits, but even our computer trading is affected by the holidays that traders take and the seeming indifference to small news items we see this time of year.
Of course, just try to find small news items. The one bit of fundamental news being touted is the export report we will get from the U.S. Department of Agriculture Dec. 29. The only reason it is being mentioned is that it is just about the only known news coming.
The guesses for the report are so wide that the anticipation really doesn’t matter. We will find some explanation as to the market reaction or lack of reaction after the report comes out. Right now, I anticipate a non-event.
Corn and soybeans
There is news that South America is getting some rain and is forecast for more. This matters because what life there has been in the corn market has been partly because of exports and mostly because of dryness in South America. The middle of this week — Dec. 27 and 28 as this was being written — saw some price change. We lost two cents on corn futures and gained almost a nickel on soybeans Dec. 28.
Neither really meant much. The soybeans lost the gain back as soon as we began trading in the night session. The best that can be said about the corn is that it was unchanged on the overnight. We were trading March corn futures at $4.74 1/4 and soybeans just above $13, at $13.09 January. We lost 11 1/2 cents Dec. 25 on soybeans, but stayed above $13.
Tomorrow traders will switch the soybeans to trade off the March contract as we hit first notice day for January contracts. March futures are almost six cents better than January, so it will be a bullish sign if we pick up the basis so we gain the six cents in cash price.
It is encouraging that the 2024 crop is better than the 2023 crop. December ’24 corn futures are trying to trade above $5.15, but is now just above $5 at $5.05.
Wheat
Wheat futures have a March futures high at $6.49 1/2 Dec. 6, but were trading at $6.31 1/4 on the Friday morning overnight. We traded at $6.39 1/4 Dec. 26, which was up 20 cents for the day. This means we are seeing volatility but no big net gains.
The one real piece of wheat news came from Ukraine this week. Last week, I mentioned the Alternative Grain Corridor, a stretch of Black Sea water that hugs the coast as it leaves Ukraine waters. The Russians have been known to mine it in response to Ukraine’s continued harassment of Russian ships with drones.
This week, for the first time, a ship going toward Ukraine to load hit a mine. Two sailors were hurt. It remains to be seen what changes this may bring in a number of ship loading and transit costs, especially in regards to insurance rates.
It remains to be seen if 6- to 11-cent losses in soybean futures Dec. 28 were due to rain in South America or fears in anticipation of the Dec. 29 export report.
Outside markets
In the struggle to have some actual news to react to, I give you the outside markets, that is markets not of agricultural production and that influence ag prices. Crude oil (West Texas Intermediate) was down 75 cents Dec. 29, continuing the trend that has lowered our gasoline prices.
We are in the neighborhood of $72 a barrel, close to the $70 at which the government hoped to buy back inventory for the Petroleum Reserve. They sold that to all comers, including China, to try to leverage prices when gasoline was getting expensive. Now we have the smallest reserves in 25 years or so, and if we try to buy back oil, we risk increasing prices.
The other significant outside market is the U.S. dollar. Going into Dec. 25, the value of our dollar was the lowest since July and working on the year’s low. The dollar index has been sliding for two months.
Currently, the reason given is the fact that our Fed has hinted broadly that they are done raising interest rates and will probably lower them. In principle, the lower dollar makes our ag exports cheaper. In practice, it makes our currency not as valuable as the “reserve currency” of the world.
There is a strong move to make something else the reserve currency, which would be harmful politically, as it would mean our nation is not as important as it was and harmful practically if our cheaper currency makes the things we buy overseas more expensive.
Currently, our dollar is worth 90 cents of a Euro. The DSY index has us at just above par, 101%, versus the several world currencies that make up the index.
