BQC Afternoon Comments Jan 3.2025

CLOSING COMMENTS

Geopolitics:

President Joe Biden’s outbound administration said today that they will allocate $306 million to bolster the nation’s bird flu response. The US has reported 66 cases of bird flu since the start of 2024, and many within the medical field believe it could be more. More bird flu outbreaks will directly effect egg prices, which have hit record high levels in the last couple months. A dozen eggs in the Midwest went from a record high $5.46 in December of 2022 to hitting a new record this week above $6. The Center for Disease Control and Prevention says the current risk to humans is low, but should the human-to-human transmission rate increase, we will have a pandemic that will make COVID look like a warm up routine. The $306 million will go to early stage research, vaccines and maintaining state and local efforts to test people exposed to infected animals. $1.5 billion has already been spent by the federal Agriculture Department on fighting the virus among animals. 

Macroeconomics:

The east coast port strike in October was temporarily resolved with a 62% wage increase over the next 6 years was approved but the automation objections remain unsolved. The International Longshoremen’s Association and the United States Maritime Alliance will resume talks on Tuesday January 7th next week. The last time these they sat down to come to a deal it resulted in a 3 day strike. The two will need to come to a deal by January 15th or risk halting billions of dollars worth of trade along the east coast. Reuters reported in December that AP Moller-Maersk has urged customers to pick up their laden containers and return the empties to the US east coast by Jan 15. Refrigerated and frozen products are likely to be redirected tot he west coast. Containerized ag exports such as soybeans, soybean meal, beef and pork will be effected by a lengthy halt in operations.  

Ag Fundamentals:

The US farmer has now sold over 60% of their soybean crop and about 55% of their corn crop. The little bean Santa rally that we saw from Christmas to yesterday was due to the quick injection of concern around Argentina’s weather. Merchandisers around the country are urging farmers to continue to sell into these small rallies and I believe that is wise. The globe is anticipating a never-before-seen bean crop from Brazil and Argentina. March bean values were rejected once again by the 100-day moving average but still able to close above the 20 day. Hard to say what the USDA will say for US bean production, it’s 50/50 in most chats. Most private Brazilian production estimates all rose above 170 million MT recently putting pressure on the USDA’s 169 MMT estimate. Corn in relation to all other row crops has held it’s own, and could receive another little boost with a reduction of US production by the USDA on Friday next week. I am of the opinion producers should be actively selling corn between now and the end of February when we start to throw around US planting intentions.