Wkly Futures Market Summary For 9.23.24

SOYBEANS

Despite bearish supply news from a South American crop estimate, US soybean prices look to start the new trading week on a positive note with an 11-day upside breakout! Positive forces include fresh hopes of Chinese economic stimulus, ongoing dryness in Brazil, stronger-than-expected US export sales last week, and the news that US exporters posted a sale of 121,000 tonnes of beans to China for 2024/2025 delivery. On the other hand, the Chinese vice premier overnight indicated China was on track for a record grain harvest despite adverse crop conditions.

SOYBEAN MEAL

Soybean and soybean meal prices traded sideways last week, although December soybean meal futures hit a 3-week low on Friday before seeing a minor rebound. Argentina’s monthly crush rate was released Friday afternoon, with a crush total for August of 3.230 million tonnes, compared to 2.079 million last year when drought significantly reduced the crop. Before last year, this was the lowest August crush since 2018. The near-week-long oilseed workers strike in mid-August affected the crush pace. Low water problems on the Paraná River and the Mississippi River continue to make meal transportation logistics an issue.

CORN

The corn market saw a weak finish on Friday with a lower low, likely spurred by market sentiment factoring rising US corn yields. The burden of incoming US harvest flow will likely spark heavy harvest hedge selling. Ukraine’s grain harvest has reportedly surpassed the previous year by 2.1 million metric tonnes. Ukraine’s corn harvest is expected to come in at 2.4 million tonnes above last year. While Ukraine wheat production increased minimally, the barley crop was slightly higher than the previous year.

WHEAT

Wheat is garnering minimal lift from a minor upside breakout in soybean prices. We also suspect it is catching a residual lift from growing evidence of lower European and UK production and residual dryness in the Black Sea. The Ukrainian Agriculture Ministry overnight projected its wheat crop to be 100,000 tonnes above year-ago levels, with that news offset by the Ukrainian Ministry reducing the 2025 winter wheat planting area by 210,000 hectares. COCERAL has forecast reduced EU/UK soft wheat production from 134.5 MMT to 126 MMT.

CATTLE

December live cattle closed the week very strong ahead of Friday’s Cattle On Feed report. The report was mostly neutral, with slightly higher placements, the only minor deviation from the pre-report estimates. Dry pasture conditions lately and cheap feed prices may have been responsible for the higher placements. The report did not indicate any significant heifer retention.

HOGS

A strong weekly close for December Hogs on Friday, hitting new highs for the recent move. The weekly kill was smaller than expected, down 2.3% from the previous week, contributing to the higher futures prices last week. Daily trading ranges and volume were small in the latter half of the week, which may be an indication the rally is getting tired. However, the technical action has not hinted at a sell signal yet.

MILK CLASS III

October Class III milk ended last week with a minimal loss after setting a new contract high last Friday. The USDA reported that farm level milk production is lighter in the Central and Southeast regions as warmer temperatures have affected cow comfort. The Northeast and mid-Atlantic are seeing steady production as seasonally cooler temperatures have begun to move in.

METALS

December gold futures are higher and are trading at a new record high. The yellow metal continues to be supported by expectations of further interest rate cuts from the Federal Reserve and rising geopolitical tensions.

December silver futures on Friday advanced to the highest level since July 17 after the Federal Reserve’s pivot to accommodation at its policy meeting last Wednesday. However, prices are lower today due to increasing prospects of a weakening U.S. and global economy, which could lower industrial demand for silver. A major silver consuming country in Asia lowered its key interest rate today, which appears to have had virtually no bullish impact on the price of silver.

On Friday December copper futures advanced to the highest level since July 18 with much of the strength last week linked to the Federal Reserve’s pivot to accommodation. However, today futures are only marginally higher despite increasing prospects of a more aggressive Federal Reserve easing of credit conditions this year.

ENERGIES

November Crude Oil was near unchanged overnight after just barely pushing through Thursday’s high. Israel reportedly hit more than 300 Hezbollah targets in Lebanon in two rounds of strikes overnight, which indicates that the war is expanding into a new phase. The market had discounted concerns about supply interruptions, but that could change. Shell said yesterday that it would shut production at two oil facilities in the Gulf of Mexico ahead of a potential tropical depression or tropical storm that could form in the next couple of days. US oil rigs in operation were unchanged at 488 rigs last week. This was down from 507 rigs a year ago but above the five-year average of 486.

November Natural Gas gapped higher this morning and traded to its highest level since August 15. US natural gas rigs in operation were down 1 rig to 96 last week. This was down from 118 rigs a year ago and below the five-year average of 120. The market saw a strong recovery on Friday following a recovery bounce on Thursday. US gas storage came in above the median expectation last week, but the surplus to year ago levels continues to decline.

STOCK INDEX FUTURES

Stock index futures are higher. The August Chicago Federal Reserve national activity index was 0.12 when 0.0 was anticipated. The 8:45 central time September PMI composite flash is anticipated to be 53.0.

DOLLAR INDEX

The U.S. dollar index is higher even though it appears likely that the Federal Open Market Committee will more aggressively lower its fed funds rate this year.

INTEREST RATES

Minneapolis Federal Reserve Bank president Neel Kashkari today said last week’s 50 basis point reduction in the fed funds rate was the right decision. Federal Reserve speakers today are Austan Goolsbee at 9:15 and Neel Kashkari at 12:00.

SOFTS

December Cocoa was higher overnight and was approaching the upper end of the relatively narrow range of the past two weeks. The market has been steady recently as it has been awaiting the west African main crop. World Weather Service says that west-central Africa rainfall is expected to increase over the next couple of weeks, with some of the driest areas in southern Ivory Coast and southern Ghana getting some significant rain after a lengthy period of dryish weather.

December Coffee recovered overnight following Friday’s steep selloff. Perhaps the market had become overbought on the dry weather theme from Brazil, with the wetter forecast for this past weekend likely inducing the selling on Friday. Southern Minas Gerais did receive some rain over the weekend, with isolated areas receiving heavier amounts, but the northern parts stayed dry. Parana and Motto Grosso do Sul received heavier rainfall.

December Cotton was a bit higher overnight, but it held below Friday’s 2 ½ month high. A wetter than normal trend in the US Delta and southeastern states could slow the harvest and cause additional damage to the crops. World Weather Service says an upper-level low pressure system over the Delta and southeastern states will merge with a tropical cyclone that is expected to move out of the Caribbean to northwestern Florida later this week, eventually to the Tennessee River Basin and/or southeastern states.

March Sugar is near unchanged this morning after pushing above Friday’s high slightly overnight. Some rains reached the Center-South region of Brazil over the weekend. Last week, Wilmar cut its projection for Brazil center-south production to 38.8-40.8 million metric tons from an initial estimate of 42 million. The extremely dry conditions in Brazil this year have raised concerns about tight supplies in the first quarter of next year.

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