Wkly Futures Mkt Summary For 9.16.24 on Ags, Cotton +more

SOYBEANS

Bean market bearish fundamentals were reinforced by USDA late last week, and dry weather in Brazil is not yet a major market issue, giving the bear camp the edge. Northern Brazil is expected to stay dry through the end of the month at least, and private forecasters are looking for monsoon rains to begin in October. IMEA says early planting has been limited to a few irrigated areas in Mato Grosso as the soil is too dry. However, there is time for rains to replenish soil moisture and get the crop in on time.

SOYBEAN MEAL

Soybean meal prices late last week inched higher after an early week pullback. USDA’s September supply/demand update was uneventful and left the new crop US soymeal balance sheet unchanged, as well as soybean yield, offering traders little new insight on market direction. Argentina’s crush rate will be released later this week and is expected to be lower than average due to the week of lost capacity due to the oilseed worker’s strike. The US export pace has continued to perform reasonably well despite the increased competition from South America. The arid finish to the crop season, especially in the eastern belt, has reduced Mississippi River water levels, and the recent hurricane Francine remnants moving up through the Delta did not do much to alleviate the situation. Transportation problems are unwelcome during very high barge traffic season at harvest and could affect meal shipments out of the US Gulf, leaving the Pacific Northwest Coast ports favored for loadings.

CORN

Last week’s USDA report resulted in buying when the larger yield forecast was offset by better demand, resulting in lower ending stocks and this keeps the edge with the bull camp this week. The dry crop finish in the eastern belt could have a small impact on final yields, but harvest is already starting. The eastern corn belt looks to be dry for at least the next ten days, with much better precipitation chances in the western belt, and temperatures will be seasonally above normal across the entire Midwest.

WHEAT

Renewed Black Sea tensions and Russian threats have added a bullish element to the wheat market over the last week, and the edge stays with the bull camp. The US and the EU are considering allowing Ukraine to use Western-made weapons to strike deeper into Russia, and Putin warned over the weekend that doing so could dramatically escalate Russia’s response. Last week’s strike by Russia on a wheat ship bound for Egypt with Ukrainian grain reminded the market that shipping risks have not gone away. Ukraine’s grain exports have been strong over the last two months and Russia may have wanted to send a message. Strong winds are fanning fires in the Rostov region in Russia, highlighting the dry conditions there.

CATTLE

December live cattle prices closed last week in the upper end of the recent 30-day range. The fall calf run is putting pressure on cattle auction prices, but December live cattle has found support on breaks below 175.00 over the last few weeks.

HOGS

December hogs had their lowest close in 4 weeks but remained in an intermediate uptrend. However, a drop below last week’s low of 70.55 could turn the trend down. Daily trading volume trailed off late last week, which may indicate that price strength is fading.

MILK – CLASS III

October Class III milk ended last week at a contract high close after setting a new contract high earlier in the week.

The USDA reported that seasonal trends continue to influence milk production in most of the US. Milk output in the Southeast and Central regions is lower than last month, while the Northeast and Atlantic areas are experiencing steady production.

METALS

December gold futures advanced to a new record high today with much of the strength due to increasing prospects of a Federal Reserve that is likely to become more accommodative. The Federal Reserve is widely anticipated to reduce interest rates this week for the first time since March 2020. December silver futures are higher for a third day and are close to the $31.50 per ounce level. Futures are trading at the highest level since July 17.

ENERGIES

November Crude Oil was higher overnight but inside Friday’s range. Prices set back on Friday as US Gulf crude production began to recover from Hurricane Francine. However, US Bureau of Safety and Environmental Enforcement said on Sunday that nearly 20% of crude production in the Gulf of Mexico remained offline. Reuters is estimating a total of 2.16 million barrels of crude oil had been lost due to the storm.

US natural gas rigs in operation were up 3 rigs to 97 last week. This was the first increase in four weeks and the largest weekly increase since Mid-July. The number of rigs is down from 121 a year ago and below the five-year average of 121.4.

STOCK INDEX FUTURES

Stock index futures are mixed. The September Empire State manufacturing index was 11.5 when -3.9 was expected. The New York Federal Reserve conducts this monthly survey of manufacturers in New York state.

DOLLAR INDEX

The U.S. dollar index is lower for a third day in light of an increased possibility of the Federal Reserve becoming more aggressively accommodative this year. There was some recovery when the stronger than anticipated Empire State manufacturing index was reported.

INTEREST RATES

The interest rate market futures initially advanced despite the bearish September Empire State manufacturing index.

The Federal Reserve is widely anticipated to reduce interest rates this week for the first time since March 2020.

SOFTS

December Cotton reversed higher overnight following a minor setback on Friday, and it traded to its highest level since September 3. The market has benefited from the stronger than expected USDA crop report last week as well as concerns about possible damage from last week’s heavy rains in the Delta. This afternoon’s Crop Progress report could provide some clues as to the damage. World Weather Service say drier weather will return to the U.S. Delta this week, which should help crops improve. Too much rain may have also occurred during the weekend in a parts of Alabama, southwestern Georgia and northwestern Florida, but situation should improve this week. Rains coming to West Texas in the next weekend being could be good for new boll development. Good harvest weather continued in the Texas Coastal Bend, and the Blacklands crop was still rated favorably during the weekend.

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