Written Commentary
Ag Market View for July 26.24
July 26, 2024
STOCK INDEX FUTURES
Major stock index futures are mixed to lower today but remain near record highs.
The 9:00 central time April existing home sales report is expected to show 4.195 million.
The minutes from the May 1 Federal Open Market Committee meeting will be released at 1:00.
The fundamentals and technicals remain supportive.
CURRENCY FUTURES
The U.S. dollar index Is higher.
The European Central Bank appears to be on track to lower its key interest rate in June.
The U.K. inflation rate slowed less than expected. The annual inflation rate in the U.K. declined to 2.3% in April 2024, which compares to market forecasts of 2.1%.
Today’s U.K. inflation report suggests the Bank of England may delay lowering its key interest rate. The Bank of England’s next policy meeting is scheduled for June 20.
Japan’s exports increased less than expected in April. Exports grew 8.3% year-on-year in April, which was weaker than expectations of 11.1%.
INTEREST RATE MARKET FUTURES
Austan Goolsbee of the Federal Reserve will speak at 8:40.
The U.S. Treasury will auction 20-year bonds.
Financial futures markets are predicting there is a 58% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting. Yesterday the probability was 63%.
The fundamentals and technicals have improved for futures, especially at the long end of the yield curve.
GOLD
Gold futures eased from Mondays record highs, as investors continued to assess recent remarks from Federal Reserve officials. Several Fed policymakers advocated for continued policy caution and said the U.S. central bank should wait a few more months to confirm that inflation is declining to its target before reducing interest rates. Investors will pay attention to the minutes from the Fed’s latest policy meeting.
Futures remain supported by fears of escalating geopolitical tensions in the Middle East. In addition, gold has been supported by buying from global central banks, including those in emerging markets. Central banks have added approximately 2,200 tons of the metal since the third quarter of 2022, according to the World Gold Council.
Higher prices for gold are likely longer term.
SILVER
Silver futures are lower today, after reaching their highest level since December 2012 on Monday as investors reassess the Federal Reserve’s monetary policy outlook following recent comments from Federal Reserve officials. Fed Vice Chair Michael Barr recently said the central bank needs more time to evaluate restrictive policy effectiveness, and Atlanta Federal Reserve Bank President Raphael Bostic reiterated his forecast for only one interest rate cut in 2024.
Silver has been supported by demand due to its industrial applications. Silver is also being underpinned on the supply side since it is on track for its fourth consecutive year of production deficit.
Higher prices for silver are likely long term.
COPPER
Copper futures fell under $5.00 per pound today, easing from the recent high of near $5.20. Copper prices have advanced approximately 30% this year, in light of its key role in electrification in grid-scale energy storage and data-center infrastructure. Additional supply from miners is unlikely to be ramped up anytime soon as miners focus on merger and acquisition activity instead of developing new projects.
The main trend is higher for copper.
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