Written Commentary
Ag Market View for Dec 13.24
December 13, 2024
SOYBEANS
Positive price action to start the week following Friday’s close, which was the weakest since August 22nd. US harvest in many areas is winding down on beans and is now focusing on corn harvest.
China reportedly bought a significant number of Brazilian bean cargoes Friday. China’s September soybean imports from the US were 1.7 million tonnes, while imports from Brazil during the same timeframe were 8.45 million tonnes. China’s January through September Brazil imports were up 13%, while bean imports from the US were down 15%.
SOYBEAN MEAL
NOPA crush last week was higher than expected, and a monthly record for September signaled that the crushing industry has moved past maintenance downtime and weather disruptions and is on track for record winter crush rates. The Mississippi and surrounding rivers are struggling with low water levels, and draft restrictions are again in place for barge traffic headed for the US Gulf. That is likely to keep the Pacific Northwest Coast bean and meal export program strong as it is primarily supplied by rail.
CORN
Strong export demand last week did not lead to a major rally but certainly put traders on notice that the $4.00 area on December corn represents value to global buyers. US Gulf and Pacific Northwest Coast basis is strong, and export demand should continue to outperform.
WHEAT
Expected rains in the Southwest Plains over the weekend did not produce much precipitation in the wheat-growing areas and were further west and lighter than expected. Over the next five days, some light precipitation will be seen in central Kansas and into southern Nebraska, but much more will be needed to replenish soil moisture across eastern Colorado, Western Kansas, Oklahoma, and Texas. China’s wheat areas did see beneficial rains over the weekend.
CATTLE
December live cattle prices closed on an uptick Friday after holding moving average support earlier in the week. Retail beef prices remain record high, and weights remain record heavy. Packer margins have improved lately.
HOGS
Last week, December hogs closed at their highest level since late April, and the strong 2-month rally is yet to show any sign of a top. The recent strength in the U.S. Dollar did not reduce pork exports last week, which was a bullish sign.
MILK CLASS III
November Class III milk came under early pressure and fell to a 10-week low before rallying to a 1-week high. A late pullback followed, and it finished with a mild weekly gain that broke a four-week losing streak.
GOLD, SILVER & COPPER
On Monday, December gold futures surged to $2755 per ounce, driven by strong global demand for safe-haven assets and the expectation of further interest rate cuts from major central banks. Investors remain attentive to escalating tensions in the Middle East. Additionally, the uncertainty surrounding the upcoming U.S. presidential election is boosting the allure of safe-haven investments.
December silver futures are sharply higher, advancing to near the $34.50 per ounce level due to heightened tensions in the Middle East, which spurred increased demand for safe-haven assets, including precious metals. Silver has now reached its highest point in nearly 12 years.
December copper futures are higher and are close to the $4.46 per pound level, marking a second consecutive day of gains, partially recovering from a nearly four-week low reached last week.
ENERGIES
December Crude oil is higher this morning and back near this upper end of the range from the latter half of last week. China cut its benchmark lending rates today as expected by 25 basis points to 3.10%, and this provided a note of optimism regarding demand. China’s GDP grew 4.6% in the third quarter, slightly better than the +4.5% expected but below the +4.7% in the second quarter. The head of the International Energy Agency said today that they expect China’s oil demand growth to remain weak in 2025 despite the recent stimulus measures, as the nation electrifies its car fleet and their economy grows at a slower pace. China has accounted for more than 60% of global oil demand in the last decade when their economy grew at 6.1% on average.
December Natural Gas had fallen into an oversold condition after extending its two-week selloff overnight into new contract lows, and then it reversed higher. Warmer than normal temperatures across the lower 48 states have lowered usage. LSEG says average gas output so far in October has been 101.4 billion cubic feet per day versus 101.8 in September.
STOCK INDEX FUTURES
Stock index futures are lower due to rising geopolitical tensions in the Middle East in conjunction with increasing U.S. Treasury yields.
DOLLAR INDEX
The U.S. dollar index is higher in response to increasing U.S. Treasury yields. In addition, a flight to safety flow of funds, in light of rising tensions in the Middle East, is supporting the greenback.
INTEREST RATES
Futures are steady at the front end of the yield curve but are lower at the long end of the yield curve. The 30-year U.S. Treasury bond futures declined to the lowest level since July 26.
SOFTS
December Cocoa was slightly higher overnight, following a three-session selloff from a two week rally. Ivory Coast port arrivals for last week were estimated at 93,000 metric tons, up from 56,000 for the same week last year and the strongest since January 2023. Cumulative arrivals for the 2024/25 marketing year that began on October 1 have reached 193,000 tons, up from 170,000 a year ago. This is the first time in a year that arrivals are running ahead of a year-ago. World Weather Service reports that scattered showers and thunderstorms continued to impact cocoa areas from Ivory Coast to Nigeria and Cameroon Friday through Sunday.
December Coffee gapped lower overnight and fell to its lowest level since October 10. The market may be reacting to the rains in Brazil’s coffee growing areas over the weekend.
December Cotton was higher overnight building on Thursday’s bounce off a three week low. The US export sales report on Friday showed the strongest week since August 29. China cut its benchmark lending rates today by 25 basis points to 3.10%. The cut was expected, but it also showed some teeth in the long-awaited stimulus measures. A stronger Chinese economy would help cotton demand.
March Sugar was near unchanged overnight and near the middle of last week’s range. Brazil sugar areas are finally starting to see decent rain, which is welcome by growers, even if it may be too late to have much impact on this year’s crop.
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