Written Commentary
Ag Market View for Dec 13.24
December 13, 2024
SOYBEANS
Bean prices closed modestly higher on Friday after a bullish USDA report. Still, another source of the upward push is likely global oil prices, with March soybean oil futures reaching the highest level since April and Malaysian Palm oil prices closing at the highest level since June 2022 overnight.
SOYBEAN MEAL
The soy complex ended on a strong note last week with January beans rallying $0.60 a bushel from the election night low. However, the soymeal did not participate in the rally and remains just above the contract low set last week. A strong rally in soyoil at least arrested meal’s downward slide last week as global vegoil prices rose. Trump has indicated that he will hit the ground running with policy moves that are expected right after the inauguration, which could include tariffs on US imports of Chinese-used cooking oil. As soyoil prices rise on trade war fears and tight palm oil supplies, this encourages additional production, and the excess soymeal produced needs to find an outlet.
CORN
December corn closed modestly higher after Friday’s USDA numbers and set a friendly tone for the market today. However, the corn market is likely to benefit from the newfound soybean leadership, which in turn is the result of improved soybean fundamentals. Technical signals have also shifted bullish with Friday’s breakout to the highest level since the wild June 28th washout and regaining that area after a protracted consolidation suggests a major low is in place!
WHEAT
With wheat prices diverging from corn and soybean prices, the focus of the wheat trade is on declining US production fears following significant rainfall over the prior days and forecasts of more rain ahead. The USDA report was considered neutral.
CATTLE
The very weak price action on Friday does not bode well for futures prices this week. December live cattle gapped down on the open Friday, leaving a negative tone following the downside reversals the previous week. Gap resistance is 185.27. Retracement support from the early September lows to the October high is 181.65 and looks to be the next target. Cash cattle last week ended down $3-$3.50 lower in the north and $2-$3 down in the south.
HOGS
December Hogs initially gapped lower Friday but did fill the gap with an intraday rally. Prices closed right on the important 20-day moving average resistance at 80.42. The market has not closed below since mid-August. CFTC data showed Managed Monday traders added nearly 13,000 longs as of Tuesday of last week, however, the late week break probably resulted in some long liquidation.
MILK CLASS III
December Class III milk finished last week with a sizeable loss after recovering from hitting a 5 1/2-month low earlier in the week. Last week’s lower close makes it three in a row. The USDA reported that overall milk production is showing mixed results nationwide.
GOLD, SILVER & COPPER
December gold futures declined as it appears that the Federal Open Market Committee may be slow to lower its fed funds rate going forward.
December silver futures dropped to $30.64 per ounce, as markets assessed future demand in light of a lackluster stimulus plan from China.
December copper futures declined to near the $4.26 per pound level on Monday, following a volatile week as investors continued to evaluate the economic outlook in China.
ENERGIES
March Crude Oil prices is under heavy selling pressure this morning, as investors are disappointed that China’s stimulus plans did not offer the type of aggressive measures they were hoping for. Chinese CPI and PPI data released over the weekend was also disappointing, with October consumer prices increasing at their slowest pace since in four months and producer prices falling. Reuters reported this morning Saudi Arabia’s crude oil supply to China is set to fall to about 36.5 million barrels in December, down from 37.5 million in November.
January Natural Gas gapped higher this morning and traded to its highest level since October 30. The market’s open above the 9-day moving spurred some technical buying. LSEG reported that Freeport LNG drew record natural gas volumes on several days last week, following completion of an overhaul that increased processing capacity.
STOCK INDEX FUTURES
Stock index futures are higher as the post-election gains continue. New record highs were registered today for S&P 500, NASDAQ, Dow Jones and Russell 2000 futures.
DOLLAR INDEX
The U.S. dollar index is higher and is trading at its highest level since the first week in July. The fundamentals and technicals remain supportive to the U.S. dollar.
INTEREST RATES
Federal Reserve Bank of Minneapolis President Neel Kashkari indicated the Federal Open Market Committee could pause at the December meeting. He said the Fed needs to see more evidence before deciding on another interest rate cut.
SOFTS
December Cocoa is higher this morning and is close to testing Friday’s 3 ½ week high. Ivory Coast arrivals continue at a strong pace, but there are nagging concerns that their production will drop off in December due to heavy rains. Arrivals are running about 65% higher than they were at this point last season.
March Coffee is higher this morning but inside the range of the previous two sessions. Traders are reportedly keeping an eye on Vietnam’s harvest, as Typhoon Yinxing, which hit northern Philippines over the weekend, approaches. However, World Weather Service expects the storm to dissipate before reaching southern Vietnam’s coast tonight.
December Cotton is lower this morning but inside Friday’s range. The market backed off from the 50-day moving average for the second time in six sessions on Friday, and that line, 71.36 could be a key resistance level this morning. The dollar extended Friday’s rally overnight and pushed through last Wednesday’s high to its highest level since July, which raises concerns about US export prospects. Friday’s USDA supply/demand report put US 2024/25 cotton production at 14.19 million bales, hardly changed from 14.20 million in the October report and above average expectations calling for 14.08 million.
March Sugar broke below moving average support overnight to trade to its lowest level since September 19. World Weather Service says center south Brazil rainfall will be frequent and sufficient to maintain moisture abundance in most sugarcane production areas through the next ten days and probably two weeks. This will benefit 2025 production but slow harvest pace for 2024.
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