Written Commentary
Ag Market View for Dec 13.24
December 13, 2024
SOYBEANS
The soy complex starts the week with a supportive tone, partly due to a weaker US dollar and strong energy prices today. The bean market will have plenty of things to watch this week, including export inspections this morning, the election tomorrow, the Fed rate announcement on Thursday, and the November supply/demand report from the USDA on Friday. The election will significantly affect beans since China is such a massive world buyer, and some may suggest that weekend polls seemingly leaning VP Harris’s way may be part of this morning’s strength.
SOYBEAN MEAL
Soymeal had a very tough month of October, setting 3 1/2-month highs on the 1st and trending down to test contract lows to finish the month. Of the 22 trading days during the month, only 4 saw higher closes. However, polls this past weekend seemed to lean towards VP Harris, and Soymeal is seeing a bounce starting this week on ideas that Harris will be less likely to apply trade tariffs. Market volatility is expected to remain high this week with the election, the Fed rate announcement on Thursday, and the November USDA supply/demand report on Friday.
CORN
Corn prices are moving above last week’s small trading range after a $2.00 rise on crude oil this morning as OPEC has delayed a production hike and the US dollar dropped to test last week’s low. Tomorrow’s election will create additional volatility along with Thursday’s anticipated Fed rate cut announcement and the USDA supply/demand report on Friday. Argentine planting is pegged at 34.5%, with normal to excellent conditions at 86%, up 5% from the prior week as beneficial rains continue to fill in.
WHEAT
Prices are starting near steady this morning after anticipated heavy rains did fall in parts of the southern Plains, including up to 3 inches in the Texas Panhandle, 2 to 4 inches in central Oklahoma, and additional heavy amounts into the eastern half of Kansas. A very active pattern across the southern Plains will continue for the next 10 days with numerous additional chances. Most dry wheat areas, except for the far northern Plains, will see precipitation.
CATTLE
December live cattle weakened significantly early in the session Friday but bounced to close in the upper half of the day’s trading range. Last week’s daily downside reversal dominates the technical outlook, which may keep pressure on the market this week. Live cattle open interest is the largest in 5 years, and that provides plenty of fuel for a further selloff. Look for key support at the 50% retracement level at 181.65.
HOGS
December hogs hit a new contract high Friday morning and continued the streak of 5 consecutive days of higher highs and higher lows. Short-term technicals are certainly overbought, but there is no indication of a top, and open interest continues to expand to new all-time highs. Managed Money traders added another 16,000 net longs as of Tuesday of last week, and once prices finally show a technical top, we could see aggressive long liquidation. But for now, last week’s gap higher remains a major bullish factor and support will be at the bottom of the gap at 80.82.
MILK CLASS III
November Class III milk could not hold only early strength and extended its pullback to a 12-week low. Despite a rebound on Friday, it finished with a sizable weekly loss. The USDA reported that overall milk production is steady to stronger nationwide. Larger increases in output are being seen in the Mountain states and the Pacific Northwest due to cooler temperatures and improved cow comfort.
GOLD, SILVER & COPPER
December gold futures are higher today after pressure developed late last week. Some of today’s gains can be attributed to a weaker U.S. dollar as markets prepare for the upcoming U.S. presidential election and the Federal Reserve’s policy announcement.
December silver futures are higher today making a high of $33.00 per ounce, recovering slightly from a two-week low as the U.S. dollar weakened today.
December copper futures are higher and are closing in on the $4.4500 per pound level, continuing gains from the previous session, driven by a weaker U.S. dollar and growing optimism about potential stimulus measures from China, which is the largest consumer of copper.
ENERGIES
March Crude Oil is higher today in the wake of an announcement by OPEC+ that the group has agreed to delay a planned December oil output increase by one month. This was not a surprise, as there had been rumors to that effect late last week. The group has had plans to gradually lift its quotas, but they have been postponed twice due to lower than expected demand and weak prices.
January Natural Gas gapped lower overnight and traded to a new contract low, but it has been working to close that gap this morning. Recent mild weather in the US has lowered demand and allowed US gas storage to build at a normal rate.
STOCK INDEX FUTURES
Stock index futures are lower in advance of the elections on Tuesday and Thursday’s Federal Open Market Committee meeting announcement.
DOLLAR INDEX
The U.S. dollar index declined as traders take a second look at the weak U.S. employment report that was released on Friday. Nonfarm payrolls in October increased 12,000 when a gain of 125,000 was expected.
INTEREST RATES
Despite higher prices today for the December 30-year U.S. Treasury bond futures, it does not look like the lows have been make for the move.
SOFTS
December Cocoa is lower this morning in the wake of the weekly Ivory Coast cocoa arrivals report, which showed a strong pace despite recent concerns that recent above average rainfall would have interrupted harvest and drying. Arrivals totaled 80,000 metric tons for the week ending November 3, up from 63,000 for the same week last year.
December Coffee is near unchanged this morning following Friday’s selloff. Recent rainfall in Brazil has brought in ample flowering for the 2025 crop, and a continuing pattern of rain has improved the outlook. The question is how well the crop will recover from the drought earlier this year, which had stressed trees.
December Cotton is higher this morning and inside the upper half of Friday’s move higher. The market saw pressure last week from a selloff in equities, but the equity markets stabilized on Friday after the monthly jobs report came in lower than expected and increased expectations for another Fed rate cut.
March Sugar was nearly unchanged overnight after Friday’s big outside reversal action lower. Brazil has seen a wetter trend over the past month after an extended hot and dry pattern most of the year. This rain should be beneficial for the 2025/26 crop, but it could slow harvest and production for this year, especially if the trend continues.
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