Wkly Futures Market Summary For 12.2.24

December 2, 2024
ADMIS Research Team
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SOYBEANS

Bean prices are starting the week steady, but the recent lack of rally power is a significant concern for the bull camp. Generally favorable weather conditions in Brazil and Paraguay, along with most of Argentina, are capping rallies, and export demand has not been strong enough to offset the potential for a significant increase in South American soy supplies compared to last year. The Brazilian currency has been sinking and moved to its lowest level in 22 years versus the US dollar, which incentivizes the Brazilian farmer to sell stored beans and new crop beans.

SOYBEAN MEAL

The soy complex continued to struggle with little rally power last week as southern hemisphere crop size estimates rise on favorable weather, keeping the fundamental outlook bearish. AgroConsult and Celeres raised their Brazilian crop estimates to new record highs of 172.2 million and 170.8 million tonnes, respectively, well above last year and above the USDA’s projection of 169 million. Soymeal prices have been unable to sustain a rally over the past 2 weeks, and traders are looking for clarification on potential Trump tariffs and the subsequent effect on trade flows.

CORN

Like last week, choppy action is likely to be seen early this week as the uncertainty of Trump tariffs, favorable South American weather, and strong export sales all jockey for the market’s attention. Trump’s threats last week to place a 25% tariff on Mexican imports into the US is a worry for the bull camp, but we expect Mexico will address the immigration issue to avoid the tariffs, as they did in Trump’s previous administration. With Mexico still recovering from a long-term drought, the need for US corn is still high.

WHEAT

Wheat prices closed lower in 6 of the last 7 sessions, and there was little major news over the weekend to give the market a reason for a significant bounce. Argentina says they are looking to make their 1st wheat shipments to China since the 1990s. Egypt says they are in direct talks with suppliers, and purchases are expected this week. Russia lowered their wheat export quota for February 15 to June 30 to 11 million tonnes, well below the 26 million last year. While the number looks bullish, the market had expected the cut. SovEcon says Russian exports for November are expected at 4.1 million tonnes, down from 5.6 million in October, and total Russian exports are now expected at 44.1 million tonnes, compared to USDA at 48.0 million and 52.4 million last year. Ukraine says it will move to a minimum export price structure for grains, similar to what Russia is now doing.

CATTLE

There is no updated news out of Mexico on the screwworm situation, but support for feeder cattle remains strong the longer the US border is closed. March feeders hit their highest price level on Friday since July 8. The cash feeder index hit a four-month high last week. February live cattle ended unchanged on Friday after bouncing off moving average support earlier in the week. It is doubtful prices can fall very far until more is known about the screwworm outbreak.

HOGS

February hogs fell sharply on Friday, following through after Wednesday’s reversal down. The selloff is likely to continue early this week as funds remain heavily long. China’s sow herd at the end of October fell 3.3% year-over-year to 40.7 million head, according to the agriculture ministry. The number of pigs slaughtered in China fell 2.6% from the previous year to 264.21 million head for the 1st 10 months of 2024.

MILK CLASS III

January Class III milk finished last week with a minimal loss after rebounding from an 8 1/2-month low and falling sharply on Wednesday. Last week’s lower close makes it six negative weekly results in a row.

ENERGIES

January Crude Oil was moderately higher overnight but inside Friday’s range. The market is drawing support from an improvement in China’s economic data over the weekend. On Saturday, China’s National Bureau of Statistics official PMI data rose to a seven-month high at 50.3 from 50.1 in October. Retail sales grew the most since February. Overnight, the Caixin/S&P Global manufacturing PMI to 51.5 in November, up from 50.3 in October and the highest since June. Eyes are on the OPEC+ meeting this week, which is now scheduled for Thursday after being postponed from Sunday.

January Natural Gas was lower overnight following a recovery rally on Friday. US LNG export plants were expected to draw 14.6 billion cubic feet on gas on Friday, the highest for the year and just short of the record 14.7 bcf from last December. The weather forecast shows a moderating trend over the next couple of weeks after some more cold weather moves though the eastern half of the lower 48 this week.

SOFTS

March Cocoa traded to a new contract high overnight but was back near unchanged as the session progressed. Ivory Coast cocoa arrivals totaled 92,000 metric tons last week, down from 94,000 the previous week but up from 67,000 for the same week a year ago and above the five year average for the week at 88,000. Cumulative arrivals since the marketing year began on October 1 have reached 735,000 tons, up from 548,000 at this point a year ago and above the five year average of 730,000. On Friday, the ICCO released its fourth-quarter update on the 2023/24 global supply/demand setup. World 2023/24 production was revised higher to 4.382 million metric tons from 4.332 million previously and 5.044 million 2022/23. Grindings were revised higher to 4.816 million from 4.751 million previously and 5.058 million in 2022/23.

March Coffee gapped lower overnight after trading to new contract highs on Friday. On Friday, the nearby contract also came within 2.50 cents of taking out the all-time high of 337.50 from April 1997. The market had become technically overbought on the tight supply theme, but the Brazilian real had also reached a new low against the dollar, which could have encouraged farmer selling. The big question is whether Brazil’s arabica trees have enough energy to produce a strong crop in 2025 after their severe drought this year.

March Cotton sold off overnight after the market failed to punch through Friday’s 2 ½-week high. The market saw another strong export sales report for cotton on Friday, the second in a row, and the market drew some mild support on the news, but it apparently lacked the momentum to close above the 100-day moving average. The nearby Brazilian real fell through its 2020 lows to its lowest level since at least the 1990s on Friday, and this may have brought expectations that Brazilian growers would be encouraged to aggressively market their cotton.

March Sugar was slightly higher overnight after selling off sharply on Friday. The Brazilian the real’s collapse last week may have encouraged selling by Brazilian sugar producers and exporters. Last week, the sugar market failed to get much lift off Bullish UNICA and Conab Reports. Crude Oil prices are higher this morning, which may lending support to sugar. Last week, Brazilian agricultural agency Conab lowered its forecast for Brazilian 2024/25 sugar production to 44 million metric tons from a previous forecast of 46 million. Center-south production was lowered to 40.31 million from 42.06 million previously forecast. Also last week, the UNICA report on Brazilian Center-South Sugar Production for the first half of November came in at 898,000 metric tons, down from 1.784 million in the second half of October and down 59% from a year ago

METALS

February gold futures dropped to $2,644.50 per ounce on Monday, breaking a three-day streak of gains.

March silver futures dropped to just above the $30.50 per ounce support level on Monday, continuing last week’s decline as the U.S. dollar strengthened on growing optimism about the U.S. economic outlook.

March copper futures fell to just above the $4.08 per pound on Monday, erasing gains from the previous week.

EQUITIES

Stock index futures are mixed to higher. The 8:45 central time November PMI manufacturing final is expected to be 48.8.

CURRENCIES

The U.S. dollar index is higher, recouping some losses from last week in light of continued resilience of the U.S. economy and a deteriorating economic outlook in other parts of the world. The greenback also received a boost after U.S. President-elect Donald Trump threatened BRICS member countries with 100% tariffs if they create or support a new currency that could replace the U.S. dollar.

INTEREST RATES

Futures are lower across the board. Federal Reserve speakers today are Christopher Waller at 2:15 and John Williams at 3:30 PM.

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