Wkly Futures Market Summary For 12.9.24

December 9, 2024
ADMIS Research Team
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SOYBEANS

The soy complex is starting the week steady. The all-time low settlement in the Brazilian currency versus the US dollar on Friday incentivizes the Brazilian farmer to be a more aggressive seller. Brazil planting is 95% complete, and conditions remain very good. Argentina will see mostly dry conditions this week, and rains will be needed next week to avoid the development of wider stress. There were 43 meal deliveries over the weekend.

SOYBEAN MEAL

Soymeal futures prices are hovering just above the contract lows on the strong US crush pace and an active meal delivery period. There have been 1,091 December deliveries so far, and heavy deliveries are typically seen as a bearish sign for the market. Strong ethanol output in the US recently (weekly US ethanol production reached a record high 2 weeks ago) has produced additional DDG’s, which are now competing with meal supplies for feed demand.

CORN

The corn market will try to build on last week’s strong gains and optimism. The USDA may raise the US corn export forecast in tomorrow’s supply/demand report, which will keep a measure of support under the market today. The Reuters pre-report estimates for US 2024/25 ending stocks are 1.906 billion bushels, compared to 1.938 billion last month. World ending stocks are expected to be 303.57 million tonnes, compared to 304.14 million last month.

WHEAT

It’s a positive start to the week as Chicago prices have pushed through resistance this morning. Tomorrow morning’s December supply/demand report is expected to show US 2024/25 wheat ending stocks at 814 million bushels, slightly down from 815 million last month. World ending stocks are expected at 257.68 million tonnes, slightly above last month’s 257.57 million. The December report typically holds few surprises for wheat.

CATTLE

Despite supportive cash trade, February live cattle prices closed out last week at a 20-day low. The poor technical action may push prices lower in the near-term. Feeder cattle held up better than live cattle last week as auction barns report very strong feeder demand.

HOGS

February hog prices reversed higher on Friday and closed strong. CFTC data showed managed money longs added nearly 9,000 contracts to their record net long. However, the minor pullback over the last week was not enough to result in fund liquidation. With Friday’s upside reversal, prices may resume the uptrend.

MILK CLASS III

January Class III Milk fell to a 7-month low last Monday but then turned sharply to the upside, reaching a 2 1/2-week high on Friday and breaking the 6-week losing streak.

ENERGIES

January Crude Oil is moderately higher this morning on a slight improvement in the outlook for China’s economy after the Chinese Politburo said that the nation will adopt an “appropriately loose” monetary policy next year. This would be the first easing of its stance since 2010 and would happen alongside a more proactive fiscal policy to spur economic growth. The problem is, China’s oil demand growth is limited by their embrace of EVs and natural gas powered trucks. The fall of the Assad regime in Syria adds to political uncertainty in the Mideast, and it also puts pressure on Russia and Iran, both of which have been benefactors of the regime.

January Natural Gas gapped higher overnight and traded to its highest level since November 29. The is a surprising move considering the mild weather trend and the lackluster reaction to a moderately bullish EIA storage report last week. The collapse of the Assad regime in Syria may be lending some support, but the size of the rally relative to crude oil suggests there is something else afoot. The weather does turn cold again this week in the upper Midwest and Great Lakes, but warm weather returns this weekend.

SOFTS

March Cocoa is near unchanged this morning following another breakout rally on Friday that took the March contract above $10,000 for the first time. Ivory Coast port arrivals totaled 85,000 for the week ending Sunday, down from 92,000 the previous week. This was up from 64,000 for the same period the last year but below the five-year average of 87,000.

March Coffee appears ready to test the November 29 contract high at 335.45 today. The state of Brazil’s upcoming crop has been the key factor behind the recent rally, as traders are concerned that the extended drought this year has left the trees in a low-productivity state. Local traders in Brazil said farmers had sold most of their current stocks and were holding what was left.

March Cotton is higher this morning and appears to be drawing strength from a rally in crude oil. The market sold off at the end of last week in the wake of a disappointing export sales report, but short covering may have emerged ahead of the USDA supply/demand report tomorrow. Indications that China is ready to ease monetary policy for the first time in 14 years may also be supporting global demand expectations. For the USDA report, the trade seems to be anticipating a slight tightening in US and global supply.

March Sugar extended Friday’s rally overnight but came short of taking out technical resistance at the 100-day moving average (21.96). The market is back in the upper half of a downward sloping channel that could end up being a bull flag. Rainfall in the Center-South Brazil through Wednesday are expecting to bring 3.00 to 8.00 inches, with a few greater amounts possible.

METALS

February gold futures are higher and are breaking out above a nine-day trading range. Today’s strength in the yellow metal can be attributed to its appeal as a safe-haven asset in light of escalating geopolitical tensions in the Middle East and renewed gold buying by China.

March silver futures broke out above a double top pattern today, with follow-through gains.

March copper futures advanced to the highest level since November 12 as they followed the broader gains in base metals. Gains are being fueled by expectations of significant economic support from China, which boosted the outlook for manufacturing demand in the world’s largest copper consumer.

EQUITIES

Stock index futures are mixed, although NASDAQ futures were able to advance to new record highs in the overnight trade.

CURRENCIES

The U.S. dollar index is slightly lower this morning. On Friday the greenback was able to close above a double bottom breakout to the downside, which suggests an oversold situation.

Ongoing political unrest in South Korea and France, along with the fall of Syrian President Assad’s regime, is providing underlying support for the greenback.

Euro zone investor morale fell in December to its lowest level in over one year.

INTEREST RATES

Futures are lower across the board. There are no Federal Reserve speakers scheduled between now and the December 18 Federal Open Market Committee meeting, which is in keeping with the central bank’s self-imposed blackout period in advance of policy meetings.

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