Commodities Overview November 2024 Edition

MONTHLY FUTURES MARKET OVERVIEW

>>Read the full November 2024 Edition HERE

GRAINS

The November 2024 USDA production and WASDE data was neutral to mildly supportive. U.S. production slipped 60 mil. bu. to 15.143 bil. roughly 45 mil. below expectations. The average U.S. yield slipped back to 183.1 bpa down from 183.8 bpa in October, however, was still a record high.  Harvested acres remained unchanged at 82.71 mil. Notable yield changes were Texas down 9 bpa, Colorado down 8, Kentucky down 6, and Illinois down 4., Indiana up 7 bpa, North Dakota up 5, South Dakota up 3 and Ohio up 2 bpa. Surprisingly, the USDA made no changes to the usage side of the equation, leaving total demand at 14.990 bil. bu. Ending stocks fell 61 mil. bu. to 1.938 bil. bu., while the highest in six years, they were slightly below expectations.

While the November 2024 USDA production and WASDE data was supportive to the soybean complex, the price rally quickly stalled on favorable weather conditions in South America along with concern over another trade war with China resulting from the re-election of Donald Trump to the Oval Office. U.S. production plunged 121 mil. bu. to 4.461 bil. roughly 95 mil. below expectations. The average yield was cut 1.4 bpa to 51.7 bpa. Neither production nor yield remain at record highs.  Yields were lowered across several Midwest states with Wisconsin and Missouri down 4 bpa, Iowa and Kentucky down 3, while Illinois, Minnesota Missouri, South Dakota and Tennessee were all lowered 2 bpa.

U.S. ending stocks were left virtually unchanged at 815 mil. bu., in line with expectations.  World ending stocks were also unchanged at 257.6 mmt, slightly above expectations. Prices have broken out to the downside as key U.S. winter wheat growing areas have seen good rains in early November cutting into the moisture deficits, while also leading to improvement in crop ratings just ahead of winter dormancy. Despite lower production and lower supplies, Russia continues to offer wheat at prices below the floor suggested by their Ag. Ministry and at levels well below U.S. offers. As a result, the U.S. remains largely uncompetitive in the global marketplace

LIVE CATTLE

After a slow September for beef demand when consumers have school expenses and credit card payments from summer travel, wholesale beef demand began to increase in October, particularly for the high priced beef cuts, rib and loin primal sections, prime rib roasts, loin roasts and steaks.  Including frozen stocks, wholesalers began to build inventory in October for the late year holidays and take advantage of lower prices starting in October.  For example, beef prices for choice rib primals, prime rib roasts, as of October 1, 2024, were $484.17. By October 15, 2024, the price moved to $515.23, and by October 31 rib primals were up to $557.88. Loin primals for the month moved up from $357.21 to $387.73.

LEAN HOGS

U.S. pork exports have been a boon for hogs even with increasing hog supplies in 2024. By October 31, 2024, the year-to-date U.S. hog slaughter was 1,104,215 head higher than the same period in 2023, a 1% increase. In 2023 for the same period as 2022, hog slaughter was up 1.4% year-to-date.

STOCK INDEX FUTURES

S&P 500, NASDAQ, Dow Jones and Russell 2000 futures advanced to record highs as traders assess the economic impact of President-elect Donald Trump’s transition to the White House. Prices advanced until the middle of November despite the growing belief that the Federal Open Market Committee will be slower to lower its fed funds rate in 2025 than what was previously forecast a few weeks ago. The fact that stock index futures were so strong despite the bearish influence of a likely less accommodative Federal Reserve suggests traders are looking ahead to other more dominant bullish fundamentals.

US DOLLAR INDEX

The U.S. dollar index saw broad gains, with the euro and yuan dropping to multi-month lows against the greenback. The U.S. dollar index surged to its highest level since the first week of December 2022. In addition, most economic reports in the U.S. have come in stronger than expected. For example, retail sales in October increased 0.4% when a gain of 0.3% was expected, and the November Empire State manufacturing index was 31.2 when 0.0 was forecast.

EURO CURRENCY

The euro currency has weakened following a report revealing a decline in German investor sentiment. Expectations are growing that the European Central Bank will adopt a more aggressive stance on interest rate cuts compared to the Federal Reserve, adding pressure to the shared currency. The ECB is anticipated to reduce its key interest rate by 25 basis points during its policy meeting on December 12.

CRUDE OIL

December crude oil futures fell under $68 per barrel and are on track for a weekly loss after three weeks of gains. There are growing concerns that the global oil market could move into oversupply. On Thursday, the International Energy Agency forecasted an oil surplus for 2025, citing slowing demand growth in China and rising global production. The IEA also reported that the surplus could be exacerbated if OPEC+ follows through with plans to restore previously cut production.

GOLD

December gold futures have been under pressure for this month due to the growing belief that the U.S. Federal Reserve will be slower to move to accommodation, which dampened the appeal of gold as a non-interest-bearing asset.

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