Written Commentary
Market Outlook for US and South America Regions
Read full December edition here
Grains
The USDA’s December report was neutral for corn, positive for soybeans and negative wheat prices. After the December USDA report, March soybean futures traded mostly sideways between 12.50 and 12.85. March corn rallied from 5.82 to 5.94. Chicago March wheat futures traded from 7.96 to a low near 7.68. March soymeal traded from 352 to near 378. March soyoil traded from 55.88 down to 51.55 due to lower energy prices and a lower biofuel mandate.
Live Cattle
Cattle producers in November found bargaining power for cash cattle, and traders added to long live cattle positions. Packers found increasing competition for cash cattle when boxed beef prices dropped. As cattle prices moved higher, boxed beef prices fell.
Lean Hogs
By November 2021 it was more than apparent that the high prices for hogs made during the summer of 2021 were long gone. Even with U.S. federal slaughter year to date by the end of November down 2.1% compared to 2020, hog prices fell.
Stock Index Futures
S&P 500 futures advanced to record highs despite the more hawkish Federal Open Market Committee. At its December 15 policy meeting the FOMC announced an accelerated rate of tapering of its asset-purchase plan and a more aggressive schedule of interest rate hikes in 2022.
US Dollar Index
In November the U.S. dollar index advanced to its highest level since July 2020. Much of this strength was linked to bullish interest rate differential expectations. However, more recently the greenback traded sideways and talk of a more hawkish Federal Reserve did little to support the U.S. dollar.
Euro Currency
The euro currency made a low in the third week of November and has since traded sideways. There were limited gains when on December 16 the European Central Bank announced a reduction in the pace of its asset purchases over the coming quarter.
Crude Oil
Indications of a slower rate of growth in the global economy and virus fears put pressure on futures in November. There was some recovery in December.
Gold
Gold futures prices topped in mid-November. Since then the bullish influence of rising inflation levels has been outweighed by the bearish influence of an increasingly more hawkish Federal Reserve. Now that the bearish December 15 FOMC statement is out of the way, an oversold gold market now has room to recover.
Market Outlook for China and Asia Regions
The key Chinese and Asian events over the last 30 days are peaking PPI readings and resilient exports performance. Surging commodity prices pushed Japan’s PPI to a 40-year high of 9.0%. New Zealand announced the second interest rate increase and Australia is holding the cash rate a record low of 0.1%.
In November, although the power shortage has eased, China’s manufacturing activities contracted due to the resurgence of COVID-19 in multiple provinces and softening domestic and foreign demand.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
