Written Commentary
SOYBEANS
After beans hit a 3-month low on Friday, this holiday-shortened week is starting on a positive note, with prices seeing a slight boost from a moderate drop in the US dollar this morning and rumors Friday that China bought multiple cargoes of US beans for February shipment. CFTC data as of Tuesday of last week showed Managed Money traders added 13,000 contracts to their net short bean position, and over 36,000 shorts were added in soymeal, where funds now hold their most bearish position since 2020. AgRural says Brazil planting is now 86% complete compared to 74% last year. This week’s weather in Brazil is expected to remain favorable for crop development. Argentina is expecting improved rainfall for the first half of this week.
SOYBEAN MEAL
Soymeal prices last week featured low volatility and a quiet, choppy trend. However, soymeal has strengthened and taken out last week’s highs to start this holiday-shortened week. Some of the strength may be attributed to below-normal temperatures moving into the Midwest, which increases soymeal animal feed demand. Vegoil prices remain weak and have fallen 17.5% since this month’s peak on November 11. Vegoil traders are still trying to gauge the biofuel policies of the new Trump Administration and how the EPA will handle tax credits and biofuel mandates.
CORN
The corn market is slightly lower to start the week, weighed down by weakness in the wheat market and a lack of supportive news. There have been no morning flash export sales since November 13, which has pushed demand out of the spotlight. Black Sea region news was generally quiet over the weekend, and South American weather remains favorable, with Argentina expected to see rain this week. Worries over feed demand may be part of this morning’s weakness after October egg production was down nearly 4% from a year ago to 9.19 billion eggs.
WHEAT
The market is under pressure as the holiday week begins with no new significant developments in the Black Sea region over the weekend. In addition, IKAR raised their total Russian grain crop to 125.0 million tonnes, up from 124.5 million last month. Also, Ukraine’s Ag Minister said the wheat harvest so far is 22.4 million tonnes, very close to last year’s 22.5 million. Russia’s Deputy Prime Minister said total grain exports for the coming season would be near 60 million tonnes, down from 72 million last year
CATTLE
The market is under pressure as the holiday week begins with no new significant developments in the Black Sea region over the weekend. In addition, IKAR raised their total Russian grain crop to 125.0 million tonnes, up from 124.5 million last month. Also, Ukraine’s Ag Minister said the wheat harvest so far is 22.4 million tonnes, very close to last year’s 22.5 million. Russia’s Deputy Prime Minister said total grain exports for the coming season would be near 60 million tonnes, down from 72 million last year
HOGS
February hogs closed out last week on a strong note, and cash trade was up $2 – $2.50 as well. Technical strength on Friday may result in some follow-through early this week and a challenge of this month’s highs at 86.90. Estimated US pork production for the week ending November 23 is 549.9 million pounds, down from 564.4 million the previous week and up from 478.5 million a year ago. The CME Lean Hog Index as of November 20 was 87.44, down -0.39 for the day and down -2.34 versus a week ago, the lowest since October 31
MILK CLASS III
December Class III milk finished last week with a moderate loss after falling back from Monday’s 2 1/2-week high. Last week’s lower close makes it five negative weekly results in a row. The USDA reported that farm-level milk production tends to be stronger as you move from east to west across the country.
ENERGIES
January Crude Oil is hovering around unchanged this morning but is in the upper portion of Friday’s range. The Baker Hughes rig count last week showed US oil rigs in operation were up 1 at 479 last week. This was down from 500 rigs a year ago and below the five-year average of 499. A lack of new threats of escalation in the Russia/Ukraine conflict over the weekend may have eased concerns a bit.
January Natural Gas is higher this morning but inside Friday’s wide range. The market traded to its highest level since October 4 on Friday but then sold off sharply as traders were clearly disappointed that it did not take out the October 4 high. The market has drawn support recently from cold weather that has moved in after a mild autumn. The 6-10-day outlook has cooler than normal conditions across the eastern two-thirds of the lower 48 states, with much below normal expected in the Midwest and Great Lakes to the Mid-Atlantic.
SOFTS
March Cocoa is lower this morning but inside Friday’s range. The market reached a new contract high last week, and the nearby contract reached its highest level since September. Ivory Coast cocoa arrivals totaled 94,000 metric tons for the week ending November 24, the same as the previous week but up from 64,000 year ago.
March NY Coffee extended last week’s rally overnight to trade to new contract highs. London Robusta Coffee was sharply higher and approaching its contract highs from September. Heavy rains in Costa Rica destroyed close to 15% of the nation’s coffee crop, according to their marketing agency, ICAFE. Back in June, USDA forecast Costa Rica’s 2024/25 arabica production at 1.1 million bags, which versus some 45 million for Brazil.
March Cotton traded to its highest level in more than a week overnight. The dollar is sharply lower this morning after breaking out of a two year range last week to trade to its highest level since November 2022. If this is a top for the dollar, it could improve US export prospects. Export sales last week showed a dramatic improvement, with net sales for the week ending November 14 at 318,516 bales for the 2024/25 (current) marketing year and another 16,016 for 2025/26, for a total of 334,532. This was up from 154,284 the previous week and was the highest since May.
March Sugar was near unchanged overnight and was hovering around last week’s lows. The market has been in a choppy downtrend since putting in a high in September when the Brazilian drought seemed to be at its worst after wildfires affected cane growing areas. Since then, rains have arrived that have improved the outlook for the 2025/26 crop. We look for the UNICA bi-monthly report on Brazilian Center-South sugar production for the first half on November to be released this week. During the second half of October, production was 1.78 million metric tons, 24.3% below a year ago.
METALS
With interest rates falling and the dollar reversing, gold and silver should see early aggressive selling interest metered. In fact, with a long list of nondollar currencies showing renewed strength (especially the Indian rupee and Chinese yuan) a measure of bargain hunting buying could be seen with a retest of initial support in December gold of $2650.
Fortunately for the bull camp last week’s slide in copper was forged on declining open interest and somewhat soft trading volume potentially indicating dissipating short side interest. In fact, the consolidation provides two key support levels of $4.061 and then again down at $4.0505. Adding to the potential for a solid consolidation low is tightening exchange supplies particularly in China.
EQUITIES
equity markets were positive around the globe overnight with falling interest rates apparently more than offsetting regulatory problems for Meta, Google and Apple. In fact, Meta was fined €797 million over Facebook marketplace practices. It should also be noted that the headlines are littered with further big tech regulatory problems in India, and the UK which could result in big tech losing the leadership role to the chip sector, energy sector, and the banking sector.
CURRENCIES
With the dollar index taking out last Friday’s massive range up and new contract high with a reversal down today we suspect follow-through selling is likely. However, residual confidence in the dollar arising from Wall Street optimism toward the US treasury secretary nominee and ongoing views the ECB is in a rate cutting mode should underpin the dollar above key support at 106.41.
INTEREST RATES
In addition to a measure of technical short covering we suspect treasury prices forged their gap higher opening trade today off the selection for the US Treasury Secretary nominee who is seen as a possible friend to banks and the energy sector.
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