Written Commentary
SOYBEANS
Little fresh market-moving news was seen over the weekend, and the sideways action continues in beans to start the week. US lawmakers are renewing their push to halt the flow of fake used cooking oil imports, but bean oil prices are weaker this morning. Brazil forecasts show a favorable weather pattern over the next 10 days for crops, while Argentina is expected to be dry during the 1st half of this week before precipitation chances increase late this week. Some private weather analysts indicate Argentine crop stress will slowly rise by late December.
SOYBEAN MEAL
Soymeal prices are seeing minor strength to start the week but remain just above the contract lows made in mid-November on March futures. Biofuel policy uncertainty for soyoil is pushing that market lower to find more export demand, while soymeal is seeing light buying in anticipation of a strong NOPA crush number. Mild temperatures are expected to spread across the Midwest next week into the year’s end, and processing plants should have very few weather-related issues.
CORN
After a 3-day pullback, corn prices are seeing a minor bounce this morning. J.P. Morgan analysts said shrinking world corn stocks are supportive and limit the downside risk for the market. Russia’s agriculture organization said their corn reserves are down 4.3% year-over-year to 3.8 million tonnes. Mexico and the US are still waiting for the WTO ruling on the GMO corn ban, which was expected to be announced by the end of last week.
WHEAT
After selling off during the 2nd half of last week, prices are getting a minor bounce this morning after Saudi Arabia purchased 804,000 tonnes of optional origin wheat. Some support may be coming from the report from the Russian Ag organization saying wheat reserves in the country are down 24.6% year-over-year to 18.7 million tonnes. J.P. Morgan analysts said lower global wheat stocks may keep prices supported. SovEcon estimated Russia’s December wheat exports to be 3.5 million tonnes, down from 4.1 million in November. Ukraine’s Ag Producers Union says high export demand may raise export prices in December/January by $20-$25 per tonne.
CATTLE
La Jornada, a prominent Mexico City daily newspaper, published an article indicating the US and Mexico had agreed on inspection protocols. USDA confirmed the agreement Friday but said they are waiting for USDA-approved holding pens to be set up for inspectors to check and treat Mexican cattle for screwworm before they cross the border into the US. The US Ag Undersecretary said US cattle imports would likely resume before the holidays. However, those comments have been walked back this morning, and the USDA chief veterinarian now says it will likely be the 1st of the year before border crossings start again.
HOGS
February hogs rallied Friday and closed strong after bouncing off moving average support last week. CFTC data showed funds reduced their record net longs by slightly less than 3,000 contracts as of Tuesday of last week, indicating there has not been significant long liquidation yet, despite the recent pullback of the last 2 weeks.
MILK CLASS III
January Class III milk rebounded from an early pullback as it climbed up to a 7 1/2 week high on Friday and finished with a second substantial weekly gain in a row.
ENERGIES
February Crude Oil is lower this morning after opening at a five-week high overnight. Chinese retail sales for November were weaker than expected, pressuring global equities and reigniting concerns about Chinese oil demand. Industrial output growth increased in November, but the trade seemed more focused on retail sales.
With mild weather expected to remain dominant in the lower 48 US states over the next couple of weeks, US gas supply could remain relatively high. The 6-10 day forecast has below normal temperatures east of the Mississippi and getting further east.
COCOA
March Cocoa reached another new contract high overnight after Ivory Coast cocoa arrivals fell to 75,000 metric tons for the week ending Sunday, down from 85,000 the previous week but up from 62,000 for the same week last year.
COFFEE
March Coffee is chopping around as it tries to asses the risk to the 2025 Brazilian Crop. The market reached all-time highs last Monday in reaction to a revision lower by Volcafe that put the crop at 34.4 million bags, but this has been dismissed by other traders as being too small, citing other analysts’ forecasts of 38-42 million.
COTTON
The Cotton market is having a difficult time escaping the poor outlook for US exports. With the dollar in the vicinity of two year highs, US exporters can only drum up sales when prices are low. Once the market rallies off some good export news, sellers step in.
SUGAR
March Sugar extended last week’s selloff overnight and fell to the 200-day moving average for the first time since September. The UNICA report last week surprised the market with an increase in Brazilian Center-South production for the second half of November after the region saw a sharp decline in the first half.
METALS
While the gold market is tracking in positive territory early today, gold is clearly missing out on the forces driving bitcoin prices into rare air above $107,000.
Holding back the minimal upward bias in gold and silver prices in the early trade today is an extension of an outflow pattern in gold and silver ETF holdings from last week.
While the damage on the March copper chart this morning is not severe, the bear camp has clearly extended its control from last week. Obviously, disappointment toward the Chinese economy continues to weigh heavily on copper especially with a handful of weak Chinese economic indicators released overnight.
EQUITIES
A rounded top or sideways to lower consolidation pattern continues to unfold with short-term technical measures suggesting minor lower lows ahead. It appears that the markets have heavily “bought the idea” of a rate cut on Wednesday and traders/investors continue to take a breath on lofty hopes of the incoming administration.
CURRENCIES
Even though the dollar has mostly traded below last Friday’s close in the early trade today, we leave a thin edge with the bull camp. In addition to soft euro zone PMI business activity the dollar should draft support from very dovish statements from the ECB president overnight regarding the potential for future rate cuts from the central bank.
INTEREST RATES
While treasury prices have managed to hold above last Friday’s spike down close in the early going today, the charts remain bearish with fundamental issues mostly bearish or simply not definitive enough to take control away from the bear camp.
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