Written Commentary
SOYBEANS
The soy complex is starting the week lower after Friday’s USDA supply/demand report, which had no significant surprises to alter the fundamental landscape. New crop ending stocks were left unchanged from last month. Yields were lowered slightly in Ohio, Kentucky, Minnesota, and Wisconsin. Yields were raised slightly in Illinois, Iowa, Missouri, and Michigan. Global carryout was raised slightly to a record high.
SOYBEAN MEAL
December soymeal prices have closed lower for eight consecutive trading sessions, dropping to their lowest level since September 3rd to start this week. Harvest pressure on soybeans has been a bearish factor, along with falling soymeal premiums in South America. Furthermore, the EU’s proposal to delay the implementation of the deforestation rules until 2026 has added additional pressure for soymeal over the last two weeks. The proposal is anticipated to be voted on in November and is expected to pass.
USDA’s October supply/demand report last Friday made no changes to the US crush and left the new crop balance sheet for soymeal unchanged from September.
CORN
Corn prices are starting the week lower, continuing the selloff that began a week and a half ago, although we expect prices to begin to find support below 410 in December. USDA raised new crop corn exports on Friday, which is a bit unusual this early in the marketing year, but a slight increase in yield kept ending stocks from falling as much as expected. Global stocks-to-use ratio was the lowest in 11 years, but overall, the report did not change the fundamentals significantly. However, the increase in exports may be a clue that USDA is anticipating that US corn will remain very competitive into early 2025. US prices are currently the cheapest origin.
WHEAT
Wheat prices are starting the week slightly lower after USDA made a few unexpected changes to the balance sheet Friday. Winter wheat yields were raised 0.1 bushel per acre, and harvested acres for old crop lowered 200,000. However, in the new crop balance sheet, despite planted acres dropping by 200,000, harvested acres were increased by 600,000, which increased the planted-to-harvested acre percentage higher than normal. In addition, yield for new crop was lowered 1 BPA to 51.2. The above changes dropped new crop ending stocks 16 million bushels, slightly more than expected. World ending stocks were the lowest in 9 years. All in all, Friday’s USDA report had a few unexpected changes but did not significantly change the US balance sheet, although global stocks were the lowest since the 2015/16 season.
CATTLE
Despite a lower close Friday, December live cattle prices were strong last week. Cash trade in the north ended mostly steady with prices $1 higher in the South. The 5-area, 5-day weighted average for the week ended at 187.12, up from 186.77 at the end of the prior week. Choice cutout jumped sharply last week, the largest weekly jump since late spring. Weekly beef production fell to 504.1 million pounds last week, down from 512.4 million a year ago.
HOGS
December hogs closed out last week at their highest level since late April, and prices show no sign of a top. Speculative funds were significant buyers last week and increased their long positions by nearly 14,000 contracts. Funds have net bought in 7 of the previous 8 weeks. In 2025 global pork production is expected to be down 0.8% year-over-year, and China’s output is expected to drop by 2.2%.
MILK CLASS III
November Class III milk rebounded from a nine-week low on Tuesday but finished with a fourth straight weekly loss.
The USDA reported that milk volumes varied across the country. Production and operations in the Southeast and mid-Atlantic regions were interrupted, and some Florida processing plant operators temporarily closed before Hurricane Milton’s landfall. The Central region had seasonally stable milk output at the farm level, while output was stronger in the Mountain states and the Pacific Northwest. Class I demand was strong in the West and East regions and stable in the Central region.
GOLD, SILVER & COPPER
December gold futures are lower today after a strong performance on Friday, although the 2660.0 support level is holding. Much of the pressure on gold is linked to strength in the U.S. dollar index, which advanced to its highest level since August 8.
December silver futures are lower today after higher prices over the last several trading sessions. There has been increased volatility as traders react to stimulus announcements from China over the weekend and the uncertainty of the Federal Open Market Committee’s path to additional accommodation.
December copper futures dropped below $4.40 per pound, nearing the two-week low. This decline was fueled by pessimistic economic signals from China, which have increased doubt on the demand outlook from the world’s largest consumer of copper.
ENERGIES
Crude oil prices are lower this morning on disappointment over the lack of details in China’s fiscal stimulus plans during the finance minister’s press conference on Saturday and from more disappointing data on Chinese oil demand. China has pledged to “significantly increase debt,” but they have not said how much. China imported 45.49 million metric tons of oil in September (11.07 million barrels per day), according to the General Administration of Customs, down 0.6% from a year earlier. This was the fifth straight month that shipments were less than a year ago. Year to date imports totaled 412.39 million tons or 19.99 million bpd, down 2.8% from a year ago. Chinese diesel consumption has been less than a year ago in every month this year except for August. The China news has offset concerns about escalation in the Middle East and speculation about Israel’s potential response to Iran’s October 1 missile strikes.
December Natural Gas is close to taking out the September 3 lows this morning. The market has sold off for the past seven sessions on reduced gas consumption for electrical generation in the wake of power outages from Hurricanes Helene and Milton. As of Friday, around 2.3 million customers were still without power in Florida. The Baker Hughes rig count showed US natural gas rigs in operation were down 1 rig to 101 last week. This was down from 117 rigs a year ago and below the five-year average of 117.6. This follows a 6-rig increase during the previous two weeks.
STOCK INDEX FUTURES
Stock index futures are mixed to higher in an atmosphere of uncertainty about the pace of Federal Reserve interest rate cuts and escalating geopolitical risks in the Middle East.
DOLLAR INDEX
The U.S. dollar index advanced to its highest level since August 8. Much of the recent strength is linked to expectations that the Federal Reserve will not deliver further supersized interest rate cuts at its two remaining policy meetings this year.
INTEREST RATES
Futures are lower across the board with most of the pressure at the long end of the curve, especially the 30-year U.S. Treasury bond futures, on the belief that the Federal Open Market Committee will be relatively slow easing monetary conditions going forward.
SOFTS
December Cocoa is chopping around inside Friday’s range this morning, drawing support on concerns that recent heavy rains in Ivory Coast have slowed the harvest there. Last week, heavy rains damaged roads, which slowed the delivery of beans to port, slowed harvest and hampered the drying of beans. Wet weather can also cause disease problems. Port arrivals picked up substantially last week after a slow start to the season.
Brazilian weather conditions have improved with the arrival of rainfall last week, with more due to arrive this week, but the market is finding support today from concerns over Vietnam’s robusta crop. Traders and analysts interviewed by Reuters expect that nation’s output for the 2025/26 season, which began this month, to fall anywhere from 5% to 10% from last year due to the drought earlier this year. European-based traders have been expecting a 3.4% decline. Vietnam is the world largest producer of robusta coffee and the second largest producer of coffee overall.
December Cotton was lower overnight on follow-through from Friday’s bearish reaction to the USDA report and disappointment over from the lack of detail on China’s fiscal stimulus plans. The Chinese finance minister held a press conference over the weekend but gave no indication of the amount of stimulus. China has been one of the largest buyers of US cotton in recent years, but their strong crop this year coupled with their sluggish economy has lowered US export prospects. The USDA report was bearish against expectations, with US exports lowered more than production, pulling ending stocks higher instead of slightly lower as expected. World production was revised higher due to increases for China and Brazil, but world ending stocks still declined.
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