Written Commentary
SOYBEANS
The week started with a bearish USDA Supply/Demand report for August. The U.S. 2024/25 soybean yield was a new record high of 53.2 bushels/acre, versus the average estimate of 52.5 and above July’s 52.0. The higher yield resulted in larger production, which came in at 4.589 billion bushels versus 4.472 billion expected (range 4.38-4.565 billion) and 4.435 in the July report. USDA also reported a bearish increase in harvested acres of 1 million. US ending stocks for 2024/25 ballooned and came in at a bearish 560 million bushels, the largest since 2018, compared to 467 million expected (range 380-555 million) and 435 in July.
SOYBEAN MEAL
The Argentine oilseed workers strike that started last week was suspended today by the government for 15 days to allow for talks to progress. The strike is said to be costing Argentina $50 million a day in export revenue and the government obviously wants to resolve it sooner than later. US processing plants should have plenty of bean supplies available as farmers have to move old crop to clear bin space for the new harvest. With record yields coming for the US bean crop confirmed by USDA Monday, crush rates will need to stay elevated to work through the ample supplies. Once processor maintenance downtime winds down in September, processors will likely hit the throttle hard, and monthly records will be seen again.
USDA August Supply/Demand report made no changes to the US old or new crop meal balance sheets and let new crop ending stocks unchanged from July at 450,000 tons.
CORN
Monday’s USDA Supply/Demand report was supportive and showed U.S. 2024/25 corn yield coming in above guesses at 183.1, and harvested acres were reduced 700,000. U.S. corn production was the 3rd highest in history at 15.147 billion bushels versus 15.124 billion expected (range 14.92-15.3 billion) and 15.1 billion in the July report. Despite the higher-than-expected yields, U.S. ending stocks for 2024/25 came in below guesses at 2.073 billion bushels. USDA raised new crop corn exports by 75 million bushels but left ethanol unchanged.
WHEAT
Monday’s USDA Supply/Demand reported U.S. 2024/25 All wheat ending stocks were lower than expected, and harvested area was reduced by 900,000 acres, but All Wheat yields rose 0.4 bushels per acre to 52.2. 2024/25 U.S. ending stocks came in at 828 million bushels versus 859 million expected (range 815-889 million) and down from 856 in July.
U.S. 2024/25 All Wheat production came in under the guesses at 1.982 billion bushels versus an average expectation of 2.017 billion. Winter wheat production came in at 1.361 billion bushels versus 1.346 billion expected. World ending stocks for 2024/25 came in at 256.6 million tonnes versus 257 million expected.
CATTLE
December live cattle reacted sharply to the upside Friday, forming a potential important reversal higher if confirmed by a stronger close today. Short-term technical indicators had reached oversold levels and turned up late last week.
Cash trade was generally $2–$3 lower last week, and we wouldn’t be surprised if cash trade trends were lower in the intermediate term. Last week’s 5–area, 5–day weighted average was 191.10, down from 194.52 the previous week. The percentage of beef cows affected by drought has dropped to the lowest since 2020, according to Cattlefax.
HOGS
December hogs finished last week with an inside day, and cash prices weakened for the 5th day in a row, the biggest drop since September of last year. Seasonal trends tend to top in August and may provide overhead selling on rallies.
Estimated US pork production last week was 501.0 million pounds, down from 519.2 the previous week and up from 489.9 a year ago. The USDA estimated hog slaughter last week at 2.372 million head, down from 2.455 million the prior week but up from 2.368 million a year ago.
MILK – CLASS III
September Class III Milk extended its pullback to reach a 10-week low before a sharp 2-day rebound and eventually finished positive for the week.
The USDA reported that large portions of the nation have seasonally low milk availability, although some areas of the Pacific Northwest are seeing steadier output. High temperatures, humidity, and summer storms are affecting production in California and the upper Midwest, and some farmers feel that fall will likely be the next turnaround in milk output. Class I bottling orders are higher for schools restarting in many regions of the nation, while Class II and Class IV processing is lighter.
METALS
December gold futures advanced when the bullish July producer price index was reported.
September silver futures declined after the July producer price index was reported on the belief that the U.S. economy is slowing, resulting in weaker demand for industrial commodities.
September copper futures are lower and are adversely reacting to today’s producer price index report, which some analysts believe foretells a weakening economy and therefore reduced demand for industrial commodities including copper.
ENERGIES
October Crude Oil was lower overnight following yesterday’s rally to the highest level since July 19, but the market held in the upper end of yesterday’s range. In its monthly report today, IEA kept the 2024 global demand growth forecast unchanged, but it trimmed the 2025 growth forecast to 950,000 barrels per day from 980,000 previously, citing a weakened Chinese economy.
September Natural Gas was moderately higher overnight and was approaching yesterday’s three-week high. One theme emerging from the reduced expectations for Chinese oil demand is that natural gas consumption is growing as that nation make a move to “greener” energy sources.
STOCK INDEX FUTURES
Stock index futures advanced when the producer price index report was released.
The July producer price index increased 0.1% when up 0.2% was expected, and on an annualized basis the producer price index was up 2.2%, which compares to the anticipated 2.6% advance.
DOLLAR INDEX
The U.S. dollar index came under pressure when the U.S. July producer price index report was released.
SOFTS
December Cotton saw a sharp rally yesterday in the wake of a bullish USDA supply/demand report, but it gave back much of the gains by the close of the day and was lower overnight. USDA tightened 2024/25 US and world ending stocks in yesterday’s report, but they were still relatively ample. The report showed US and world cotton production and ending stocks all coming in below the low end of expectations.
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