Written Commentary
SOYBEANS
Some weekend showers and a slight change to the US weather forecast has put heavy pressure on beans to start the week, and the bear camp is in control. The rally early last week quickly evaporated Friday, and over the weekend, a few showers were seen in southern Minnesota, eastern Kansas, and Iowa. In addition, the extended forecast pushes the ridge back to the west and allows some storms to ride over the top into the north-central and eastern Corn Belt. The 6-10 day and 8-14 day forecasts show dry and hot weather for the Plains.
SOYBEAN MEAL
Soymeal prices moved higher last week but dropped Friday when beans and corn tumbled. Meal open interest had steadily risen on the break earlier in July but began to trend lower as prices rallied last week, indicating a paring down of positions. The ADM Decatur processing plant reported some damage from an explosion on Sunday morning, but the extent is unknown. The US cash meal pipeline has been tight, and we are moving into August with an expected monthly record level of maintenance downtime. The shutdown of the ADM plant, even for just a few days, could further tighten old crop meal supplies. Export shipments are expected to remain strong.
CORN
Corn prices are weaker after the extended forecast keeps the hottest temperatures in the US Plains and western states. December corn prices were up $0.20 at the peak last week from the close the previous week but have given back all but a few cents of those gains, and the market is once again testing recent lows.
WHEAT
Prices are lower to start the week on spillover pressure from corn and beans and a lack of bullish news. US winter wheat harvest is expected to be over 80% complete, and last week’s HRS crop tour across the Dakotas found very strong yield potential. Hot weather in Ukraine is moving harvest along quickly, now at 76% complete.
CATTLE
Cash cattle prices were generally $2 higher in all feeding areas, which supported the futures rally last week. August cattle prices closed up every day last week except for Friday. December had its highest close Friday since March 21st but has yet to take out the July 5th high of 190.07, which will be next resistance. Beyond that, the 2024 high at 191.62. Those levels will likely be tested this week if cash prices are any higher.
HOGS
December hogs had a strong week on firm cash markets and continued short covering. Estimated US pork production last week was higher at 515.4 million pounds, up from 503 the previous week and up from 499.4 a year ago. The cash hog Index last week had its 1st higher weekly close since early June.
MILK – CLASS III
August Class III Milk maintained upside momentum and reached a 2-week high on Wednesday, followed by choppy price action as it finished last week with a sizable gain.
Cream volumes are tight or tightening throughout the country. Butter makers are running active production schedules in the East and Central regions, but churning is seasonally light in the West. Domestic butter demand is steady to lighter in the Central and West regions. Cheese production schedules continue to trend steady to lighter throughout much of the US but have been active in the Central region despite tightening spot mild availability. Retail cheese demand remains strong, and there is increased interest from customers from Mexico.
METALS
August gold futures are higher and are testing a steep downtrend line that started on July 17. Some of the strength in gold can be attributed to flight to quality buying in light of ramped-up geopolitical tensions in the Middle East.
In light of increasing geopolitical tensions in the Middle East, the flight to quality aspect of silver came to the forefront taking prices higher, advancing from last week’s 11-week low. Prospects of an accommodative Federal Reserve have only partially offset the bearish influence of renewed concerns about the global demand situation in light of increased U.S. trade restrictions in the high tech area. In addition, there appears to be faltering demand from a top copper consuming country in Asia.
September copper futures declined to 4.0610, extending a recent sharp downturn to the lowest level in almost four months, due to increasing demand concerns from a top copper consuming country in Asia.
ENERGIES
With bearish global energy demand news flowing early in July (mostly from China) the September crude oil contract justifiably remains near last week’s downside extension pricing. Fortunately for the bull camp, Chinese government owned refinery run rates reached the highest levels in nearly 8 weeks which could help offset sagging demand. It should also be noted that Chinese economic data showed a slight improvement at the end of last week but not enough to extinguish growth concerns and soft energy demand fears.
With a new low for the move in September natural gas, hotter than normal US temperatures have not discouraged sellers. Not surprisingly, hot weather in northern Asia has failed to support futures prices despite a pickup in physical trading demand in the region. Adding into the bear case is news that the Freeport LNG facility has full capacity after moving nearly 2 bcf of natural gas yesterday. In
STOCK INDEXES
Coming easier credit policies from the Federal Reserve will ultimately rescue this market.
DOLLAR INDEX
In light of heightened geopolitical tensions in the Mid-East, the U.S. dollar index advanced to its highest level since July 11. Longer term, the greenback is likely to drift lower due to prospects of a more aggressively accommodative Federal Reserve.
INTEREST RATES
The September 10-year U.S. Treasury note futures advanced to the highest level since March 13.
There is a 96% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at 5.25% to 5.50% at its July 31 policy meeting.
SOFTS
In what might be a psychological sign of a softening of demand Lindt has hiked prices and has indicated demand has generally held together. In fact, the Swiss chocolate manufacturer indicated sales declined by 7% in the first half with prices increasing by 6%. Additionally, Nestlé indicated they may increase prices further as costs were weighing heavily on profitability.
The bias in coffee is pointing down with a general pattern of lower highs and lower lows throughout July which is likely the result of a rapidly progressing Brazilian harvest. As of late last week, the Brazilian 24/25 harvest was 81% complete or 7% ahead of year ago levels.
In addition to December cotton building consolidation support just above 67.50, COTLOOK reduced the 2024/2025 global cotton surplus from a previous forecast of 1.05 million tons to 760,000 tons. The reduction in supply was primarily the result of lower output from Indian, Pakistani and portions of Africa.
Like the cotton and cocoa markets, however, the sugar market appears to have found a value zone on the charts with the rejection of sub $0.18 pricing last week. Furthermore, cash sugar market have strengthened because of Brazilian crop production concerns following reduced output from the center South region in the first half of this month.
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