Market Outlook for US and South America Regions
Read full November edition here
The USDA’s November report was positive for corn, soybeans and wheat prices. After the November USDA report, November soybean futures traded higher from 11.81 to 12.89. December corn rallied 5.47 to 5.89. Chicago December wheat traded from a low near 7.62 to a high near 8.43. December soymeal traded from 330 to near 382. December soyoil traded to near 60.58 but dropped to 57.50 due to lower energy prices and concern that the EPA may announce lower biofuel mandates.
The week before Labor Day, August 24, 2021, October live cattle futures topped and throughout September 2021 went into a steep decline losing $12.50/cwt by September 30. However, the decline stopped on October 1, and by the end of the month October 2021 live cattle futures regained $7.15/cwt.
From October 2020 through June 2021, the lean hog market was a great example of a runaway bull market. However, when October 2021 topped on June 8, 2021 at $97.87/cwt trading throughout the summer looked like a child’s teeter totter with traders buying and selling the fall futures. From June 2021 and every month following until October, the October 2021 lean hog futures fluctuated from a high to a low four times with trading ranges close to $11.00/cwt to $14.00/cwt each time.
Stock Index Futures
S&P 500 and NASDAQ futures advanced to new record highs. Recent strength was linked to mostly stronger than expected corporate quarterly earnings reports. Approximately 80% of S&P 500 companies that have reported results this season have topped analysts’ earnings expectations. Futures advanced despite supply-chain problems, tight labor markets and news that the Federal Reserve approved plans to start scaling-back its bond-buying stimulus program.
US Dollar Index
The U.S. dollar index advanced to its highest level since July 2020 and is on course for a fifth weekly increase. Much of the strength is linked to bullish interest rate differential expectations and flight to quality flows of funds. In addition, there was support for the greenback due to the larger than estimated increase in the U.S. consumer price index, which showed a 0.9% increase on a monthly basis and 6.2% growth on an annualized basis. This puts pressure on the Federal Reserve to tighten credit conditions, which in turn, is bullish for the U.S. dollar.
The euro currency has underperformed and made a new 16-month low after European Central Bank President Lagarde continued to push back against expectations of policy tightening in the euro zone. The ECB chief said it does not make sense to tighten policy, as inflation pressures in the euro zone are expected to fade.
U.S. crude dropped again on Friday, putting oil on pace for its fourth consecutive weekly decline. Prices are trading near their lowest levels in approximately seven weeks. Coronavirus demand fears are hitting sentiment again after Austria said it will begin a nationwide lockdown in response to surging Covid-19 cases.
Gold futures prices have advanced since late September due to increasing inflation concerns. Some investors are using precious metals directly to hedge against rising inflation. Prices have advanced despite the strength in the U.S. dollar, which should be viewed a sign of strength for the yellow metal.
Market Outlook for China and Asia Regions
The key Chinese and Asian events over the last 30 days are the record high industrial inflation rates caused by soaring commodity prices. Australia changed its yield target for government bonds and New Zealand posted a higher-than-expected inflation rate, which could lead to further increases in interest rates.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
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