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Global Commodities Newsletter Sep 2021

Market Outlook for US and South America Regions

Read September edition here


The USDA’s September report was slightly negative for corn and soybeans, but neutral for wheat prices. After the August USDA report, November soybean futures traded lower to near 12.62 and December corn to 4.97. Chicago December wheat traded down to 6.77, December soymeal to near 335.40 and December soyoil to near 55.36. Much of the selling was due to slow demand and concerns that the USDA would increase U.S. corn and soybean supply on the September report. Increased global Covid cases is also raised concerns about food and fuel demand.

Lean Hogs

During August 2021, lean hog trading had something for the longs and the shorts because of the heavy speculation, primarily spreading.  As August 2021 lean hog futures ended the month on August 13th, there was strength in August 2021 lean hogs because pork prices were strong.  August 2021 topped on June 7th at $120.55, dropped to June 24th at $98.70/cwt and then climbed to settle on August 13th at $109.50/cwt, gaining back about half of the summer loss.

Live Cattle

For the first three weeks in August, live cattle futures trading was a continuation of what began in June and July, slowly moving higher but with several bounces.  Live cattle futures traded within a $4.50/cwt range. The futures market correlated with how cash cattle were priced in the various feeding regions throughout the U.S.   When packers needed choice and prime heavier cattle, cash prices in the Midwest would be from $125.00/cwt to $130.00/cwt with a few cattle as high as $131.00/cwt.

Stock Index Futures

S&P 500 and NASDAQ futures advanced to new record highs earlier this month in response to stronger than expected third quarter corporate earnings reports. In addition, traders were encouraged by the Federal Reserve, which said it doesn’t plan to pull back on supportive policies in the near term.  Federal Reserve Chairman Jerome Powell said the timing of scaling back on bond purchases, which is likely to begin later this year, won’t have any bearing on decisions to hike its fed funds rate.   Mr. Powell indicated that policymakers will only gradually cut back on asset purchases, and that the Federal Reserve is still a long way from raising interest rates.

US Dollar Index

The U.S. dollar index has been supported by a safe-haven flow of funds in light of increasing evidence of slower growth in the global economy. However, there was some pressure on the greenback on news that the national employment report from Automated Data Processing showed 374,000 new jobs in August, which is well below market expectations of a 613,000 increase. Also, prices declined on news that the August consumer price index report showed an increase of 0.3% when a gain of 0.4% was expected.

Euro Currency

The euro currency firmed against the U.S. dollar after the European Central Bank left interest rates at record low levels, but announced it would start conducting a moderately lower pace of  asset purchases for the rest of the year. The central bank said the Pandemic Emergency Purchase Program will be maintained at €1.85 trillion until at least the end of March 2022 but gave no signal of its next policy move, including how it might dismantle the Pandemic Emergency Purchase Program.

Crude Oil

Crude oil prices bottomed in the third week of August followed by an $11 rally.  The higher prices are partly due to tight supplies as OPEC recently decided to maintain some of its emergency production cuts, while production in the U.S. has been limited due to tropical storms that knocked out offshore oil output.


Subdued inflation expectations have been a headwind. Gold prices trended lower in September on ideas that the spike in inflation will be transitory. This belief was fueled by news that the consumer price index in August increased 0.3% when a 0.4% increase was expected.

Market Outlook for China and Asia Regions

The key Chinese and Asian events over the last 30 days are softening manufacturing activities in China, South Korea and Japan. Australia started reducing bond purchases and New Zealand is expected to increase interest rates in October.

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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© 2021 ADM Investor Services International Limited.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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