Written Commentary
SOYBEANS
Despite bearish supply news from a South American crop estimate, US soybean prices look to start the new trading week on a positive note with an 11-day upside breakout! Positive forces include fresh hopes of Chinese economic stimulus, ongoing dryness in Brazil, stronger-than-expected US export sales last week, and the news that US exporters posted a sale of 121,000 tonnes of beans to China for 2024/2025 delivery. On the other hand, the Chinese vice premier overnight indicated China was on track for a record grain harvest despite adverse crop conditions.
SOYBEAN MEAL
Soybean and soybean meal prices traded sideways last week, although December soybean meal futures hit a 3-week low on Friday before seeing a minor rebound. Argentina’s monthly crush rate was released Friday afternoon, with a crush total for August of 3.230 million tonnes, compared to 2.079 million last year when drought significantly reduced the crop. Before last year, this was the lowest August crush since 2018. The near-week-long oilseed workers strike in mid-August affected the crush pace. Low water problems on the Paraná River and the Mississippi River continue to make meal transportation logistics an issue.
CORN
The corn market saw a weak finish on Friday with a lower low, likely spurred by market sentiment factoring rising US corn yields. The burden of incoming US harvest flow will likely spark heavy harvest hedge selling. Ukraine’s grain harvest has reportedly surpassed the previous year by 2.1 million metric tonnes. Ukraine’s corn harvest is expected to come in at 2.4 million tonnes above last year. While Ukraine wheat production increased minimally, the barley crop was slightly higher than the previous year.
WHEAT
Wheat is garnering minimal lift from a minor upside breakout in soybean prices. We also suspect it is catching a residual lift from growing evidence of lower European and UK production and residual dryness in the Black Sea. The Ukrainian Agriculture Ministry overnight projected its wheat crop to be 100,000 tonnes above year-ago levels, with that news offset by the Ukrainian Ministry reducing the 2025 winter wheat planting area by 210,000 hectares. COCERAL has forecast reduced EU/UK soft wheat production from 134.5 MMT to 126 MMT.
CATTLE
December live cattle closed the week very strong ahead of Friday’s Cattle On Feed report. The report was mostly neutral, with slightly higher placements, the only minor deviation from the pre-report estimates. Dry pasture conditions lately and cheap feed prices may have been responsible for the higher placements. The report did not indicate any significant heifer retention.
HOGS
A strong weekly close for December Hogs on Friday, hitting new highs for the recent move. The weekly kill was smaller than expected, down 2.3% from the previous week, contributing to the higher futures prices last week. Daily trading ranges and volume were small in the latter half of the week, which may be an indication the rally is getting tired. However, the technical action has not hinted at a sell signal yet.
MILK CLASS III
October Class III milk ended last week with a minimal loss after setting a new contract high last Friday. The USDA reported that farm level milk production is lighter in the Central and Southeast regions as warmer temperatures have affected cow comfort. The Northeast and mid-Atlantic are seeing steady production as seasonally cooler temperatures have begun to move in.
METALS
December gold futures are higher in a flight to safety move in light of increasing geopolitical risks in the Middle East. Some of the pressure on prices yesterday was linked to comments from Federal Reserve Chair Jerome Powell when he indicated traders should not expect follow-on interest rate reductions of 50 basis points at upcoming meetings. After two days of declines, December silver futures are higher today. December copper futures are higher today. However, yesterday on the daily chart a one-day reversal pattern to the downside was formed, suggesting a near term top may have been made as traders took profits following three straight weeks of gains.
ENERGIES
November Crude Oil extended its selloff overnight, falling to its lowest level since September 11. Israel’s incursion into Lebanon has been less of a concern than the prospect of more supply and slow demand. Libya is preparing to restart oil production that has been shut since late August after reaching an agreement on the new head of the central bank. An engineer at one oilfield said they took advantage of the one-month shutdown to conduct maintenance. Libya’s national oil company announced on August 28 that production had dropped by more than half because of the dispute. They have not provided any estimates since then. OPEC+ ministers meet today, and no policy changes are expected, but you never know given the resumption of the downtrend in prices.
November Natural Gas found resistance at the 200-day moving average yesterday and backed off from there overnight. The price trend is positive, and the seasonal build in US gas supply is running below normal. The once burdensome surplus to year ago levels has steadily decline since June. Early expectations for the US gas storage report this week call for build of 60-65 bcf.
STOCK INDEX FUTURES
Stock index futures are lower in light of increased geopolitical tensions in the Middle East. In addition, Gulf Coast and East Coast ports dock workers went on strike early today, which threaten to disrupt supply chains nationwide, and is also having a bearish influence on stock index futures.
DOLLAR INDEX
The U.S. dollar index is higher in a flight to quality move in light of increasing geopolitical risks in the Middle East.
INTEREST RATES
Safe haven buying is supporting futures across the board.
SOFTS
December Cocoa was near unchanged overnight after yesterday’s steep selloff. Ivory Coast raised the farmgate priced paid to cocoa farmers by 20% to 1,800 CFA francs ($3.09) per kg for the main crop of the new crop season (equal to $3,090 per metric ton). In early September Ghana raised its farmgate priced by nearly 45% to 48,000 cedis ($3,043.75) per metric ton. It is hoped that this will provide enough incentive for farmers to bring their beans to market.
December Coffee was a bit lower overnight but inside yesterday’s range. World Weather Service says one more week of restricted precipitation and warm temperatures is expected until the potential for greater rain begins to increase. The precipitation late next week and out toward mid-October may be enough to boost soil moisture and induce some flowering, but a close watching on the weather is warranted.
December Cotton was lower overnight but inside yesterday’s range despite a sharp drop in crop conditions this past week. The weekly Crop Progress report released yesterday afternoon showed 31% of the US cotton crop was rated good/excellent as of September 29, down from 37% the previous week and only slightly ahead of 30% a year ago. The five-year average for this date is 40%. Georgia saw a big decline in the wake of Hurricane Helene, falling to 33% G/E from 59% last week and 56% a year ago. The five-year average is 57%. Georgia is the US second largest producer after Texas. Sixth-larger producer North Carolina also declined, to 50% G/E from 76% the previous week versus and an average of 47%. Texas was 20% G/E, down from 22% last week but up from 11% a year ago.
March Sugar was near unchanged overnight as it consolidated the selloff of the previous three sessions. World Weather Service says the next chance for significant rain for Center-South Brazil is next week but that a good, soaking rain could prove elusive.
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