Commodities Overview October 2024 Edition

MONTHLY FUTURES MARKET OVERVIEW

>>Read the full October 2024 Edition HERE

GRAINS

The October 2024 USDA corn production and WASDE data were largely neutral and rather uneventful by USDA standards. U.S. production rose 17 mil. bu. to 15.203 bil., which is  roughly 50 mil. above expectations. The record yield was extended to 183.8 bpa, which is up from 183.6 bpa in September. Harvested acres were left unchanged at 82.71 mil. Notable yield changes were  Indiana down 8 bpa, Ohio down 4 and North Dakota down 2. Iowa was up 2 bpa, Kansas up 7 and Missouri up 4. Old crop demand was massaged to get 2023/24 ending stocks down to 1.760 bil. as outlined in the September 30 report. The only change to new crop demand was a 25 mil. bu. increase to export to 2.325 bil., leaving 2024/25 ending stocks at 1.999 bil., which is slightly above expectations.

U.S. soybean production slipped 4 mil. bu. to 4.582 bil., which is still a record large crop. However, it was in line with expectations. The average yield was cut .1 bpa, yet remains a record high at 53.1 bpa. Harvested acres were left unchanged at 86.271 mil. Notable yield changes were Indiana and Ohio down 3 bpa, while Minnesota and Wisconsin were down 1 bpa. Illinois was up 2 bpa and Iowa was up 1 bpa. Old crop demand was massaged to get 2023/24 ending stocks down to 342 mil. bu. as outlined in the September 30 report. Very minor changes to new crop demand resulted in 2024/25 ending stocks holding steady at 550 mil. bu., which was also in line with expectations.

U.S. wheat ending stocks dropped 16 mil. bu. to 812 mil., which is a touch below expectations as feed and residual use rose 10 mil. bu. The USDA left its export forecast unchanged for now at 825 mil. bu. I was expecting a 25 mil. bu. increase, anticipating lower global production. Global production was cut 2 mmt to 794 mmt. However, world stocks rose .5 mmt to 257.7 mmt, which was slightly above expectations. EU and Russian production were both cut 1 mmt to 123 and 82 mmt respectively. This was partially offset by a .6 mmt increase to Ukraine’s production to 22.9 mmt. There was no change to Australian production as that was left at 32 mmt.

LIVE CATTLE

By September 30, 2024 the U.S daily cattle slaughter year-to-date was 23,301,230 head, which was down 938,422 head year-to-date or 3.9% lower year-to-date compared to 2023. The national average steer price was $185.18. For the same period in 2023 slaughter was down 1,129,000 head compared to 2022. The national average cash steer price was $184.10. For 2024 the CME Boxed Beef Index was $296.51, and in 2023 the index price was $294.16. With the cattle inventory dropping for two years, and with the cattle inventory in 2024 near 75 year lows, prices are close to the same.

LEAN HOGS

While cattle inventories are down in 2024, hog inventories are up in 2024. U.S hog slaughter was up 1,102,832 head by the end of September 2024. Year-to-date in 2023 hog slaughter was up 1,274,000 head, for two years of increasing supplies The CME Lean Hog Index by the end of September 2024 was $84.13. For 2023 it was $87.14. The CME Pork Cutout Index by month-end September 2024 was $94.19 compared to 2023 at $97.80. According to the U.S. Meat Export Federation pork exports on September 1, 2024 were 1,996,732 metric tons, which is up 4% compared to 2023 when exports were 1,913,338 metric tons.

STOCK INDEX FUTURES

Stock index futures continue to advance with S&P 500 and Dow futures reaching new record highs in light of mostly better than expected U.S. bank earnings reports. In addition, futures advanced in light of mostly stronger than expected economic reports. Retail sales in September increased 0.4% when up 0.3% was expected, and the October Philadelphia Federal Reserve manufacturing index was 10.3 when 3.0 was anticipated. Also, jobless claims in the week ended October 12 were 241,000 when 260,000 were forecast.

US DOLLAR INDEX

The U.S. dollar index steadily advanced in October and recently hit the highest level since August 2. The greenback was able to hold up well despite the bearish September housing starts and permits report. In addition, there is the flight to safety influence supporting the U.S. dollar in light of increasing geopolitical tensions in the Middle East.

EURO CURRENCY

The euro currency has come under pressure in October and recently traded at its lowest level since July 3, recording its third consecutive weekly decline as money markets adjust their predictions for further interest rate cuts from the European Central Bank. The ECB has reduced interest rates for the third time this year last week, citing improved control over inflation as a result of deteriorating economic conditions in the euro zone.

CRUDE OIL

WTI crude oil futures dropped below $70 per barrel late last week, and prices are on track for their steepest weekly decline in over a month due to worries about demand and an anticipated coming surplus. The IEA recently revised its demand forecasts downward, indicating a potential global oversupply, while OPEC has reduced its projections for three straight months, mainly due to weaker demand from China. China’s recent housing policy announcement also failed to meet analysts’ expectations, which further increased worries about demand from the world’s largest oil importer.

GOLD

December gold futures advanced to a new record high due to global demand for safe-haven assets and the anticipation of additional interest rate cuts from major central banks. Recently the European Central Bank implemented its third interest rate cut this year, reducing its deposit rate to 3.25% and indicated the disinflationary process is “well on track.”

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