Crude Futures Post Gains in Light Pre-Holiday Trade — Market Talk

U.S. natural gas futures settle higher in light pre-Christmas trade, with the January contract soaring ahead of Friday's expiration as weather forecasts point to a cold start for the New Year. Front-month gains are due "not only to short-term weather expectations but rollover dynamics and other non-fundamental factors," Gelber & Associates says in a note. "With that said, the soon-to-be-prompt February contract's gains are notable in their own right, hovering above November's highs and just below those made in early October." The January contract settles up 7.9%, at $3.946/mmBtu, a nearly two-year high. Gas for February delivery rises 4.7%, to $3.504/mmBtu. (anthony.harrup@wsj.com)

Livestock futures are little changed as trading closes earlier on Christmas Eve. AgResource estimates that the U.S. feeder cattle inventory outside of feedlots is at 21.4 million head, down 6% from a year ago. The firm says in a note it is "likely the tightest inventory since the 1960s." Live cattle close at $1.874 and lean hogs at 84.38 cents. (paulo.trevisani@wsj.com)

March NY world sugar #11 (SBH25) today is up +0.07 (+0.36%), and March London ICE white sugar #5 (SWH25) closed up +6.20 (+1.21%).

Sugar prices today are trading higher, consolidating mildly above last Thursday's lows, when NY sugar posted a 3-month low and London sugar posted a 4-month low. Sugar prices today are trading higher but the market remains wary ahead of Unica's report expected later this week of Brazil's sugar production in the first half of December.

Sugar prices fell last Thursday after India's Food Secretary Chopra said that India may allow sugar exports if there is a surplus once domestic ethanol blending requirements are met. The Indian government currently estimates a sugar surplus of about 1 MMT this season.

Sugar prices have also been undercut by the weakness in Brazilian real (^USDBRL), which encourages export selling by Brazil's sugar producers. The real on Monday fell -1.7% and consolidated just mildly above last Thursday's record low against the dollar.

An improved global supply outlook is undercutting sugar prices. On November 21, the International Sugar Organization (ISO) reduced its 2024/25 global sugar deficit forecast to -2.51 MMT, compared to an August forecast of -3.58 MMT. ISO also raised its 2023/24 global sugar surplus estimate to 1.31 MMT from an August projection of +200,000 MT.

The outlook for higher sugar production in Thailand is bearish for sugar prices. On October 29, Thailand's Office of the Cane and Sugar Board projected that Thailand's 2024/25 sugar production would jump by +18% y/y to 10.35 MMT. Thailand produced 8.77 MMT of sugar in the 2023/24 season that ended in April. Thailand is the world's third-largest sugar producer and the second-largest sugar exporter.

Reduced sugar output in India is supportive of prices. The National Federation of India Cooperative Sugar Factories Ltd reported Monday that India's sugar production from Oct 1-Dec 15 fell -18% y/y to 6.1 MMT.

Sugar output from Brazil's Center-South has recently declined, which is a bullish price factor. Unica reported last Thursday that cumulative 2024/25 Center-South sugar output through November is down -3.7% y/y to 39.361 MMT.

Drought and excessive heat earlier this year caused fires in Brazil that damaged sugar crops in Brazil's top sugar-producing state of Sao Paulo. Sugar cane industry group Orplana said that as many as 2,000 fire outbreaks affected up to 80,000 hectares of planted sugarcane in Sao Paulo. Green Pool Commodity Specialists noted that as much as 5 MMT of sugar cane may have been lost due to the fires. Conab, Brazil's government crop forecasting agency, cut its 2024/25 Brazil sugar production estimate from November 21 to 44 MMT from a previous forecast of 46 MMT, citing lower sugarcane yields due to drought and excessive heat.

In a supportive factor for sugar prices, India's Food Ministry on August 30 lifted restrictions on sugar mills producing ethanol for the 2024/25 year that starts November, which may prolong India's sugar export curbs. Last December, India ordered sugar mills to stop using sugarcane to produce ethanol for the 2023/24 supply year to boost its sugar reserves. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season. However, on October 3, the Indian Sugar and Bio-energy Manufacturers Association (ISM) said India will have 2 MMT of sugar to export next season and urged the government to lift its current sugar export restrictions.

The Indian Sugar and Bio-energy Manufacturers Association (ISM) on September 26 projected India's 2024/25 sugar production would fall by -2% y/y to 33.3 MMT and that India's 2023/24 sugar reserves will be at 8.4 MMT on September 30, compared with a May projection of 9.1 MMT.

As a supportive factor for sugar prices, the International Sugar Organization (ISO) on August 30 forecasted 2024/25 global sugar production of 179.3 MMT, down -1.1% y/y from 181.3 MMT in 2023/24.

The USDA, in its bi-annual report released November 21, projected that global 2024/25 sugar production would climb +1.5% y/y to a record 186.619 MMT and that global 2024/25 human sugar consumption would increase +1.2% y/y to a record 179.63 MMT. The USDA also forecasted that 2024/25 global sugar ending stocks would decline -6.1% y/y to 45.427 MMT.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

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The wheat market is trading with weaker action across the three exchanges on Tuesday. Chicago SRW futures are down 5 to 6 cents this far on the session. KC HRW contracts are 6 to 7 cents lower across most contracts. MPLS spring wheat futures are 4 to 5 cents in the red on the day.

Precipitation is expected to make its way to eastern portions of the Plains this next week with the westerns half expected to remain dry. Portions of the SRW regions are forecast to receive 1-2 inches of precip.

The markets will be closed early on Tuesday in observance of Christmas Eve and all-day Wednesday for Christmas. There will be hard open at 8:30 am CST on Thursday.

Weekly Export Inspections data showed a total of 403,719 MT (14.83 mbu) of wheat shipped in the week that ended on December 19. That was up 34.18% from last week but down 14.65% from the same week last year. The largest destination was the Philippines at 107,103 MT, with 76,255 MT headed to Indonesia and 72,951 MT on its way to Mexico. Full year shipments have totaled 11.943 MMT (344.9 mbu), which is 27.22% above the same week last year.

Algeria purchased an unspecified amount of wheat in a tender on Tuesday

Mar 25 CBOT Wheat is at $5.35, down 5 1/2 cents,

May 25 CBOT Wheat is at $5.45 1/4, down 5 3/4 cents,

Mar 25 KCBT Wheat is at $5.44 1/2, down 6 1/2 cents,

May 25 KCBT Wheat is at $5.52 1/2, down 6 1/2 cents,

Mar 25 MGEX Wheat is at $5.90 1/2, down 5 cents,

May 25 MGEX Wheat is at $5.99 1/4, down 4 1/4 cents,

On the date of publication, Austin Schroeder did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

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Live cattle futures are trading with contracts down a nickel to 37 cents higher on Tuesday. Cash trade has yet to begin this week, with last week showing steady trade, at $195-195.50 in the North and $191 in the South. Feeder cattle futures are mixed wth January up 20 cents and others down a nickel to 12 cents. The CME Feeder Cattle Index was up 85 cents from the day prior at $263.00 on December 20. The markets will close early this afternoon, with a day off on Wednesday.

Beef stocks at the end of November were reported at 440.5 million lbs, which was down 3.69% from last year and 1.8% above October per the seasonal shift. It was the tightest beef stocks for November since 2014.

USDA wholesale Boxed Beef report will not be published on Tuesday or Wednesday for Christmas. Prices were higher in the Monday afternoon report, with Choice boxes up 13 cents to $315.98/cwt and Select 84 cents higher @ $286.75. USDA estimated Monday’s federally inspected cattle slaughter at 118,000 head. That is even with last Monday, but well above the same (Christmas) Monday from last year.

Dec 24 Live Cattle are at $191.125, up $0.150,

Feb 25 Live Cattle are at $187.825, up $0.375,

Apr 25 Live Cattle are at $189.900, up $0.200,

Jan 25 Feeder Cattle are at $256.800, up $0.200

Mar 25 Feeder Cattle are at $255.875, down $0.125

Apr 25 Feeder Cattle are at $256.725, down $0.050

On the date of publication, Austin Schroeder did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

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Lean hog futures are getting a midday pop in prices despite a weaker early start, as contracts are up 27 cents for Feb and down 35 to 62 cents in other front months. The CME Lean Hog Index was reported at $84.35 on December 19, up 14 cents from the previous day.

After revising the September 1 inventory down 385,000 head, Monday afternoon’s quarterly Hogs & Pigs report showed the December 1 inventory at 75.845 million head, a 0.51% increase from last year and above estimates. Hogs kept for breeding was up just 5000 head at 6.004 million, in line with the trade, as market hogs were up 0.514% at 68.841 million head, above the +0.1% estimate. The September to November pig crop was up 2.03% at 35.238 million head, as the pigs per litter were up 2.2% at 11.92 ppl. Farrowing intentions for Dec-Feb are up 0.03% at 2.93 million head, with the March-May period up 1.37% at 2.953 million head.

November 30 pork stocks were 391.08 million lbs per NASS Cold Storage data, which was down 8.27% from last month and 5.91% vs. last year. That total was the lowest for any month since August 2010 and the tightest November total since 1997.

USDA’s FOB plant pork cutout report will not be out on Tuesday or Wednesday due to the holidays. The value was reported back lower on Monday afternoon, down $2.66 at $96.62 per cwt. All primals were reported lower, with the belly leading the charge, down $9.35. USDA estimated the Monday FI hog slaughter at 490,000 head. That is 3,000 head larger than last Monday and well above the same Monday last year due to Christmas.

Feb 25 Hogs are at $84.650, up $0.275,

Apr 25 Hogs are at $89.275, down $0.350

May 25 Hogs is at $92.700, down $0.625,

On the date of publication, Austin Schroeder did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

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