Coffee and metal futures plummeted sharply last week, while the agricultural sector saw an impressive recovery.

Key Macroeconomic Developments

United States: The U.S. August jobs report recorded 142,000 new jobs, falling short of the forecasted 161,000. However, the unemployment rate dropped to 4.2%, leading the market to expect that the Federal Reserve (FED) will maintain high interest rates to control inflation. These figures reinforced concerns about slowing economic growth. Production indices from S&P Global and ISM also continued to show weakness, further pressuring economic growth. This resulted in a significant sell-off in the U.S. stock market, with major indices experiencing steep declines.

China: China’s industrial production continued to decline, significantly affecting international markets. Exports from China struggled due to weak global demand. Meanwhile, China’s domestic commodity market faced price drops due to overproduction and weak domestic demand. Recently, China has also relaxed restrictions on foreign investors, reducing the number of restricted sectors from 31 to 29, with the manufacturing sector no longer subject to limitations.

U.S. Stock Market (2 - 6/09/2024)

Last week, the U.S. stock market witnessed its sharpest decline since March 2023. The S&P 500 fell 4.3%, closing at 5,408.42 points, while the Nasdaq Composite lost 5.8% and the Dow Jones dropped 2.9%. The market's weakness was driven by growing concerns over economic slowdown and disappointing job data.

Shares of major technology companies plunged as investors sold off riskier assets, amid increasing concerns about the U.S. economy. Currently, investors expect the Federal Reserve to cut interest rates by at least 0.25% after its policy meeting at the end of this month. However, with the labor market showing clear signs of weakness, many believe the central bank may consider a more significant rate cut. According to the CME FedWatch Tool, two key views are emerging: one expects a 0.25% rate cut, while the other anticipates a more substantial 0.50% reduction.

U.S. Dollar Movements

Commodity Market Developments

Oil: Last week, WTI crude oil prices saw their steepest decline in nearly a year, dropping 8% to $67.67/barrel by September 6, 2024. Brent crude also fell sharply, down 9.8%, closing at $71.06/barrel. The drop reflects concerns over global oil demand due to slowing economic growth, particularly from China. Although OPEC+ extended production cuts until November 2024, the market continues to face downward pressure due to weak demand​.

According to the U.S. Energy Information Administration (EIA), U.S. crude oil inventories dropped by 7 million barrels for the week ending August 30, surpassing market expectations. However, gasoline inventories increased by 800,000 barrels, signaling a decline in fuel demand after the summer driving season​/

U.S. oil production remains high, with reports indicating a steady output of nearly 12.8 million barrels per day, which is contributing to further downward pressure on global oil prices​.

Gold and Metals

On September 6, 2024, gold prices fell by nearly 1%, closing at $2,495.85/ounce, following the release of the U.S. jobs report, which raised concerns about a potential rate cut by the Federal Reserve. Central banks, especially in Asia and developing countries, continue to increase their gold reserves amid growing economic risks​.

Silver futures for December closed at $28.283/ounce on September 6, marking a 3% decline compared to the previous week. Despite industrial demand from sectors like electronics and renewable energy, lower demand from China and abundant supply pushed prices down​.

Copper prices also dropped by over 3%, with October futures closing at $4.0315/pound. Copper inventories at major exchanges in Shanghai and London rose, reducing supply pressure, but weak demand from China continues to negatively impact copper prices​.

Platinum prices saw a smaller decline, with October futures settling at $918.7/ounce, down 1.5%. Analysts expect platinum demand to rise due to increased production in the electric vehicle industry​.

Agricultural Commodities

Corn prices on the CBOT edged up in early September, supported by short covering from non-commercial funds. December 2024 corn futures rose to 406.25 cents/bushel, up 1.3% from the previous week​.

Soybean prices rebounded after a sharp decline in August, with November 2024 futures rising 0.5% to 1,005 cents/bushel, driven by increased buying from China​.

Wheat posted the strongest gain among agricultural commodities, with December 2024 futures rising nearly 3% to 567 cents/bushel, due to concerns over global supply and reduced harvest pressures​.

USDA Weekly Export Report (for the week ending August 29, 2024):

• Corn exports reached 830,000 tons, soybeans totaled 1.48 million tons, and wheat exports were 520,000 tons. The increase in export volumes was driven by growing demand from China​.

Weather Conditions:

• U.S.: Dry weather conditions in key producing states like Iowa and Illinois are favorable for corn and soybean harvesting, though some rain is forecast for late September​(.

• Brazil: Steady rainfall in Brazil's Midwest is expected to improve soil moisture and support the safrinha corn crop​.

• Argentina: Argentina is forecast to experience dry conditions, which may hinder wheat and corn production, potentially affecting export volumes​.

China’s Purchasing Trends. China made no major corn purchases from the U.S. last week, impacting export prospects. However, it continued its seasonal soybean buying, as this is the peak export period for U.S. soybeans.