[Audio Version] Jinshi Futures Breakfast on December 5, 2024 (Thursday)

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Macroeconomic News
According to Caixin, the service industry sentiment continued to be in the expansion range in November, but showed a slight decline compared to the previous month. The Caixin China General Services Business Activity Index (Services PMI) for November, released on December 4, recorded 51.5, a decrease of 0.5 percentage points from October, still above the critical point, indicating that the expansion rate of service industry activities has slightly slowed.
OECD: The world economy is expected to grow by 3.2% this year, and by 3.3% in 2025 and 2026. The growth rate of the U.S. economy is expected to decline from 2.8% this year to 2.4% in 2025 and 2.1% in 2026. The Fed is expected to lower interest rates to 3.25-3.50% by the first quarter of 2026, the European Central Bank is expected to lower rates to 2.0% by the end of 2025, and the Bank of Japan is expected to raise rates to 1.5% by the end of 2026.
St. Louis Fed President Musalem stated that given inflation is higher than expected and concerns about the job market have eased, it may be time for decision-makers to slow the pace of interest rate cuts. Maintaining policy flexibility seems important, and the consideration to slow down or pause interest rate cuts may soon arrive to carefully assess the current economic environment, future information, and evolving prospects.
November ADP employment figures grew almost entirely in line with expectations, increasing by 146,000, while the market expected 150,000. The October data was revised down from 233,000 to 184,000. Although this is still quite good compared to the trend (the highest level since April), during that month, hurricanes and strikes caused the Bureau of Labor Statistics to estimate a negative growth in private sector employment for the first time since 2020 (-28,000), indicating potential strength.
Fed Chairman Powell: Does not believe there is any possibility of a 'shadow Fed chair' during Trump's term; can remain cautious in seeking a neutral interest rate. St. Louis Fed President Musalem: May pause interest rate cuts at the December meeting or later. Richmond Fed President Barkin: Inflation and employment are both heading in the right direction, but both face risks. The latest Beige Book released by the Fed shows that economic activity has slightly increased in most regions of the U.S. recently.
South Korea's opposition party formally proposed a motion to impeach President Yoon Suk-yeol, with the National Assembly set to vote on December 6-7. At least eight ruling party members need to switch sides for the motion to pass; the ruling party held a meeting to decide to oppose the impeachment motion; the Democratic Party proposed impeaching Defense Minister Kim Dong-hyun, who subsequently resigned; large-scale protests erupted in Seoul, with demonstrators calling for the arrest of President Yoon Suk-yeol; Yoon is set to deliver a speech on Thursday.
Global Futures Market Abnormal Movements
Domestic commodity futures closed generally lower at night, with most energy and chemical products declining. Butadiene rubber fell by 2.27%, glass fell by 2.06%, and soda ash fell by 1.87%. Most black series commodities rose. All agricultural products declined, with vegetable meal falling by 2.43%, soybean meal by 2.2%, corn by 2.14%, soybeans by 1.71%, corn starch by 1.47%, and white sugar by 1.27%. Most base metals rose, with alumina increasing by 1.28%, Shanghai aluminum by 0.95%, Shanghai lead by 0.83%, Shanghai copper falling by 0.31%, and stainless steel falling by 0.65%. Shanghai gold rose by 0.03%, and Shanghai silver rose by 0.77%.
International oil prices fell across the board, with U.S. oil for January 2025 contracts down 1.73% to $68.73 per barrel. Brent oil for February 2025 contracts fell 1.56% to $72.47 per barrel.
International precious metal futures generally rose, with COMEX gold futures rising by 0.24% to $2,674.3 per ounce, and COMEX silver futures rising by 1.09% to $31.835 per ounce.
London base metals closed mixed, with LME copper down 0.16% at $9,097 per ton, LME zinc down 0.34% at $3,085 per ton, LME nickel up 0.22% at $16,050 per ton, LME aluminum up 1.11% at $2,638.5 per ton, LME tin up 0.96% at $29,100 per ton, and LME lead up 0.34% at $2,086.5 per ton.
Chicago Board of Trade (CBOT) agricultural futures main contracts closed lower across the board, with soybean futures down 0.78% at 984 cents per bushel, corn futures down 0.58% at 429.75 cents per bushel, and wheat futures down 0.05% at 547.25 cents per bushel.
Black Series Hotspot News
According to Mysteel, the Jinshenglan Group's silicon manganese tender amounted to 6,500 tons, with a tender price of 6,240 yuan/ton in Hubei for 2,900 tons, 6,290 yuan/ton in Anhui for 1,000 tons, 6,300 yuan/ton in Yunfu, Guangdong for 1,600 tons, and 6,380 yuan/ton in Heyuan, Guangdong for 1,000 tons, all inclusive of tax cash price.
The Dalian Commodity Exchange issued a notice that starting from the settlement on December 6, 2024 (Friday), the price fluctuation limit for iron ore futures contracts will be adjusted from 11% to 9%, and the margin level for speculative trading will be adjusted from 15% to 11%, while the margin level for hedging transactions will remain unchanged at 11%. For contracts that simultaneously meet the relevant adjustments to the fluctuation limit and margin regulations in the Dalian Commodity Exchange's risk management measures, their fluctuation limit and margin will be executed according to the larger value among the prescribed numbers.
According to Steel Valley Network, the national building materials social inventory is 4.4309 million tons, a decrease of 31,600 tons from last week, down 0.71%; factory inventory is 3.2166 million tons, a decrease of 117,500 tons from last week, down 3.52%; production is 4.1114 million tons, a decrease of 94,600 tons from last week, down 2.25%.
Agricultural Products Hotspot News
Due to excessive rainfall and flooding, Malaysia's palm oil production estimate for the 2024/25 marketing year has been slightly revised down to 19.4 million tons, 1% lower than the previous year. Adverse weather conditions during the Northeast Monsoon season and seasonal low production have affected palm oil production.
Adverse weather conditions are expected to reduce Indonesia's palm oil production for the 2024/25 marketing year to 49.9 million tons, down 1% from previous estimates. The main weather condition in November was wet weather. Reports indicate that several flooding events occurred in West Kalimantan, North and South Sumatra, hindering harvesting activities.
According to Mutian Technology, as of November 30, 61 sugar factories in Guangxi have started crushing, an increase of 45 factories year-on-year; the total sugarcane crushed reached 4.1735 million tons, an increase of 3.3899 million tons year-on-year; mixed sugar production was 512,400 tons, an increase of 438,600 tons year-on-year; the mixed sugar production rate was 12.28%, up 2.86 percentage points year-on-year; total sugar sales reached 285,000 tons, an increase of 224,600 tons year-on-year; the production-sales ratio was 55.62%, down 26.22 percentage points year-on-year.
According to monitoring by the National Grain and Oil Information Center, on November 29, the total inventory of the three major oils in the domestic market was 1.96 million tons, a decrease of 40,000 tons week-on-week, and a decrease of 40,000 tons month-on-month, down 210,000 tons year-on-year. Among them, soybean oil inventory was 1.06 million tons, down 20,000 tons week-on-week, down 70,000 tons month-on-month, and up 130,000 tons year-on-year; rapeseed oil inventory was 390,000 tons, up 10,000 tons week-on-week, up 30,000 tons month-on-month, and up 110,000 tons year-on-year; palm oil inventory was 510,000 tons, down 30,000 tons week-on-week, unchanged month-on-month, and down 450,000 tons year-on-year.
According to data released by the International Cotton Advisory Committee (ICAC), the global cotton production estimate for the 2024/2025 marketing year is 25.299 million tons, up from the previous month's estimate of 25.259 million tons. The production estimate for the 2023/2024 marketing year is 24.123 million tons, a year-on-year increase of 4.9%. The global cotton ending inventory estimate for the 2024/2025 marketing year is 18.4703 million tons, up from the previous month's estimate of 18.4610 million tons, while the ending inventory estimate for the 2023/2024 marketing year is 18.5627 million tons, a year-on-year decrease of 0.5%.
Industry analysis shows that due to floods and seasonal low production, Thailand's palm oil production estimate for the 2023/2024 marketing year has been revised down by 3.2% to 3.32 million tons. Official data shows that production in October fell to 199,000 tons, down 26% from 268,000 tons in September. Despite four consecutive months of decline, the total production for the first ten months of this year has increased by 3.3% year-on-year, reaching 2.96 million tons, compared to 2.86 million tons in the same period last year.
The Rural Economic Department of Paraná State, Brazil (Deral) reported that soybean planting for the 2024/2025 marketing year has been completed. Last week, the planted area reached 99% of the total planned area, with nearly all production areas completing planting. According to information provided by Safras & Mercado, the total soybean planting area in Paraná this year is estimated at 5.776 million hectares, slightly down from 5.784 million hectares in the 2023/24 marketing year. However, the estimated production is expected to reach 2.2285 million tons, a 20% increase from last year. The average yield expectation is 3,858 kilograms per hectare, exceeding last year's 3,200 kilograms per hectare.
Soybean planting for the 2024/25 marketing year in Mato Grosso, Brazil, was completed last Friday (November 29). According to a survey conducted by the Mato Grosso Agricultural Research Institute (Imea) in November, the estimated soybean planting area for the state in the 2024/2025 marketing year is 12.66 million hectares, an increase of 1.47% from last year. The estimated soybean yield is 57.97 bags per hectare, an increase of 11.15% from last year. Due to the increase in both planting area and yield, the total soybean production for Mato Grosso in the 2024/25 marketing year is estimated to reach 4.404 million tons, a 12.78% increase from last year's production.
The USDA announced that private exporters reported sales of 30,000 tons of soybean oil to South Korea for delivery in the 2024/2025 marketing year.
Reuters released forecasts regarding the USDA's December supply and demand report. Analysts predict that the U.S. ending soybean stocks for the 2024/25 marketing year will be 469 million bushels, with an estimated range of 430-486 million bushels. The USDA previously estimated it to be 470 million bushels in November. Brazil's soybean production for the 2024/25 marketing year is estimated at 169.3 million tons, with an estimated range of 166.2-171 million tons; the USDA had previously estimated it at 169 million tons in November. Argentina's soybean production for the 2024/25 marketing year is estimated at 5.135 million tons, with an estimated range of 5.1-5.4 million tons; the USDA had previously estimated it at 5.1 million tons in November.
According to expectations from foreign media surveys, as of the week ending November 28, the net sales of U.S. soybeans for export in the 2024/25 marketing year are expected to be 1.1-2.5 million tons, and for the 2025/26 marketing year, net sales are expected to be 0-75,000 tons.
Energy and Chemical Hotspot News
According to data from the Petroleum Association of Japan (PAJ), for the week ending November 30, Japan's commercial crude oil inventory decreased by 290,000 kiloliters to 9.55 million kiloliters, gasoline inventory decreased by 140,000 kiloliters to 1.77 million kiloliters, naphtha inventory decreased by 64,000 kiloliters to 1.57 million kiloliters, and kerosene inventory decreased by 40,000 kiloliters to 2.65 million kiloliters; Japan's refinery average operating rate was 79.8%, compared to 79.3% for the week ending November 23.
According to Longzhong Information, the latest data shows that as of the week ending December 4, China's asphalt refinery capacity utilization rate was 28.9%, a decrease of 3.6% month-on-month. The weekly asphalt production was 519,000 tons, a decrease of 9.4% month-on-month; China's methanol port inventory totaled 1.2213 million tons, an increase of 44,300 tons compared to the previous data.
The National Development and Reform Commission reported that a new round of refined oil price adjustment will begin at 24:00 on December 4. According to the price monitoring center of the National Development and Reform Commission, during this round of refined oil pricing cycle (November 20 - December 3), international oil prices fluctuated slightly. Based on the current domestic refined oil pricing mechanism, the adjustment amount is less than 50 yuan per ton. There will be no adjustments to gasoline and diesel prices this time, and the unadjusted amount will be included in the next pricing adjustment.
The latest data from the Fujairah Oil Industry Zone in the UAE shows that as of the week ending December 4, the total inventory of refined oil at Fujairah Port was 17.487 million barrels, an increase of 3.252 million barrels from the previous week. Among them, the inventory of light distillate oil increased by 710,000 barrels to 6.533 million barrels, the inventory of medium distillate oil increased by 249,000 barrels to 2.39 million barrels, and the inventory of heavy residual fuel oil increased by 2.293 million barrels to 8.564 million barrels.
According to the EIA report, for the week ending November 29, U.S. Strategic Petroleum Reserve (SPR) stocks increased by 1.445 million barrels to 391.8 million barrels, an increase of 0.37%. Excluding the strategic reserves, commercial crude oil inventories decreased by 5.073 million barrels to 423 million barrels, a decrease of 1.18%. The average supply of U.S. oil products over four weeks was 20.448 million barrels per day, an increase of 4.0% compared to the same period last year. For the week ending November 29, U.S. domestic crude oil production increased by 20,000 barrels to 13.513 million barrels per day.
Metal Hotspot News
Rio Tinto expects bauxite production in 2025 to be between 57 million and 59 million tons, alumina production to be between 7.4 million and 7.8 million tons, and aluminum production to be between 3.25 million and 3.45 million tons.
According to foreign media reports, Chile's lithium carbonate exports in November 2024 reached 20,700 tons, an increase of 3.1% month-on-month and a 17.1% increase year-on-year. Of this, 17,000 tons were exported to China, a decrease of 0.2% month-on-month and an increase of 24.6% year-on-year. From January to November 2024, Chile's lithium carbonate exports totaled 221,000 tons, a year-on-year increase of 21.4%; of this, exports to China were 178,700 tons, a year-on-year increase of 43.1%.
On December 4, data from the Passenger Car Association indicated that preliminary statistics show that from November 1 to 30, retail sales in the passenger car market reached 2.446 million vehicles, an increase of 18% year-on-year and an increase of 8% compared to the previous month. The cumulative retail sales for the year to date reached 20.281 million vehicles, a year-on-year increase of 5%; wholesale sales of passenger cars from November 1 to 30 reached 2.943 million vehicles, a year-on-year increase of 15% and an increase of 8% from the previous month. The cumulative wholesale sales for the year were 24.119 million vehicles, a year-on-year increase of 6%.
The Shanghai Futures Exchange announced that it has discovered two groups of four individual clients suspected of failing to declare actual control relationships in the trading of alumina futures. According to the relevant regulations of the Shanghai Futures Exchange's trading rules and actual control relationship account management measures, it has been decided to impose regulatory measures on the above clients, restricting new positions for one month and restricting withdrawals.
Kua Kua 'Period' Talk - Unveiling the Logic of Variety Trading!
Supply strong, demand weak, is there still room for coking coal to fall?
Everbright Futures Analysis points out that at the industry level, as temperatures drop, demand for finished materials seasonally weakens, especially in the northern market. Inventory continues to accumulate. At the same time, steel plant profits are declining, production enthusiasm is weakened, and recently there has been an increase in maintenance at steel mills, resulting in decreased procurement sentiment for upstream raw materials. Currently, coking enterprises' profits are near breakeven, and short-term operating rates are not expected to change much. Coking coal procurement is mainly opportunistic, maintaining a low inventory operating strategy, while terminal demand feedback to upstream is transmitted layer by layer. On the supply side, most coal mines in producing areas are operating normally, and coking coal supply is relaxed. Traders are cautious, with some coal mines accumulating inventory, and online bidding transaction prices are declining. It is expected that there is still room for further decline. On the macro level, the market expects a central economic work conference to be held next week, and there are still policy games concerning the real estate industry. If there are any unexpected policies, it may boost the short-term depression of black metals, and attention should be paid to the risk of price rebounds.
Short positions exert pressure, when will soybean meal futures stop falling?
New Lake Futures Analysis indicates that from the perspective of the main contract 2505, it has broken the fluctuation range that lasted for three and a half months since mid-August. However, the U.S. soybean market remains around 1000 cents. The performance of domestic soybean meal is weaker than that of U.S. soybeans, reflecting a lack of confidence among domestic players. Domestic soybean meal inventory has begun to seasonally decline, alleviating some pressure, but the spot basis has not performed well, remaining mainly in a low-level fluctuation. The large volume of imported soybeans arriving in the domestic market from August to October has created significant psychological pressure on the market, although purchasing for shipping periods from December to February has been slow and customs inspection times have been extended. Nevertheless, the probability of domestic shortages in the long term is not high, and imported soybean reserves may be released into the market in various forms at any time. In conclusion, the domestic soybean meal market is weak due to a lack of themes on the supply side and highlights on the consumption side, and the market may continue to decline, though the extent of the decline could be limited by U.S. soybeans, while the strong oil and weak meal situation is unlikely to change in the short term.
Recent Important Futures Data and Events Overview
On December 5 at 3:00, the Federal Reserve will release its Beige Book on economic conditions. Although inflation data exceeded expectations, the dovish stance of Fed Chairman Powell has weakened, but the market remains optimistic about the prospect of a rate cut by the Fed in December.
On December 5 at 21:30, the U.S. will release initial jobless claims for the week ending November 30. Previously, initial jobless claims for the week ending November 23 recorded 213,000, with expectations of 216,000, which was lower than expected. The labor market remains strong, and this decrease indicates that the U.S. job market continues to stay stable.
On December 6 at 21:30, the U.S. will release adjusted non-farm employment figures for November and the unemployment rate. Previously, the adjusted non-farm employment figures for October recorded the smallest increase since December 2020, at 12,000. The unemployment rate remained unchanged at 4.1%. Citi expects that next week's non-farm employment data for November will record 150,000 jobs, with an unemployment rate of 4.3%.
Article forwarded from: Jinshi Data
[Audio Version] Jinshi Futures Breakfast on December 5, 2024 (Thursday)

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