Written Commentary
SOYBEANS
Bean prices are following through lower this morning after yesterday’s sharp weakness on bearish USDA data. The USDA raised harvested acres by 100,000, raised crush slightly, and lowered exports, resulting in a larger ending stocks increase than expected. In addition, quarterly stocks were slightly higher than expected. The report confirmed late-season weather did not adversely affect yields. Another negative factor yesterday was the lack of morning flash sales after talk that China bought more US cargoes late last week.
SOYBEAN MEAL
The meal market is under heavy pressure following yesterday’s bearish USDA readings for beans. However, the USDA trimmed 2025/26 soymeal ending stocks by 25,000 short tons to 450,000, while soybean oil carryout rose modestly. Both meal and oil export projections were increased, which is evidence of solid demand, but not enough to outweigh the large bean supply picture.
CORN
The corn market took a hard blow to the chin yesterday after USDA confirmed a massive US harvest, strong yields, and larger-than-expected world stocks. December 1 stocks were also at an all-time record high. Typically “fringe” corn areas had yields in 2025 that were much better than average, and USDA found another 1.3 million harvested acres. Good weather at harvest led to minimal abandonment, and the USDA adopted China’s newly updated, larger corn production estimate, resulting in much higher world stocks than expected.
WHEAT
The USDA did not spare wheat from the bearish statistics yesterday. The downside price reaction was not as harsh as corn or beans, however. Winter wheat acres were 160,000 below last year, compared to expectations of 750,000 acre decline. The 2025/26 balance sheet featured a 21 million bushel cut to usage and higher-than-expected ending stocks. December 1 stocks were also above expectations. After months of bearish fundamentals on wheat, the report was not a huge surprise but reinforced the fact that there is no bullish wheat story at this time.
CATTLE
The cattle complex closed higher yesterday, with feeders boosted by the sharp break in corn, and the bulls retain the edge. The GSCI index roll continues to result in plummeting February open interest, while April open interest rises.
HOGS
April hogs continue to move in “fits and starts”, and yesterday’s action was another example of the market’s inability to follow through to the upside recently. April fell below last week’s low briefly yesterday but regained some ground late in the session. Daily trading volume was the highest in 2 months, and February open interest plummeted nearly 10,000 contracts, while April increased by 6000 contracts.
MILK CLASS III
February Class III milk finished last week with a moderate loss after reaching a contract low last Monday and a 1 1/2-week high on Wednesday. The market has fallen to a new contract low early this week. The USDA said milk production is seasonally strong nationwide, with an abundance of milk following the end of the holiday season.
ENERGIES
March Crude Oil rallied sharply early Tuesday and pushed up against resistance at the 200-day moving average, something the market has not touched since September. The ongoing unrest in Iran, with reports that as many as 3,000 have been killed and that government forces have begun firing indiscriminately on unarmed protesters have raised anxiety about global supply, not only from Iran but also the possibility that shipping out of the Persian Gulf could be restricted if hostilities spread beyond Iran’s border.
March Natural Gas rallied up to the 9-day moving average overnight but backed off from there. The market has managed a minor recovery off last Friday’s lows as a colder weather pattern has emerged for the key heating areas of the US. The 6-10 day shows below normal temps across the eastern half of the US and above normal in the western half.
DOLLAR INDEX
The dollar gave up earlier gains following December’s inflation print, which showed core price pressures eased in December, while headline prices remained stable. Fed Chair Powell has suggested that the impact of tariffs on inflation will peak in the first quarter and then subside. The dollar was pressured to start the week after Fed Chair Powell said the Department of Justice had served the Fed with grand jury subpoenas, threatening a criminal indictment related to his testimony before the Senate Banking Committee last June.
COCOA
March Cocoa was slightly lower early Tuesday but was respecting Monday’s low. Ivory Coast port arrivals data were released during Monday’s session, and they showed arrivals totaling 54,000 metric tons for the week ending January 11, up from 43,000 the previous week and 48,000 for the same week a year ago. This was the first time arrivals were above the previous week and above year-ago levels since December 14.
COFFEE
March Coffee was moderately higher early Tuesday but it only managed to recover a portion of Friday’s steep selloff. The International Coffee Organization reported significant increases in green coffee exports by coffee producers in November, but that was due to a sharp increase in robusta sales.
COTTON
March Cotton was holding firm early Tuesday but did not take out Monday’s high. The dollar recovered slightly following Monday’s decline, which takes away some of the currency support. Monday’s USDA supply/demand (WASDE) report came in at the bullish end of expectations for US production and ending stocks and bullish for world usage and ending stocks.
SUGAR
March Sugar was near unchanged early Tuesday, inside Monday’s range and inside the range of the past two months. The large global supply this year is limiting upside potential despite the market’s attempt to put in a low. Sugar consultancy Covrig Analytics on Monday raised its global sugar surplus forecast the 2025/26 (October-September) to 4.7 million metric tons, up 600,000 tons from their previous forecast.
PRECIOUS METALS
Gold prices rose slightly to start the session and held gains following December’s CPI inflation report, which saw the dollar lose early gains and yields drop. Gold hit all-time highs on Monday as concerns over Federal Reserve independence ramped up again following news that the Trump Administration threatened Fed Chair Powell with a criminal indictment over the weekend.
Copper prices are higher as supply concerns continue to drive prices higher and attract interest from speculative traders. Benchmark three-month copper on the LME rose 0.2% to $13,235, after hitting a record high of $13,387.50 earlier last week. Copper’s rally has been fueled by supply disruptions, worries about deficits, and a strong flow of copper to the US ahead of potential tariffs.
EQUITIES
The indexes are higher following Decembers CPI inflation data, which showed core prices rose 0.2% during the month, below expectations. Core CPI rose 2.6% on the year in December, edging down from November’s 2.7% and also below expectations, while headline inflation held steady at 2.7%. On the corporate front, JP Morgan shares rose about 1.2% in premarket trading after the bank’s earnings and revenue exceeded estimates, while Bank of New York Mellon fell 0.5% as its results failed to impress investors.
INTEREST RATES
Yields are lower at the front end and higher at the long end following the release of December’s CPI report. December CPI showed moderate but sticky inflation, with headline prices up 0.3% on the month and 2.7% year over year, while core inflation rose 0.2% on the month and 2.6% on the year. Shelter and services (rent, lodging, recreation, medical care) continued to drive inflation, while goods prices and gasoline fell, keeping overall inflation contained but still above the Fed’s target.
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