Written Commentary
SOYBEANS
The bean market fell back from early gains and turned lower this morning as crude oil sold off sharply following President Trump’s message that negotiations with Iran are ongoing and further military strikes will be halted for a 5-day period. However, multiple headlines from Iranian media have denied that there were any talks with the US. While this news will dominate the headlines today, Brazil’s harvest is moving forward and now stands at 65% complete compared to 67% average, and Mato Grosso is 99% done. Brazil’s news service Globo Rural says China is easing rules for weeds in imported Brazilian shipments. Brazil’s truckers union has entered labor negotiations for the next 7 days before deciding on any strike.
SOYBEAN MEAL
A slightly lower start for soymeal, but the market was surprisingly strong last week. The EPA’s RVO announcement seems to be a moving target, with rumors it could be out as early as this week and others saying it will be released next week or even in early April. This has caused some unwinding of the long bean oil/short meal spreads, but firm basis and limited competition from Argentina for soy product exports drove last week’s meal rally.
CORN
The corn market was higher early this morning but turned lower when crude oil sold off sharply on reports that President Trump will pause further Iran infrastructure strikes for 5 days to allow time for negotiations. Iranian media states that there have been no talks with the US, and that there are none currently. For corn, the tight global fertilizer supply issue is a major problem unlikely to be solved quickly, given the time required to repair some of the large gas facilities in the Middle East.
WHEAT
Overnight strength disappeared when crude oil sold off sharply this morning, but prices are moving back up off the lows. Record-setting heat impacted the central and southern Plains over the weekend, and some private forecasters are indicating damage from the extreme cold early last week is starting to show in some fields in the southern Plains. Mild/cool weather is needed for the crop to recover, but the forecast calls for well-above-normal temperatures to continue for the next 2 weeks for the Plains.
CATTLE
Live cattle closed near the highs of the week on Friday and are likely to get a boost this morning from sharply weaker energies and a major rally in the stock market after President Trump said he would pause strikes on Iran’s energy infrastructure for 5 days. However, Friday afternoon’s Cattle on Feed report showed Placements significantly above the average guess and On Feed slightly above as well. Without the Iran news, the opening would likely be lower.
HOGS
June hogs had a rough week last week, closing on a two-month low. Strong stocks and lower energy prices may give the market a boost this morning, but recent technical action has been poor, and that may continue. Managed Money traders through midweek reduced their net long position by 10% and likely even more than that during the second half of last week. Another bearish news item today is a report that China’s pig prices have hit a 15-year low as they continue to try to manage oversupply.
MILK CLASS III
April Class III milk finished last week with a sizable gain after climbing up to a 2-week high on Friday.
ENERGIES
May Crude Oil reversed lower Monday morning in the wake of a Trump announcement via Truth Social that he has instructed the US defense department to suspend strikes on Iranian power plants for a five-day period after productive talks with Iran government officials over the weekend. So far today, the market has an outside reversal day going, and the market was holding its declines despite some contradictory comments from news sources in Iran. The situation remains volatile, with the trade trying to assess what the Trump announcement means, the key issue being whether the Strait of Hormuz can reopen and stay open.
New highs in May RBOB and May ULSD overnight prior to the selloff that came in the wake of the Trump announcement leave open the possibility of key reversal tops in both markets, if volume is high.
May Natural sold off in the wake of the Trump announcement this morning but it was already under pressure from mild weather in the US and limited prospects for a demand driven rally. The US market has been insulated from global supply tightness because US LNG exports are already running at near capacity levels.
DOLLAR INDEX
The USD is lower at 99.56 after a steep drop earlier in the session following President Trump’s comments that he issued a five day halt in military strikes against Iranian power plants and energy infrastructure. Oil prices dropped sharply following the announcement, with WTI falling more than 9% below $90 per barrel and Brent sliding over 13% to under $97.
COCOA
May cocoa remains inside the narrow, sideways pattern that has held it for two weeks. Last week, sources at some of Ghana’s licensed cocoa buyers (LBCs) told Reuters that they lack the funds to buy beans from farmers despite the cut in the fixed price. This suggests there could be renewed pressure on the government regulator, Cocobod, to lower the official price again. The current official price is 41,392 cedis ($3,797) per metric ton versus the May futures trading around $3,200-$3,500. On the supportive side, higher fertilizer costs could lower production this year in the face of what appears to be good weather for growing.
COFFEE
May Coffee turned lower on Monday following the Trump announcement that was postponing strikes on Iranian power infrastructure in the wake of “productive talks” with Iranian government officials over the weekend. Prior to the announcement, coffee had edged above Friday high to reach its highest level since February 3. There were reports last week that growers in Brazil and Vietnam farmers were reluctant to commit to sales because of concerns about logistics risks linked to the Iran war. Brazil is expected to see a strong crop this season.
COTTON
May cotton fell off sharply in the wake of the Trump announcement but recovered to higher on the day almost as quickly. Crude oil prices reversed lower on the announcement, and lower oil prices reduce the cost of man made fibers that compete with cotton. The prospect of opening the Strait of Hormuz also puts downward pressure on fertilizer prices. Dry conditions in US growing areas at the start of the season lends support. As of last week, roughly an area representing 89% of US cotton production was experiencing drought. World Weather Inc. said on Sunday that Texas and northeastern Mexico still need rain to support planting this month and in April. A few showers are possible in early April. West Texas also needs rain, and only light amounts are expected, mostly in the first days of April.
SUGAR
May Sugar sold off in the wake of the Trump announcement that he was postponing attacks on Iranian power plants but bounced off its lowest levels. The reversal lower in the crude oil complex following the initial announcement undermines the ethanol market, which lowers the incentive for Brazilian cane crushers to favor ethanol production at the expense of sugar. The possibility of a reopening of the Strait of Hormuz also pressures fertilizer prices. However, markets are bouncing back and forth in the wake of some contradictory reports out of Iran. The rally in global sugar prices last week improved the economic for Indian exports, and sugar mills there have reported sales of 100,000 metric tons.
PRECIOUS METALS
Gold is extending its rout into a ninth consecutive session, though is trading above session lows following President Trump’s comments that he had asked the Department of Defense to postpone military strikes against Iranian power plants and energy infrastructure for five days. Trump made the announcement on Truth Social just hours before a deadline he had set for Tehran to “fully open” the Strait of Hormuz, threatening to destroy Iranian power plants in a further escalation in a conflict now in its fourth week. However, Iran’s Fars news agency said after Trump’s post that there was no direct communication with the US or through intermediaries.
Silver futures are down 2.5% to $68. Silver remains down meaningfully from its January highs, and the wide 52‑week range highlights the role of speculative participation.
Copper prices have recovered from three-month lows earlier in the session on the back of President Trump’s comments regarding talks between the US and Iran. Still, risks around the conflict remain as a headwind to prices given the uncertainty and potential impacts on demand and monetary policy.
EQUITIES
US equity index futures got a lift following comments from President Trump that he had asked the Department of Defense to postpone military strikes against Iranian power plants and energy infrastructure for five days. Trump made the announcement on Truth Social just hours before a deadline he had set for Tehran to “fully open” the Strait of Hormuz, threatening to destroy Iranian power plants in a further escalation in a conflict now in its fourth week.
INTEREST RATES
Yields are lower across the curve, following President Tump’s comments and a subsequent drop in energy prices. The Two-year yield is down 2.5 bps to 3.869%, while the 10-year yield is 2.4 bps lower at 4.370%. Inflation swaps, a gauge of the outlook for future consumer prices, have eased from a six-month peak of roughly 3.3% to 3.17% in one-year maturities. Suggesting that investors believe that the consumer price index will average more than 3% over the next 12 months, higher than the 2.4% year-on-year CPI reading for February.
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