Written Commentary
SOYBEANS
Following Friday’s close above resistance, beans are following through to the upside, with July hitting a 1 1/2-month high and November reaching its best level since December 2023. Crude oil is strong again today, and biofuel demand has clearly been a major factor in the current rally. The China/US Beijing summit is less than 2 weeks away, and if China follows historical patterns, it will likely buy some US beans ahead of the meeting.
SOYBEAN MEAL
July soybean meal is starting the week slightly stronger, and cash bids remain very firm. Meal fundamentals are supportive, and May crush downtime is expected to reach record high levels for the month, limiting production at a time when demand is firm. However, the March USDA crush, released late Friday, was 227.4 million bushels, versus expectations of 231.4 million. The crush breakdown between territories was unusually low in the northeast region, suggesting a revision could be on the way.
CORN
The market finished last week on a strong note and is steady this morning, despite a more than $3 rebound in crude oil. Brazil’s Safrinha crop weather remains favorable, with dry conditions expected to persist this week across the center-west, but late-week rains in the south could stabilize crops there.
WHEAT
Chicago wheat is slightly lower this morning, but Kansas City wheat is seeing a larger pullback on an increase in potential rains in the Southwest Plains late this week. Whether moisture at this stage of the growing season will significantly improve crops is debatable, but the perception that Western Kansas rains are finally being seen in the near-term forecast is a headwind today. Also, India has restarted wheat exports after a four-year pause, and last week’s technical reversal lower in Chicago wheat is another headwind today.
CATTLE
The cattle complex saw some minor profit-taking on Friday after a very strong trading week. Technically, new contract highs Friday morning in both live cattle and feeders gave way to lower closes, raising the possibility of a key reversal down if prices are weak again today.
HOGS
Weak technical action to close out last week was a near-term negative for hogs, and the inability to extend rallies has been the theme lately. The bulls might point to Friday’s low holding the mid-April lows, but the market needs upside follow-through to shift the recent bear trend.
MILK CLASS III
June Class III milk finished last week with a moderate gain after reaching a 4 1/2-week high on Tuesday and a 7-week low on Friday.
CRUDE OIL
June Crude Oil was higher early Monday on a report from Iran’s Fars news agency that a US warship intending to pass through the Strait of Hormuz was turned back and that two missiles had hit the ship. This follows an announcement from President Trump over the weekend that the US would begin efforts to assist ships stranded in the strait, which was followed by a warning from Iran to not attempt to do so. There is the usual confusion between contradicting claims by the US and Iran regarding the incident, with Axios citing a senior US official denying that a US ship was hit.
NATURAL GAS
The 6-10 and 8-14 day maps show the cooler than normal pattern retreating to the northeastern US, while much above normal temperatures expand eastward from the west coast into the central/western Midwest, which perhaps opens the possibility of increased cooling demand. On the whole, the weather pattern appears normal. However, the somewhat cooler pattern recently coupled with a drop in US output last month has some traders looking for the net injection to be lower than normal in this week’s EIA report.
DOLLAR INDEX
The USD index is 0.28% higher at 98.43, supported by the overnight move higher in energy prices. Ongoing geopolitical tensions and higher oil prices continue to offer the dollar support through safe-haven flows. Underlying fundamentals make the case for a resumption of the dollar’s downward trend once hostilities between the US and Iran are over.
COCOA
July Cocoa reached its highest level since February 12 early Monday, successfully taking out the April 15 high and leaving a pattern of higher highs and higher lows intact.
COFFEE
July Coffee was slightly higher early Monday after bouncing off a two-week low on Friday. The upcoming Brazilian crop is expected to be large and harvest is expected to begin in a couple of weeks, but the market has found buyers on breaks since mid-March.
COTTON
May Cotton was slightly lower early Monday after reaching a new contract high shortly after the open. Higher Crude Oil prices lent support early, but some drought relief has emerged in US growing areas that may have undercut the recent rally.
SUGAR
July Sugar was higher early Monday, extending its recovery rally and reaching its highest level since April 7. The Australian sugar analysis firm Green Pool on Friday raised its projected global sugar deficit for 2026/27 to 4.33 million metric tons from a previous estimate of 1.66 million. This follows a general pattern of tightening supply expectations across the industry off ideas Brazil will raise its ethanol production from cane this year due to high energy prices, which will cut into sugar production.
PRECIOUS METALS
June COMEX contracts are down 1.50% to $4,575 as a higher dollar and oil prices fueled inflation fears. Market expectations for Fed policy remain modestly on the hawkish side, though no change in policy is priced by markets. Oil prices climbed to over $113 a barrel after Iran’s Fars news agency reported that a US warship was hit with missiles and turned back from the Strait of Hormuz.
Silver futures are down 3.75% to $73.11.
Copper prices moved lower, with July COMEX contracts down over 1% to $5.92, while the LME is closed for holiday. ISM manufacturing data showed a solid expansion in factory activity, alongside a sharp upturn in input prices. The headline figure came in at 52.7, unchanged on the month and the highest since August 2022, indicating an expanding manufacturing sector. Supplier deliveries have lengthened further, moving deeper into “slower” territory, which in ISM terms signals tighter supply or stronger demand (or both) along industrial supply chains.
EQUITIES
Equity index futures are mostly lower as energy prices rose overnight, despite the US announcement of “Project Freedom” to free Hormuz-stranded ships. Official Iranian media reported that two US warships were hit by missiles in the Strait of Hormuz, although the attack reports were denied by US officials. US equities will find underlying support on resilient earnings expectations and an assumption that the growth impact due to the Strait closure will be contained.
INTEREST RATES
Yields are higher across the curve as markets digest weekend headlines ahead of ISM services PMI data on Tuesday and April’s labor report due Friday. Current levels: 3M 3.666% (-0.1 bp vs Fri close 3.667%), 2Y 3.915% (+2.7 bps from 3.888%), 5Y 4.042% (+2.1 bps from 4.021%), 10Y 4.394% (+1.6 bps from 4.378%), and 30Y 4.976% (+1.0 bp from 4.966%, again threatening the 5.00% line).
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