Written Commentary
SOYBEANS
Both Iran and the US rejected each other’s peace proposals, and energy markets rose overnight which prompted buying across the soy complex. China’s official news agency finally announced President Trump’s visit later this week, and talk that the President is looking to secure a purchase commitment is driving beans higher. There will be no shortage of news for beans this week, with planting progress this afternoon, the USDA May supply and demand report tomorrow, CONAB’s latest update on Thursday, and the Trump/Xi meeting.
SOYBEAN MEAL
Meal held its ground late last week and is off to a strong start this morning. July soymeal has been mainly range-bound since the 1st of the month. Exports remain a bright spot and were strong again last week, but Argentine farmer sales of beans to crushers are ramping up quickly as their harvest moves forward. That will increase competition for soy product exports over the coming weeks. Harvest weather looks good.
CORN
The market is stronger this morning on higher crude oil and the rejection of the Iran peace proposal. There is also talk that President Trump is looking to secure a larger package of Chinese purchases of US grain, including corn. With corn demand already very strong, any new commitment would be positive for prices.
WHEAT
A higher start for wheat this morning as the Kansas Wheat Quality Council crop tour begins today and runs through Thursday. The tour will begin to help clarify HRW yields in the biggest producing state.
CATTLE
The cattle complex had an auspicious end to last week, as all-time high cash trade did not prompt a futures rally. For months on end, strong cash trade has been one of the main drivers for the bull market in cattle, so it was unusual to see weak futures action both Thursday and Friday. Could it signal a potential bearish shift? It will take more than a couple of bad days to kill a long-term bull market, so additional technical evidence will be needed to determine that, but it is certainly a warning shot across the bull’s bow.
HOGS
July hogs had their two best trading-volume days of the year to finish last week, with a daily upside reversal on Thursday and a marginally higher close on Friday after early-session strength. Further strength at the start of this week could signal the beginning of a typical seasonal rally at this time of year. Open interest rose a little over 3,200 contracts on Friday.
MILK CLASS III
June Class III milk finished last week with a modest gain after reaching a 12-week low on Monday and a 1-week high on Wednesday.
CRUDE OIL
July Crude Oil was higher early Monday after President Trump on Sunday said Iran’s response to last week’s US peace proposal was “unacceptable.” The market remains volatile and is apparently vulnerable to any suggestion that the Strait of Hormuz will be opened, only to rally again when those hopes are dashed. In the meantime, the impacts of the cutoff of roughly 20% of the world’s oil can be expected to increase. Saudi Aramco said it will ship about 10 million barrels of oil to its customers in China next month.
NATURAL GAS
July Natural Gas was higher early Monday but had yest inside Friday’s range. The market may have put in a low last week but has yet to make much progress on that move. The theme of high US production and low demand may be playing itself out as the market approaching the cooling season. The mild winter and spring allowed US stocks to build at a faster than normal rate, but US production has slowed in recent weeks.
DOLLAR INDEX
Equity index futures were directionless overnight after President Trump called Iran’s response to a US peace proposal “totally unacceptable.” Oil prices rose roughly 3% in response, with Brent crude up 3% to over $104 a barrel. However, recent dynamics have shown that equity prices are less sensitive to oil prices than in the early days of the war, in part due to the AI trade resurging in the last couple of weeks. Trump will also be meeting with Chinese President Xi later in the week, where trade controls for products such as AI chips, airplanes, rare earths, and soybeans will be discussed.
COCOA
July Cocoa has taken out last week’s high to reach its highest level since January 20 and was approaching a gap from that day at 4783. The cocoa market is facing the prospects of lower production this year with the arrival on El Nino expected as early as June and with high fertilizer prices due to the Iran war.
COFFEE
July Coffee turned higher after reaching its lowest level since Last August earlier in the session on Monday, signaling that perhaps sellers are taking a step back as they await the upcoming Brazilian harvest. The Brazilian real reached its highest level since February 2024 on Friday, which lowers the urgency for growers to sell. Crop expectations are running strong, however.
COTTON
July Cotton inched to a new contract high early Monday but failed to follow through. It has been consolidating around contract highest of the past several sessions. Some US growing areas have received timely rainfall, but more is needed. Higher crude oil prices this morning lend some support to cotton on ideas that it higher polyester prices will boost cotton. The resilient stock market also lend support.
SUGAR
July Sugar may have found some support early Monday off the slightly higher crude oil prices on ideas it will further encourage Brazil and other nations to produce more ethanol from cane at the expense of sugar. They have already moving in that direction as indicated by the UNICA data, and Brazil is expected to raise the ethanol mix in their gasoline. The strong Brazilian real also discourages sugar exports.
PRECIOUS METALS
June COMEX contracts are up 0.26% to $4,742, parring earlier losses, which stemmed from inflation concerns after President Trump rejected Iran’s response to a US proposal to end the conflict. Recent optimism that a US-Iran resolution would take place soon has seen inflation expectations fall, leading to a reduction in hawkish Fed expectations, a dynamic which has been supportive to gold.
Copper prices on the LME climbed to a three-month high as supply worries outweigh demand concerns over the impact of the US-Iran conflict. Benchmark three-month copper on the London Metal Exchange gained 1.1% to $13,715.
Silver futures are up 6.4% to $86.00.
EQUITIES
Equity index futures were directionless overnight after President Trump called Iran’s response to a US peace proposal “totally unacceptable.” Oil prices rose roughly 3% in response, with Brent crude up 3% to over $104 a barrel. However, recent dynamics have shown that equity prices are less sensitive to oil prices than in the early days of the war, in part due to the AI trade resurging in the last couple of weeks. Trump will also be meeting with Chinese President Xi later in the week, where trade controls for products such as AI chips, airplanes, rare earths, and soybeans will be discussed.
INTEREST RATES
Yields are little changed across the curve. Friday’s labor report did offer some stability for markets and has cooled fears that the US-Iran conflict has materially damaged the labor market. However, that assumption still remains untested with laggard-effects still taking place. Despite the strong headline reading, the report did come with some signs of weakness: the 445,000 surge in involuntary part-time workers to 4.9 million, the largest monthly increase in roughly two years, signals that employers are cutting hours rather than maintaining full-time positions, while the broader U-6 underemployment measure jumped to 8.2% even as the official unemployment rate held steady at 4.3%, revealing widening slack beneath the surface.
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