Written Commentary
SOYBEANS
eans started the week by reaching a new 7-week high overnight amid this week’s hot & dry weather in the Midwest and Plains, as well as rising geopolitical tensions between the US and Iran and between Ukraine and Russia. The bulls have the edge, and a resumption of the Iran conflict is strengthening energy prices as bean oil is sharply higher.
SOYBEAN MEAL
Meal prices finished last week at a new five-week high, but have pulled back at the start of this week on strength in bean oil due to higher energy prices that have supported long bean oil/short meal spreads. With another morning flash sale to China of 136,000 tonnes, exporters and crushers are competing for bean supplies, resulting in firm basis levels. The meal export book remains at a record high for this time of the season, and soy processors have no reason to take their foot off the gas unless maintenance needs are critical.
CORN
The market saw a gap-higher opening on a more bullish forecast, with heat and dryness expected across the Plains and Midwest this week, and a shift toward more limited precipitation in week 2. EU conditions have been declining quickly, and the French crop may be the smallest since 1976. Some areas will see chances of showers and less heat this week. However, no soaking rains are in the forecast, so conditions are unlikely to improve significantly.
WHEAT
Wheat led the rally Friday on a bullish USDA report, lower EU+UK production, and news that Russia halted shipping through the Kerch Strait and the Azov-Don Canal, both important Russian export waterways. As of this morning, both waterways appear to remain closed, and Ukraine over the weekend says they struck 18 more Russian vessels, 13 of them tankers.
CATTLE
The cattle market had a tough week last week, with lower closes each day in August live cattle futures. Cash trade was significantly lower, which was part of the bearish sentiment, but technical action was very poor last week as well, with August prices hitting a new 3-month low on Friday. Part of the reason was heavy liquidation of August open interest, which fell 9,500 contracts on Friday and is now at its lowest level this year.
HOGS
October hogs took out the June highs early in the session Friday, but closed modestly lower. However, last week’s strong rally put Managed Money net shorts on notice. August open interest fell 13,000 contracts as funds liquidated. COT data was likely a bit deceiving, with the Managed Money net short hitting a new 3-year high as of Tuesday of last week.
MILK CLASS III
August Class III milk finished last week with a sizable gain after reaching a new contract low on Monday and a 4-week high on Friday.
CRUDE OIL
September Crude Oil was higher early Monday but did had not made it through last week’s highs, as the traded seemed less alarmed with Iran’s threats to close of the Strait of Hormuz despite the increased hostilities between Iran and the US over the weekend. Iran’s Revolutionary Guards said on Monday they had targeted US military facilities in Bahrain and Kuwait, destroyed radar systems in Oman, and hit fuel tanks and ammunition depots at Prince Hassan Air Base in Jordan in response to US strikes.
NATURAL GAS
September Natural Gas fell below Friday’s lows early Monday, extending last week’s selloff to its lowest level in almost five year. The US is experiencing some very hot weather this week, but the 6-10 and 8-14 day maps are less consistently hots than they have been, with some normal temps from the eastern Midwest to the New England/mid-Atlantic. The market is still reeling from last week’s news of the chance of increased flows to the henry Hub, reduced LNG offtake, and larger than normal increased in US storage.
DOLLAR INDEX
The USD index is little changed at 100.90 after initially firming at the start of the session. The main story for the currencies is that the dollar is softer despite the pick up in fighting between the US and Iran. However, unlike earlier phases of the conflict, the dollar is starting from a stronger base and with expectations of Fed tightening already priced in, so the scope for an additional war-driven surge is limited.
COCOA
September Cocoa gapped lower for the second straight session overnight, following a weak close on Friday after a move to its highest level since November 5 on Thursday. At its high on Thursday, the market just managed to close a gap from last November, achieving a technical target that may spell a peak in the market until more is known about the upcoming crop. The current mid-crop appears to be in good shape, but concerns are arising about the 2026/27 main and mid crops due to excess rains and the possibility that El Nino will disrupt the growing season.
COFFEE
September Coffee was near unchanged early Monday as it continues to consolidate following last Monday’s move to its highest level since October. The ICE exchange raising margin requirements last week apparently sparked a major bout of short covering. However, the Commitments of Traders reports show that managed money traders and other spec categories have been holding relatively small, net long positions recently.
COTTON
December Cotton was sharply higher early Monday, reaching its highest level since May 20. The market managed to just close a gap from that day, and traders will be watching to see if achieving that technical target will satisfy the bears or encourage more buyers. The USDA supply/demand report on Friday came in at bearish end of expectations for US 2026/27 production and ending stocks and world ending stocks, but the market quickly recovered after selling off upon the initial release.
SUGAR
The USDA lowered US 2026/27 sugar production to 9.004 million short tons 9.063 million in the June update, with a 118,000-ton drop in beet sugar production and 57,000-ton increase in cane. That was accompanied by at 300,000-ton increase in imports from Mexico. The increase in imports implies more sugar will be taken more sugar off the global market. The weather outlook it mixed, with Europe having a chance to improve this week, India and Thailand remaining dry, and Brazil dry, which could benefit harvests, and not threatened by cold.
PRECIOUS METALS
August gold fell lower, looking to test the $4,000 level. Gold’s direction remains subject to the broader inflation and Fed outlook in which recent dynamics have been bearish. Tomorrow’s inflation data will be responsible for the next breakout move in gold. As for Fed policy, markets are priced for a move higher in October and see nearly 40 bps of tightening by year-end. For gold, focus on higher oil prices amid the low-liquidity summer period could see the metal break out of its recent consolidation range, especially if tomorrow’s core print comes in higher-than-expected.
Copper prices were mixed in overnight trade as the metals complex looks to developments in the Middle East. Benchmark three-month copper on the London Metal Exchange was down 0.3% at $13,443, while COMEX copper prices are up 1.10% at $6.35. Inventories in LME-approved warehouses have dropped more than 20% since the end of May to a four-month low of 305,200 tons.
EQUITIES
Equity index futures were lower overnight as US and Iran exchanged drone and missile attacks over the weekend and into the Monday. Iran target several Gulf states: Bahrain, Kuwait, Oman, Jordan. Trump has publicly said the interim agreement is “over” and that the US is “beating them up,” while still nominally leaving the door open to talks; Iran’s lead negotiator is similarly framing this as the end of “one‑sided deals,” with explicit warnings that breaking the framework carries a price. Control of Hormuz has become the central battleground.
INTEREST RATES
Yields moved higher across the curve in a flattening move. Tuesday’s inflation data is expected to show a -0.1% MoM drop, thanks to a dramatic fall in gasoline prices. Focus remains on core inflation, which is expected to rise +0.2% MoM to leave the YoY rate at 2.9%, exactly where it was a year ago. That dynamic alone appears strong enough to encourage the Fed to retain a hawkish bias. Consumer inflation expectations are also drifting — the NY Fed’s latest survey showed 1-year expectations at 3.7% (highest since September 2023) and 3-year expectations at 3.3%, a dynamic Warsh will be watching closely given his 2% mandate commitment.
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