Written Commentary
SOYBEANS
Headlines from the weekend China/US talks were positive, although lacked specifics, and the bean market is reacting with a minor rally this morning. Secretary Bessent described the talks as “very successful.” Headline risk will be very high ahead of Thursday’s meeting, and volatility is likely to be elevated. Beans are holding in a high range consolidation pattern, biding time until the extent of additional China demand can be gauged. COT numbers showed Managed Money traders added to their record long in meal but reduced the record long in beans.
SOYBEAN MEAL
Soybean meal volatility increased last week with a sharp profit-taking selloff on Friday, the day after the December futures contract hit a nearly 3-year high. Meal open interest dropped by almost 20,000 contracts on Friday as longs ran for the exit. Cash meal tightness in the western belt continues, and processors need beans to keep the throttle up and produce enough meal to meet strong export pull from Pacific Northwest ports. Precipitation has slowed the early harvest pace, and high moisture beans can force plants to make equipment adjustments. Rainfall will shift to the western belt this week while the eastern belt begins a drying trend.
CORN
A moderate bounce this morning on hopes corn will be included in the China/US talks and from heavy rains slowing harvest across parts of the heart of the corn belt over the weekend. Heavy rains fell in eastern Iowa, southern Minnesota, Wisconsin, and northern Illinois over the weekend. The forecast this week for the eastern half of the Midwest calls for scattered showers but an overall drying trend heading into early October. A pattern shift in the Plains will begin this week with much better chances for rain midweek and beyond in the southwest Plains, extending northward into Kansas, Nebraska and northwest Iowa. Above-normal temperatures are expected in the 6-15 day outlook. COT data showed Managed Money traders slightly increased their near-record long position.
WHEAT
Wheat is regaining what it lost in Friday’s selloff, but it remains within last week’s $0.26 range. Daily trading volume was unusually low at the end of last week as speculative interest was poor.
CATTLE
Cattle closed mixed on Friday after selling off sharply the 2nd half of last week, but it made a gap-higher opening this morning off of the bullish Cattle on Feed report. On Feed numbers came in below the lowest guess, placements were well below the lowest guess, while marketings were slightly above estimates. The placement figure is the lowest on record for the second month in a row. After last week’s sharp weakness, a bullish reaction was expected for this morning, but a strong close will be important, as last month’s report also showed lower placements than expected and the market opened higher but ended lower that day. The New Mexico border crossing will reopen this week, and placements in the South will slowly but surely begin to increase. Managed Money traders slightly reduced their net long last week.
HOGS
The hog market fell further into new contract lows on Friday, and open interest rose nearly 2,900 contracts on the break. Cutout was slightly lower. Technical action was poor last week with lower daily highs each day. COT data showed Managed Money traders added nearly 7,900 contracts to their net short position, pushing it to a new record short. Trading volume was strong all of last week as the Goldman role was ongoing.
MILK CLASS III
October Class III milk finished last week with a sizable loss after reaching a new contract low on Friday.
CRUDE OIL
November Crude Oil was under pressure early Monday, falling to its lowest level since September 10. The selloff is notable in the face of Iran and the US exchanging more threats over the weekend and reports of Houthi missile and drone strikes on the Saudi capital of Riyadh. With Iran’s President Pezeshkian is expected in New York this week for the United Nations General Assembly and President Trump saying would be open to meeting him, the market may be hoping for diplomacy. There are also indications that despite all the blockages, a fair amount of oil is still making it out of the Persian Gulf. Ship-to-ship transfers of oil outside the Strait of Hormuz are estimated around 2.4 million barrels per day this month, up from 1.4 million in August and 730,000 in July.
NATURAL GAS
November Natural Gas was lower initially on Monday, just barely avoiding closing a gap from last Monday’s open (at 2.893). The market has been in a sideways/consolidation pattern for two months, around contract lows. The 6-10 and 8-14 day forecasts continue a pattern of mostly above normal temperatures across the lower 48-states, which has the potential to extend the cooling season (which is supportive to natural gas consumption for electricity generation), but it will also delay the startup of the heating season in the north (which has a bigger impact on gas consumption). Hot weather this summer may have kept domestic demand strong enough to avoid a steeper selloff give the record production. Expectations for steady demand growth in the future may have been hit by the backlash against data centers.
DOLLAR INDEX
The USD index was little changed overnight at 100.24. Traders continue to expect an additional rate hike before year-end, while the Bank of Japan’s rate hike on Friday and forward guidance was unconvincing to investors, giving the dollar a further edge. However, reports of possible intervention this week could see dollar strength tested if Japanese authorities intervene.
PRECIOUS METALS
December gold contracts edged lower and are finding support near the $4,400 level as the dollar maintained recent strength, while Treasury yields edged lower and global equities rallied. The dollar’s maintained strength from Friday is likely resulting in a wave of profit-taking from investors as they position into equities.
December silver contracts are little changed at to $66.50.
Copper prices on the LME gained 1.4% at $14,725 as buyers in China continue to underpin prices among expectations of a wave of seasonal buying in the country. The demand from China is not limited to just exchange purchasing, as physical buying has moved the Yangshan copper premium, a gauge of Chinese demand for copper imports, up nearly 70% in September to $119 a ton, easing from Friday’s $124.
EQUITIES
Equity index futures were higher overnight with the Nasdaq leading gains as sentiment was lifted following hopes over an to the US-Iran conflict and falling oil prices. President Trump signaled that he would be open to the prospect of meeting Iranian President, Masoud Pezeshkian. This comes as world leaders will gather in New York for the U.N. General Assembly, where the president will also meet with Gulf leaders for broader talks over security in the region.
INTEREST RATES
Yields moved lower across the curve as oil prices fell and global equities rallied. No key US data on the calendar today, so markets will continue to trade headlines heading into tomorrow’s Two-year note auction. President Trump said he could be open to meeting the Iranian President this week, while he is also expected to meet with other Gulf leaders, ahead of a scheduled summit with Chinese President Xi Jinping.
COCOA
December Cocoa was higher early Monday but inside Friday’s range lower. The market is seeing bounce off a short term oversold condition and perhaps from concern over the lack of rainfall over the weekend in parts of West Africa. World Weather Inc. said rainfall was too light in central and southern Ivory Coast and southwestern Ghana over the weekend to counter evaporation. Northern areas of those countries, as well as Cameroon, saw heavier amounts. They expect a routine occurrence of showers and thunderstorms Ivory Coast to Cameroon and Nigeria during the next ten days
COFFEE
December Coffee was higher for the second straight session early Monday, the market having found its legs after a three week selloff. The selloff came after strong exports out of Brazil finally started to ease tight supply worries and allowed exchange stocks to recover from 26-year lows. ICE certified arabica stocks were up 10,528 bags on Friday to 258,415, their highest since August 3. Stocks increased by 40,483 bags last week. Ample rainfall earlier this month in Brazil has also gotten the 2027/28 crop off to a good start.
COTTON
December Cotton was higher early Monday following a recent selloff that took the market to its lowest level since July 31 on Friday. A slight improvement in US crop conditions, trader concerns that the funds had built too big of a net long position, sluggish export sales, perceived harvest pressure, and a turn higher in the US dollar contributed to the selling. Despite some improvement in two out of the last three weeks, the crop conditions are not good, especially in Texas.
SUGAR
March Sugar was higher early Monday after starting off the session at its lowest level since August 26. The large net long position held by the funds has sparked a modest decline from the September 10 contract highs, but so far the market has avoided a steep selloff, as concerns about crops in key producers India, Brazil, Europe and Thailand persist. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 10,763 contracts of sugar for the week ending September 15, reducing their net long to 236,288.
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