Written Commentary
SOYBEANS
Beans started stronger this morning, partly due to the sharp overnight jump in the Brazilian real after conservative candidate Bolsonaro and current Brazil President Lula advanced to a runoff, despite neither candidate reaching 50%. The news prompted aggressive buying of the Brazilian currency as it reached a new 4 1/2-month high against the Dollar. The stronger real typically means Brazilian farmers will be less aggressive sellers and US exports become more competitive, although South American inputs may come down.
SOYBEAN MEAL
The market has fallen sharply over the last week. Meal premiums are falling now that a harvest weather window is ahead, and processors can replenish soybean supplies more easily. Many processors are reporting trucks lining up at the start of the week, which was not the case a week ago. Cash meal tightness will not immediately go away as the supply pipeline got very low, but processors are expected to throttle up through the fall.
CORN
There were slight gains for corn overnight as pictures of crop quality issues in the wet areas of the Midwest circulated on social media over the weekend, raising ideas that USDA may lower yields in Friday’s October Supply & Demand report. The Brazilian real bounced sharply overnight versus the US dollar, and is considered supportive, as Brazilian farmers typically become less aggressive sellers in a rising-currency environment. Also, persistent flood risk in southern Brazil may continue to delay planting.
WHEAT
Wheat had a strong start to the week as Russia said it will intensify strikes on Kiev after recent rhetoric by Ukraine President Zelensky. A grain ship at the Odessa port was hit, along with a key bridge in Kiev. Latvia’s Parliament adopted a resolution last week calling for an immediate halt to Russian and Belarusian grain entering Latvia. Still, there was no official vote over the weekend to implement the ban, following Estonia’s decision to do so last week.
CATTLE
The cattle complex pulled back sharply on Friday, led by weakness in feeders. Cattle slaughter bounced back significantly from the prior week and was one of the largest slaughter weeks of the year as packing plant labor problems improved. COT data showed Managed Money traders increased their net long in live cattle by 9% and by 10% in feeders. December live cattle have been very choppy over the last 10 sessions, with neither rallies nor breaks able to extend.
HOGS
Hogs closed out last week on a strong note and finished near the highs of the day on Friday in the December contract. Managed Money aggressively extended their net short as of last Tuesday by 24% to a new record of just over 44,000 contracts. The late-week bounce triggered fund short covering, and October open interest plummeted more than 9,500 contracts, with open interest higher in all other months.
MILK CLASS III
November Class III milk finished last week with a moderate loss after reaching a new contract low on Monday and a 1-week high on Friday.
CRUDE OIL
November Crude Oil was slightly lower early Monday but inside Friday’s range. According to Reuters, shipping data from Kpler and Vortexa indicated that Middle East oil exports exceeded pre-war levels in September. The seven-day moving average was 18.3 million bpd on September 30 versus 18 million bpd average in the 12 months leading up to the war, with Saudi loadings leading the way. In addition, Saudi Arabia cut its oil prices for sale to Asia for November to $5 a barrel below the average of Oman and Dubai prices, down $3 from October and the widest discount since June 2020. The G-7 countries agreed on Friday to release 100 million barrels of diesel and crude oil from emergency reserves and pledged to refrain from energy export restrictions. In return President Trump said that the US would not impose a diesel export ban.
NATURAL GAS
November Natural Gas bounced higher on Friday after testing contract lows and was hovering around the upper end of Friday’s range early Monday. US production appears to be starting out October at a lower rate, with LSEG putting average output in the lower 48 states 112.2 billion cubic feet per day (bcfd) as of October 3, down from the record 113.3 both August and September. The 6-10 and 8-14 day forecasts show above normal temperatures over most of the US lower 48 states except for some near normal in the PNW in the 6-10 day and the northern Plains/northern Midwest in the 8-14. This will keep heating demand low.
DOLLAR INDEX
The USD index rose 0.25% to 102.20, after touching 102.53, its strongest level since April 10, 2025.
The dollar’s resilience suggests that FX markets remain focused less on a softer jobs report and more on the
broader policy and rates environment. A still-restrictive Fed, higher Treasury yields, and global fiscal stress
maintain the dollar’s carry advantage and reinforce its role as a defensive currency. The dollar is also benefiting
from the absence of an attractive large-currency alternative.
PRECIOUS METALS
December gold contracts moved higher overnight despite a strong rise in the dollar. Fiscal concerns over
France’s debt are raising demand for gold, which could offer the metal a slight tailwind despite higher interest
rates and a stronger USD. Focus now centers around minutes of September’s Fed meeting, which is likely to
help shape expectations around future monetary policy.
Copper prices on the LME and COMEX both rose, with LME copper was up 0.8% at $14,365 and US
prices rose 1% to $6.62. Short-term support is coming from reduced expectations of an October rate hike from
the Fed following Friday’s jobs report and August’s PCE inflation data last week. Meanwhile, a strike at
Antofagasta’s Centinela copper mine is set to begin on October 13 if no agreement is reached.
EQUITIES
Equity index futures opened modestly lower as investors took profits in technology after record highs and
reassessed the implications of still-elevated Treasury yields and oil prices near $100 per barrel. The immediate
policy signal is more favorable at the front end as markets now see an 80% probability of an October Fed hold
following September’s jobs report on Friday. However, the combination of a 5.28% 10-year yield, large Treasury
supply, fiscal concerns, and energy-driven inflation leaves the broader risk backdrop fragile. For the Fed,
September’s report was a bit of a mixed bag: weak hiring, downward revisions, yet stable unemployment, labor
utilization, and participation argue against interpreting the data as evidence of a sharp deterioration in labor
demand.
INTEREST RATES
Yields are little changed across the curve, though selling picked up in the morning ahead of ISM’s September
PMI data for the services sector. Signals on how strong private sector activity is will play a dominant role in price
direction today and could lead markets to shore up bets on a rate hike this year. However, with recent Fed speak
and September’s jobs report, the Fed appears poised to hold rates steady in October and assess incoming data.
While September’s jobs report was dovish through the weaker hiring momentum, its stable household-survey
and wage details limit the case for an aggressive repricing in policy.
COCOA
December Cocoa was near unchanged early Monday following a sharp rally the previous two session after falling to a three-month lows. Persistent dry conditions in Ivory Coast are lowering expectations for the 2026/27 main crop. A Reuters survey of farmers, exporters, cooperatives and buyers put Ivory Coast’s main crop at around 1.25 million metric tons, down from with 1.5 million last season. They also blamed reduced fertilizer and pesticide usage because of high prices. Farmers say the weather had been persistently dry since July, hampering flower and pod development, and they say that any rains that do develop will be too late to help the main crop but could help the mid-crop.
COFFEE
December Coffee was higher early Monday, but it struggled to make new progress on its recovery rally. There are concerns that the excessive rain in Brazil this summer damaged bean quality, but the dire concerns about the crop were eased by the strong export pace in August. ICE stocks fell 125 bags on Friday to 260,239, yet the increased by 5,935 bags last week and reached their highest level since August 3 on Wednesday. Rains and cooler weather over the weekend with more expected this week in key growing areas of Brazil should ease concerns about the 2027 crops after hot and dry conditions last week.
COTTON
December Cotton was higher early Monday after bouncing off the 200-day moving average on Friday. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 7,017 contracts of cotton for the week ending September 29, reducing their net long to 74,593. This is down from 107,976 contracts on September 1, and while it is still quite large, represents a 30% decline from the peak, which appears to have been enough long liquidation to calmed jittery longs.
SUGAR
March Sugar broke above the August contract high on Friday and extended that rally early Monday. Heavy rainfall in center south Brazil is keeping production there down. Datagro said mills are struggling to maintain harvest operations at normal levels. The rains also interrupt port loadings because the berths are not covered, and rain would damage the sugar. Data from shipping brokers showed that the main port of Santos had to stop loadings in at least 35 days from July to September.
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