Written Commentary
SOYBEANS
The new month has begun after beans fell $0.75, meal fell $28, and bean oil fell 180 points during October. COT data showed Managed Money traders reduced net longs moderately across the complex last week, and there is a risk of further fund long liquidation if prices do not start moving higher early this week.
SOYBEAN MEAL
December meal has closed lower in 11 of the last 13 sessions and continues to weaken, falling below the 200-day moving average today for the first time since August 14th. Declining South American premiums and plenty of newly harvested bean availability to US crushers have been the major bearish forces, combined with Managed Money long liquidation as open interest has fallen to its lowest level since late June.
CORN
Corn started slightly higher this morning, but overnight ranges remain small, and trader interest is low. In October, December corn fell $0.55. While the market has yet to find significant demand support on the break, Asian buyers did step up late last week.
WHEAT
A tight range overnight and during October. Chicago wheat fell $0.70 a bushel, while Kansas City was down $0.88. The break has pushed momentum indicators deep into oversold territory, and the market has at least held steady over the last few sessions, showing signs of modest support.
CATTLE
Extremely heavy selling hit the cattle complex on Friday, driven by a sharp selloff in tech stocks and economic concerns ahead of the midterms. Surprisingly, open interest in live cattle did not change significantly despite the large break, and stocks are seeing a modest recovery this morning, which may give cattle a reason to open higher. December live cattle is nearly $12 off last week’s highs, but the aggressiveness of Friday’s selling may spill over into early this week. Screwworm cases are on the rise. However, USDA confirmed the 3 border crossings with Mexico will remain open.
HOGS
The market pulled back Friday after plummeting to new contract lows earlier last week on heavy volume. As expected, COT data showed Managed Money traders increased their net short positioning to a record high of just over 47,000 contracts. The sharp break late last week means the Managed Money net short total is likely even larger now. Open interest jumped a little less than 4,500 contracts and continues to increase to new highs for the year.
MILK CLASS III
December Class III milk finished last week with a minor loss after falling to a 2 1/2-week low on Thursday.
CRUDE OIL
December Crude Oil was sharply lower early Monday following a move to new contract highs on Friday. News that a meeting between Iranian negotiators and Qatari mediators resulted in a draft proposal to reopen the Strait of Hormuz and the lack of any “meaningful’ military action over the weekend have raised hope for peace a bit. Perhaps the Iranians view a potential Democratic victory in Tuesday’s mid-terms will help rein-in Trump, but on the other hand, just last week the market was worried about a majora attack being planned for after the election. Reuters reported that data from ship-tracking companies showed Saudi Arabian crude exports increased in October relative to September despite the Houthi attacks.
NATURAL GAS
December Natural Gas was higher early Monday after falling to its lowest level since June 2021 on Friday, with
the nearby contract falling to its lowest level since April. The weather forecast continues to point to mild temperatures and slow heating demand, and US production is close to record levels, but the market had already fallen 23% since October 15.
DOLLAR INDEX
The USD index is down 0.25% to 101.625, reflecting a drop in oil prices even as front-end rates edged higher. Despite the raft of data that came out last week the most evident driver of the dollar was the movement in the Nasdaq. While a slowdown in the entire tech sector is unlikely, investors have begun to reprice the AI trade, and seek US Treasury’s, which has reduced some near-term support for the dollar. This dynamic has lead DXY to largely mirror movements in the Nasdaq, leaving Apple and Palantir’s results after the bell today to drive direction in the index.
PRECIOUS METALS
December gold contracts are recovering amid a drop in oil prices and the dollar index. Hopes of an end to US-Iran hostilities are leading oil and the dollar lower, which is allowing gold to find some breathing room. Gold falling below the $4,000 level offers central banks a cheaper opportunity for further purchasing, which would reflect a trend the market has seen over the last two years. That dynamic is likely to keep gold prices supported against further downside and offers a solid purchasing opportunity for investors.
Dec Silver contracts are up 3.47% to $51.025.
LME copper was up 0.6% at $14,240; US prices are up 0.97% to $6.5440 as a softer dollar and a downgrade to Chile’s copper production outlook lifted prices. Talks between Iranian and Qatari officials have lifted hopes of a possible US-Iran deal that could reopen the Strait, which has sent oil and the dollar down. Meanwhile, Cochilco, Chile’s copper commission, lowered its forecast for copper production this year while projecting softer than expected production in 2027.
EQUITIES
Equity index futures were higher overnight. Friday’s selloff highlights a repricing of the AI trade rather than a deterioration in the macroeconomic outlook. As the Nasdaq has fallen roughly 9% from its peak, the Equal Weight S&P 500 has continued to advance, suggesting that weakness remains concentrated in large tech rather than spreading across the broader market. Notably, this contrasts with earlier pullbacks in the AI-led rally, when broader equity indexes also declined. This divergence is consistent with investors reassessing AI-related valuations and earnings expectations, which comes in line following disappointing earnings results from Amazon and Intel last week.
INTEREST RATES
Yields flattened the curve alongside the drop in oil prices and as investors remain positioned in Treasuries ahead of more tech earnings later in the day following last week’s sharp tech selloff. Today’s ISM prices-paid component will provide a more current view of manufacturing cost pressure, while the Senior Loan Officer Opinion Survey will help assess the credit restraint emphasized by Warsh after the October hold. Friday’s payrolls will be central to determining whether labor-market resilience continues to justify another increase.
COCOA
December Cocoa was trading in a relatively wide range early Monday as the market weighed slow Ivory Coast arrivals and less than ideal growing conditions in west Africa against reports of sluggish demand. Ivory Coast port arrivals were estimated at 51,000 metric tons for the week ending November 1, down from 90,000 for the same week last year and the lowest for that week in at least five years. Cumulative arrivals have reached 209,500 tons, down from 304,000 at this point last year and the lowest for this point in the season in at least six years.
COFFEE
December Coffee extended last week’s bounce for the third straight session early Monday. Perhaps the market became oversold on strong Brazilian export theme, especially with ICE exchange stocks holding near their lowest level in 26 years, even if there has been a modest increase in the amount pending review. ICE certified arabica stocks held steady at 225,068 bags on Friday after falling to their lowest levels since September 15 (the 26-year low) on Wednesday. Stocks fell 2,910 bags last week.
COTTON
December Cotton has been trading in an narrow sideways pattern for the past five sessions with mixed harvest
weather in the US. World Weather Inc. said recent rains in west Texas and southwestern Oklahoma delayed harvesting and induced some yellowing of the crop. West Texas is expected to see a few showers Monday,
mostly in the Panhandle, to be followed by a full week of mostly dry conditions. The Delta crops have been dry
in recent weeks, but it will be impacted by some rain in the coming week. The southeastern states will also get some rain.
SUGAR
March Sugar was lower early Monday despite forecast for more rain in Brazil that does not bode well for production. Wet weather has slowed production and reduced the sugar content in the cane, and high oil prices support ethanol demand.
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