Written Commentary
SOYBEANS
The soy complex is starting the week little changed from Friday, as most of the holiday weekend news (Greenland, Venezuela, etc.) did not add much volatility to the Ag markets. However, energy and metals prices are very strong, while the stock market is very weak.
SOYBEAN MEAL
Meal finished last week on a sour note and at its lowest price level since October 20. However, a morning flash sale to the Philippines of 190,000 tonnes may be the spark to start a short covering bounce after recent heavy selling.
CORN
A slightly lower start for corn this morning after yesterday’s holiday. Prices fell by a little over $0.20 last week but spent most of the week trying to recover from the USDA’s bearish data a week earlier, with little success. However, the US dollar is sharply weaker this morning, further enhancing US export competitiveness.
WHEAT
The market closed Friday with a firm tone, but is slightly lower following Monday’s holiday. This morning’s weakness is a bit disappointing following a large 907,000-tonne mixed origin purchase from Saudi Arabia, another 600,000 tonnes from Algeria, and USDA buying 183,700 tonnes of HRW for African nations.
CATTLE
Sharp weakness on Friday seemed to come out of the blue, even though prices were approaching overbought levels. To start the week, the market will be grappling with a sharply lower stock market this morning, additional screwworm cases last week in northern Mexico, the Texas Secretary of Agriculture warning that it may be inevitable that screwworm reaches Texas, and President Trump’s new 10% tariff threat on the EU starting February 1st.
HOGS
April hogs made a new contract high on Friday but settled back to near unchanged by the close. The market is overbought and could see some long liquidation to start the week as the US stock market is sharply weaker. COT data showed Managed Money trader positioning did not shift significantly last week and still hold a net long of more than 82,000 contracts. Last week’s action solidified the bull trend with new contract highs, and further upside potential is likely.
MILK CLASS III
February Class III milk finished last week with a mild loss after reaching a contract low last Thursday.
ENERGIES
March Crude Oil was higher early Tuesday on a new level of global uncertainty over the Greenland issue, though it its difficult to see how a renewed trade war would be beneficial to crude prices. The dollar collapsed, which does translate to higher crude oil prices.
Product prices were higher overnight, particularly diesel, which benefited from a cold wave settling in over the eastern two-thirds of the US that supports heating demand.
March Natural Gas gapped higher early Tuesday and quickly rallied to its highest level since December 31, as winter appears to have finally arrived to the US. The latest 6-10-day forecast has below normal temperatures over the eastern two-thirds of the lower 48 US states, with much below temps from Illinois eastward. The west is above normal.
DOLLAR INDEX
The USD index is set for its largest daily fall in over a month as political tensions between Washington and Europe over Greenland weigh on the greenback. The extent to how long the selloff persists will likely be tied to events at this week’s meeting in Davos. Tariff threats have had a marginal effect on the dollar in previous events since the Trump administration gained power. However, a major escalation with NATO allies is likely to sting harder if no resolution or agreement is made.
COCOA
March Cocoa extended it its selloff early Tuesday and fell below the previous counteract low from October 2024. Last week’s disappointing European grind numbers convinced traders that the record prices weakened demand. This ramifications could be long lasting due to candy makers having developed new products that use less chocolate. News that Ivory Coast exporters’ association GEPEX reported on Monday that Ivory Coast’s cocoa grind rose 3.6% year-on-year in December to 64,787 metric tons was not enough to stem the selling.
COFFEE
March Coffee fell to its lowest level since January early Tuesday, possibly under pressure from global economic uncertainty stemming from the latest tariff threats against Europe over the Greenland issue. Brazil growing areas continue to see beneficial rains. Cecafe reported that Brazil exported 2.86 million bags of green coffee in December, down 18.4% from December 2024, with 2.63 million bags of Arabica (down 10%) and 222,147 bags of robusta (-61%).
COTTON
March Cotton was higher early Tuesday despite weakness in the US stock market. The dollar collapsed in the wake of the latest tariff threats and uncertainty over the Greenland issue, and perhaps that lent support to cotton on ideas it improves the competitiveness of US exports on the global market
SUGAR
March Sugar was near unchanged early Tuesday, holding most of Friday’s gains. World Weather Inc. said central Florida citrus and southern Florida sugarcane areas were not impacted by frost or freezes this morning and that Louisiana sugarcane experienced frost and light freezes today with very little permanent damage. China customs data released on Sunday showed the nation imported 580,000 tons of sugar in December, up 47.9% from December 2024.
PRECIOUS METALS
Gold prices are sharply higher a wave of the “Sell America” trade grips market following a rise political tension between the US and Europe over Greenland.
Silver futures are over 7% higher as the metal echoes the same factors that is driving gold prices higher.
Copper prices dropped as higher prices dented demand from industrial consumers. Benchmark three-month copper on the LME slipped 0.2% to $12,937.
EQUITIES
The indexes are lower to start the week as political tension between the US and Europe over Greenland triggered a broad selloff across US stocks and bonds. President Trump’s renewed tariff threats against European allies prompted a repeat of the “Sell America” trade, which emerged after last year’s “Liberation Day” tariff announcement in April. Traders are dumping American assets on fears of prolonged uncertainty and a potential retaliation.
INTEREST RATES
Yields are higher across the curve as a wave of the “Sell America” trade grips markets following a rise in JGB yields and President Trump’s threats to impose tariffs on major US allies over Greenland. The 10-year yield jumped about 7bps to 4.29%, hitting highs last seen in August, as a global bond sell-off was initially triggered by heavy selling in Japan.
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