Written Commentary
SOYBEANS
Friday’s reversal lower in beans after the neutral USDA data led to a further extension to the downside move overnight. However, prices have turned higher this morning after President Trump said China’s purchases of US beans are likely before spring and that talks regarding bean purchases are ongoing. It would not be surprising if China bought US beans on the overnight weakness.
SOYBEAN MEAL
The strong soymeal rally since mid-October finally ran into heavy selling on Friday after the WASDE report. However, the market is regaining most of what it lost on Friday and is retesting last week’s 12-month highs.
CORN
Traders did not get the expected yield cut in corn, and higher ending stocks prompted a downside reversal, shifting the edge to the bears. Gulf Coast and central and north-central Midwest yields fell from September, but were a record high in Iowa, Illinois, Indiana, Wisconsin, and South Dakota.
WHEAT
The market received little help from the USDA on Friday. The supply-and-demand data were seen as bearish, reinforcing the narrative that global supplies are burdensome. Crop production increased in all major wheat-exporting countries. Furthermore, the accumulated flash sale data showed no China purchases, despite strong rumors early last week. It is possible that purchase amounts were under the reportable level of 100,000 tonnes. Nonetheless, it was a disappointment.
CATTLE
Today’s opening was not as weak as expected after the Trump Administration removed tariffs on beef imports from New Zealand, Australia, and Argentina, prompting some to call for limit down this morning. Contrasting the prospects for additional beef supplies, JBS says Q4 US cattle supplies will tighten even further than in Q3, and 2026 will remain tight as well. Tariff-removal headlines are likely to limit gains in the short-term, but supply tightness is an offsetting friendly factor longer term. Open interest for live cattle Friday was roughly unchanged from Thursday.
HOGS
February hog prices had a dramatic bounce on Monday of last week, but spent the rest of the week giving back those gains and closed near the lows of the week. Further weakness is possible this morning on headlines about foreign meat imports (no specific mention of pork), especially if the cattle complex declines sharply as expected. Hog weights and production continue to increase, likely keeping sellers active on rallies. Open interest fell by 2,500 contracts on Friday, with liquidation ongoing in the December contract.
MILK CLASS III
December Class III milk finished with a moderate weekly loss after reaching a 3 1/2-week low on Thursday.
ENERGIES
January Crude Oil is near unchanged this morning and inside the range of the past week, as the market is drawing support from reports that Iran seized a tanker in the Strait of Hormuz over the weekend, marking their first aggressive move to interrupt oil supply since June. The Baker Hughes rig count showed US oil rigs in operation were up 3 rigs to 417 last week, but this was still down from 478 rigs a year ago and below the five-year average of 460, and it was the lowest for this point in the season since 2020. Russia’s Novorossiysk port resumed oil loadings on Sunday after a two-day suspension that was triggered by a Ukrainian missile and drone attack. The US sanctions on Russian crude oil have left a lot of oil in floating storage, a so far it appears that China and India have avoided buying Russian oil since the sanctions were enacted.
January Natural Gas is lower this morning but inside Friday’s range. The market saw a steep selloff on Friday after the EIA weekly gas storage report showed a much larger injection than expected, and the gradual warmup through after a cold start to last week lowered the expectations for heating demand.
DOLLAR INDEX
The USD index edged higher as markets await September’s nonfarm payrolls report on Thursday. Expectations of a Fed rate cut next month have been pared back substantially, which has proven supportive of the dollar. Dollar direction is likely to be dependent on upcoming economic data releases, given that comments from policymakers have largely been priced in. Fed Funds futures are pricing a 44.6% chance of a rate cut come December, down from being nearly fully priced in just over a month ago.
COCOA
March Cocoa is higher this morning after falling to its lowest level since February 2024 on Friday on reports that the Trump Administration will lift tariffs on certain agricultural products that cannot be grown in the US, such as cocoa. So far the reports have been light on details, but the fact that Ecuador was mentioned as one of the countries that would see tariffs lifted is important because they are the third largest producer in the world.
COFFEE
March Coffee gapped higher overnight after falling to its lowest level since October 29 on Friday. The market turned lower last week on announcements from the Trump Administration that tariffs on certain agricultural products not grown in the US would be lifted, including coffee. However, there has been no explicit mention of Brazil, which up until now has represented about 30% of US coffee imports.
COTTON
March Cotton saw some light pressure overnight following Friday’s steep selloff in the wake of a bearish USDA supply/demand report, in which US and world production and ending stocks all came in above expectations. The report put US 2025/26 cotton production at 14.12 million bales versus an average trade expectation from a Bloomberg survey of 13.52 million (range 13.00-14.30 million) and 13.22 million in the September update.
SUGAR
March Sugar is lower this morning but inside the upper end of Friday’s range. The market extended a rally on Friday off ideas that low sugar prices are pushing Brazilian cane crushers increase ethanol production at the expense of sugar. The UNICA report came in somewhat bearish against expectations, but the market rallied despite that. Sugar production is following its seasonal decline but is still running ahead of year-ago.
PRECIOUS METALS
Gold prices moved lower in muted activity as investors await clues on Fed policy ahead of a delayed September jobs report due on Thursday, while PMI data due Friday will also shine some light on current economic conditions.
Silver futures fell 0.6% to $50.38.
Copper prices fell as a slightly firmer dollar and broader macro concerns weighed on prices. Benchmark three-month copper on the LME was down 0.5% at $10,802. There is little change regarding narrative on copper, with markets eyeing upcoming data out of the US for clues on Fed direction and for signs of economic activity.
EQUITIES
The indexes are little changed to start the week as investors ready for a slate of major corporate earnings on the heels of the end of the government shutdown. Investors will keep an eye out for any announcements of a revised schedule of economic data releases from US government agencies after the Bureau of Labor Statistics announced that September’s labor report will be released on Thursday.
INTEREST RATES
Yields edged lower, with the 10-year yield inching below 4.15% as skepticism over a December rate cut grows ahead of Thursday’s release of September’s labor report. Fed Funds futures are showing that investors are almost evenly divided on the prospect of a rate cut, as several Fed officials have called for rates to remain unchanged next month, while other officials continue to stress labor market weakness.
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