Written Commentary
SOYBEANS
Beans are extending last week’s losses this morning ahead of tomorrow’s December WASDE report. The report is not expected to be a major market mover. US ending stocks are anticipated at 302 million bushels, up from 290 million in November. World ending stocks are expected to increase fractionally. Beans are moving lower, looking to find a price level competitive enough to encourage larger Chinese purchases, as the consistent pace of small purchases seems to have already been factored into prices. US Trade Representative Greer said the US is constantly monitoring China’s compliance
SOYBEAN MEAL
Meal futures ended last week on a downbeat note and have closed lower in 6 of the previous 7 sessions. Reasons for the pullback include the EU’s decision last week to delay the implementation of the deforestation regulations for one year and uncompetitive US meal values compared to South America. Furthermore, weakness in the Brazilian Real late last week encouraged Brazilian farmers to sell beans, putting more supplies in the hands of crushers and exporters.
CORN
A mostly steady start for corn this morning ahead of tomorrow’s supply and demand update for December. US ending stocks are expected at 2.124 billion bushels, down from 2.154 billion in November, and world ending stocks are anticipated to drop slightly. March prices have remained range-bound since late October, and daily trading volume remains light.
WHEAT
Wheat continues its range-bound action seen over the last 2 weeks, and there was little news over the weekend to suggest a breakout is imminent. The December WASDE will be released tomorrow, December 9. US ending stocks are expected at 890 million bushels, down from 901 million in November. World ending stocks are expected to rise modestly.
CATTLE
The cattle complex ended extremely strong last week on higher cash trade and anticipation of additional cattle weather stress. Lows below zero are forecast for later this week across the upper Midwest. However, temperatures will be at more moderate levels in the southern Plains feeding regions.
HOGS
February hogs hit their highest in nearly a month on Friday as ASF fears in Spain are encouraging new buying. There has still been no ASF detection in a commercial hog herd in Spain, but the disease’s highly contagious nature means it’s unlikely to remain confined to the wild hog population. Technical action also improved with Friday’s rally, and the upside correction may continue.
MILK CLASS III
January Class III milk finished last week with a moderate gain after reaching a 2-week high on Thursday.
ENERGIES
January Crude Oil was lower early Monday following a rally on Friday that took the market to its highest level since November 19. Late last week, traders were viewing the lack of progress on the Russia/Ukraine peace talks as supportive, but the possibility of some sort of agreement remains, which would be expected to bring additional Russian supply to the market. Regardless, the market does not appear worried about any interruption of supply.
January Natural Gas was significantly lower early Monday following a sharp rally to its highest level since March on Friday. The market left a spike high on Friday that has the look of a blow-off top.
DOLLAR INDEX
The USD index is little changed to start the week as markets await the Fed’s interest rate decision on Thursday, where it is widely expected that the central bank will lower rates. Fed Funds futures are implying an 89.6% chance of a rate cut. However, the FOMC appears to remain highly divided on how to move on the economy, creating a situation where future easing out of the central bank is likely to face strong resistance.
COCOA
March Cocoa traded to its highest level since November 12 early Monday. News that Ivory Coast port arrivals last week were level with year ago and five-year average levels after being well ahead of them for the previous five weeks may have provided additional impetus for a rally. It may have also left traders thinking that 2025/26 crop has peaked.
COFFEE
March Coffee remains in a tight, consolidative range. Recent revisions higher for Brazil’s 2025 crop and steadily increasing ICE exchange stocks may be limiting upside potential, but the lifting of the tariffs on Brazilian coffee imports into the US may be providing consistent buying support as US suppliers look to rebuild inventories.
COTTON
March Cotton was higher early Monday, recovering a bit from a selloff late last week in the wake of a disappointing export sales report on Thursday. The next update will be released this morning (Monday), and it will cover the week ending November 7.
SUGAR
March Sugar edged higher early Monday following a modest setback on Friday. Strong production out of India and Thailand may be offset by increased focus on ethanol production from cane in Brazil at the expense of sugar output. Low sugar prices seem to be making ethanol from cane more attractive.
PRECIOUS METALS
Gold prices slipped ahead of the Fed’s policy meeting on Wednesday, where an interest rate cut is widely expected. Data last week showed that US consumer spending grew moderately in September, while the Fed’s PCE inflation gauge met forecasts at 2.8%.
Silver futures are down 0.5% to $58.78.
Copper prices hit another record high to kickoff the week on Monday as supply worries, a weaker dollar, and expectations that the Fed will lower rates on Wednesday set up bullish conditions for the metal.
EQUITIES
The indexes are higher with the S&P and Nasdaq trading higher, while the Dow lagged. Focus this week will center around Wednesday’s highly anticipated Fed meeting, where markets have priced in just under a 90% chance that the Fed will lower rates by 25 bps. The expectations have emerged despite a divide among policymakers over whether to focus on the labor market or inflation, which some at the Fed worry could still be too high. Recent comments from several influential officials for the third cut of this year have cemented bets, though the prospects for 2026 are seen as less certain.
INTEREST RATES
Yields are higher at the front end and flat at the long end of the curve as markets prepare for the Fed’s policy decision and interest rate outlooks on Wednesday. Markets are seemingly priced in for a rate cut, as a string of private jobs figures have pointed to signs of an ever-weakening labor market, while inflation has remained elevated but not accelerating.
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