Written Commentary
SOYBEANS
Beans are higher this morning as crude oil moves back above $100 a barrel, offering strong carryover support for bean oil. The Quarterly Stocks and Prospective Acreage report looms tomorrow morning and is typically a significant market mover. However, we think the soybean acreage number will have to be taken with a grain of salt and could change significantly by the time the end-of-June final planting report arrives, due to the significant crop input cost changes this month.
SOYBEAN MEAL
Meal futures pulled back in 4 of the 5 sessions last week. The EPA biofuel guidance announcement offered longer-term clarity for soy processors and was generally considered bullish for bean oil and bearish for meal.
CORN
There was a mostly steady start for corn this morning after some profit-taking on Friday. The market is likely to find support today from crude oil moving back above $100 a barrel and from US Tampa ammonia prices rising 26% last week.
WHEAT
The market is lower this morning, and Kansas City wheat is giving back some of the gains versus Chicago wheat seen on Friday. Forecasts show an uptick in precipitation potential starting midweek across the Plains, and although the southwestern areas may continue to miss any heavy totals, several rounds of precipitation will move across the rest of the HRW growing region.
CATTLE
Cattle finished sharply higher on Friday, and the June contract tested the highs of the last 5 months. Cash trade came in higher last week, and Easter beef demand is typically strong. Bearish factors such as the weak stock market on Friday and the increase in Argentina beef imports into the US were ignored, and the uptrend looks to be accelerating. The JBS strike continues.
HOGS
June hogs finally turned decisively higher on Friday, gapping up and closing strong, following the friendly Hog and Pig report on Thursday afternoon. However, Friday’s strong technical turn higher suggests the market may have shaken off the recent bearish price action and is ready to regain its footing. This month, June futures have fallen nearly $9.00 amid steady selling, and an upside correction appears to be starting.
MILK CLASS III
May Class III milk finished last week with a moderate loss after climbing up to a 3 1/2-week high on Thursday.
ENERGIES
The White House said on Monday that talks with Iran were continuing and progressing well, adding that what Tehran says publicly differs from what it tells U.S. officials in private.
May RBOB and May ULSD are both close to take out their contract highs from May 9 this morning.
For the EIA gas storage report this week the early Reuters survey has an expectation ranging from a net injection of 7 to 38 billion cubic feet for the week ending March 27.
DOLLAR INDEX
The USD is 0.17% higher at 100.23, alongside a rise in oil prices overnight. Safe haven flows and hawkish Fed expectations continue to underpin the dollar, though market pricing of a December rate hike has fallen from a 50% chance of a hike to 11%.
COCOA
Ivory Coast cocoa arrivals at ports totaled 31,000 metric tons for the week ending March 29, up from 22,000 the previous week and 14,000 a year ago. Cumulative arrivals since the marketing year began in October have reached 1.423 million tons, down from 1.441 million a year ago and below the five year average at 1.575 million.
COFFEE
Dealers said the weather remained generally favourable in top robusta producer Vietnam while a bumper coffee crop is expected in Brazil this year.
COTTON
ICE cotton futures rose on Monday to hit a more than 10-month high, supported by upbeat sentiment across Chicago grains, crude oil and equity markets, while investors also awaited the U.S. Department of Agriculture’s planting intentions report.
SUGAR
May Sugar traded to its highest level since October 8 early Monday, as higher crude oil prices continue to support the theme that cane crushers will be incentivized to focus more on ethanol and less on sugar production. That tendency was apparent in Unica’s update on Brazil Center-South sugar production on Friday, but that trend has been going on for several months. The report showed cane crush for the first half of March at 1.309 million metric tons, down from 1.861 million a year ago but up from 0.361 million during the second half of February.
PRECIOUS METALS
Gold prices rose overnight, with April COMEX contracts up 1.60% to $4,597, even as oil prices also rose. President Trump said that Iran’s new leaders have been “very reasonable” in a social media post Monday morning, as more US troops arrived in the region, while Tehran warned it will not accept humiliation. Meanwhile, Iran-backed Houthi militants in Yemen joined the conflict after targeting Israel over the weekend.
Copper prices are higher, with benchmark three-month copper on the LME up 0.2% at $12,220 as signs of stronger demand in China lifted prices ahead of Chinese PMI data on Tuesday. Forecasts expect Chinese factory activity to have expanded in March, ending a two-month contraction, though supply chain shocks from the Iran war cloud the outlook.
EQUITIES
US equity index futures are higher as markets head into a holiday-shortened week that holds key labor data. President Trump said that Iran’s new leaders have been “very reasonable” in a social media post Monday morning, as more US troops arrived in the region, while Tehran warned it will not accept humiliation.
INTEREST RATES
Yields are lower across the curve, with the 10-Year yield down 8 bps to 4.360%. Notably, unlike most sessions since the conflict began, this morning’s rise in energy prices has not driven yields higher. Still, front-end inflation pricing remains firm, with one-year inflation swaps closing at 3.15% on Friday.
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