Written Commentary
SOYBEANS
A somewhat disappointing start for bean bulls this morning with a steady opening, even though crude oil made a sharp rebound overnight as the Strait of Hormuz is once again closed. Bean oil is seeing some gains, but meal is lower.
SOYBEAN MEAL
Meal prices are pulling back to start the week after seeing mostly sideways action following the upside breakout last Tuesday. Crude oil is bouncing back after the Strait of Hormuz was closed again this weekend, and bean oil has taken the lead on the upside today.
CORN
Corn is steady to slightly lower this morning despite a $5 rally in crude oil. We were surprised by how well corn held up on Friday amid a more than $10 drop in crude oil, but today the market is not reacting.
WHEAT
Wheat broke hard Friday on the reopening of the Strait of Hormuz and is seeing a rebound this morning as the Strait has been closed again. The other major influence is Plains weather, and a dry week is on tap for most of the Plains. However, the Western Plains will have some chances for rain late this weekend into next week. Chilly temperatures moved through the northern and western Plains over the weekend, and that will likely result in at least some minor winterkill.
CATTLE
The cattle complex sold off late last week, but rebounded off Friday’s lows to regain most of the day’s losses. Cash trade Friday was steady with the prior week at 246-249.
Friday’s Cattle on Feed report did not hold any major surprises, and, as expected, placements came in the second lowest level over the last 26 years.
HOGS
June extended its streak on Friday to 9 consecutive sessions of lower highs, lower lows, and lower closes, as selling has been relentless recently. Open interest dropped by nearly 4,000 contracts, another indication that speculative longs are exiting the space.
MILK CLASS III
May Class III milk finished last week with a moderate loss after reaching a 1 1/2-week high on Wednesday and falling to a 5 1/2-week low on Friday.
CRUDE OIL
June Crude Oil is higher this morning, near the upper end of Friday’s range, before it sold off on the news the Strait had opened. Iran closed the Strait of Hormuz again over the weekend after the US did not lift its blockade of Iranian ships. Reuters said shipping data indicated that traffic through the Strait remained at a standstill on Monday with just three crossings in 12 hours. The US also seized and Iranian cargo ship that attempted to break through the blockade.
NATURAL GAS
June Natural Gas extended last week’s recovery rally overnight to reach its highest level in a week. Last week the market fell to its lowest level since November 2024 on warm weather, a faster than normal build in US supply, and higher US production driven in part by higher crude oil output. The market also closed higher on Thursday despite a larger than expected injection into in US gas supply in the weekly EIA storage report
DOLLAR INDEX
The USD index is 0.10% higher at 98.19, as oil prices rose and investors flocked to the dollar in response to this weekend’s heightened tensions between the US and Iran. The weekend escalation revives the geopolitical risk premium just as markets had started pricing in a wind-down to the conflict.
COCOA
July Cocoa was higher early Monday following last week’ selloff from two-month highs. The bulls are glad to have the first quarter grind date behind them, which while not bullish were about as expected. The European grind was lower than expected, but Asia had a surprise increase. The upcoming mid-crop looks good, and demand needs to recover. On Friday, Brazil’s first quarter grind came in at 51,715 metric tons, down 0.8% from the same period in 2026,according to data from local industry association AIPC released on Friday. This followed updates on Thursday that showed a 3.8% drop in North America, a 7.8% decline in Europe and a 5.2% increase in Asia.
COFFEE
July Coffee was slightly higher early Monday after last week’s selloff from a three week high. The market has been in a sideway pattern for the past 2 ½ months, as the trade awaits the arrival of the Brazilian crop. Last week Safras & Mercado raised their forecast for Brazil’s 2026/27 coffee crop to 75.65 million bags, up 4.65 million from their previous estimate and up 17% from 2025/26. Arabica production was forecast to be +29% from 2025/26. World Weather Inc says net drying is expected in most coffee areas over the next week, which is not unusual for this time of year. The US CPC has given El Nino a 61% of arriving during the May-July period. These events can bring drier than normal conditions to coffee growing regions of Africa, Indonesia, and India.
COTTON
July Cotton was lower early Monday after starting off the session above Friday’s two-year highs. Not even the drop in oil prices on Friday stopped the rally, but the higher oil prices today are not lending much support either. The dollar was higher this morning after bouncing off six-week lows on Friday, and this undermines US export prospects. The extremely dry conditions in the US cotton belt has been a main contributor the 15-cent, 24% rally over the past two months. As of last Tuesday 97%, of US cotton growing area was under drought. The transition from La Nino to ENSO neutral conditions is now complete, which could favor better rainfall in the US cotton areas.
SUGAR
July Sugar just barely held above the contract low at 13.34 when it sold off on Friday. Adding to the pressure was a drop in crude oil prices off the news that Iran had reopened the Strait of Hormuz, but the recovery in crude overnight on the Strait’s “closure “ over the weekend has only lent mild support to sugar at best. Conab raised its forecast for Brazil’s 2025/26 cane harvest by 1.02% from its previous estimate to 673.25 million metric tons and their center-south cane production by 1.46% to 616.24 million tons. This would still be down from 2024/25. Sugar production was estimated at 44.2 million tons, up 0.1% from 2024/25. The 2026/27 season is just beginning, and the trade has been expecting close to steady sugar production against a stronger cane crop due to an expected increase in ethanol output.
PRECIOUS METALS
June COMEX contracts are down 1.15% to $4,823, as a stronger dollar and renewed inflation fears weighed on the metal after another closure of the Strait of Hormuz pushed oil prices higher.
Copper prices slid as the Strait of Hormuz closed once more and as the ceasefire between Iran and the US looked in jeopardy ahead of talks between the two sides, reigniting fears that higher oil prices will dampen economic growth. Benchmark three-month copper on the LME was down 0.8% at $13,235. Meanwhile, LME copper stocks remain near a 12-year high at almost 400,000 tonnes, offering headwinds to further price gains given the ample supply.
EQUITIES
US equity index futures fell lower overnight in response to this weekend’s developments in Iran. Through Friday, 10% of the S&P 500 has reported Q1 results, and the early read is notably strong: 88% have beaten EPS estimates (vs. the 5-year average of 78%) and 84% have topped revenue forecasts (vs. the 5-year average of 70%), with earnings surprises averaging 10.8% above consensus, well above the 7.3% 5-year norm.
INTEREST RATES
Yields are higher in a curve-flattening move and markets respond to this weekend’s developments out of the Middle East. The 10-year yield is 1.6 bps higher to 4.26%, well below its local high of 4.44% in late March. Longer-run inflation expectations at the time-being continue to offer resistance to higher yields as the Fed should remain biased towards policy-easing given weakness in the labor market.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
