Written Commentary
SOYBEANS
The soybean market broke out to its highest level since February 24th yesterday, boosted initially by trade talk progress and followed by a bullish USDA report. The USDA’s larger-than-expected ending stocks cuts, especially for the new crop, brought in new buyers as open interest jumped more than 16,300 contracts. New crop stocks-to-use hit a 3-year low, and the report reduced worries that the USDA would use tariffs as a reason to cut exports.
SOYBEAN MEAL
Soymeal prices have not shaken the sideways pattern seen since late April. Monday’s bullish USDA soybean ending stocks offered meal prices a brief rally, but the gains were quickly erased today
CORN
Corn prices are pulling back slightly this morning following the USDA’s lower-than-expected ending stocks for both old and new crop and an unexpectedly large cut to new crop global carryout, the lowest level in 12 years. Exports were increased again for both old and new crops, and the decrease in global carryout suggests that the USDA believes the US will be very competitive over the next year, despite Brazil’s Safrinha crop forecast increasing more than expected. After the report yesterday, the bull camp certainly was disappointed with the price action, as old crop prices closed lower and new crop prices were only marginally higher.
WHEAT
The USDA did not do the wheat bulls any favors yesterday, especially for new crop, with higher-than-expected ending stocks and a stocks-to-use ratio at a 5-year high. USDA was not optimistic about US exports, and winter wheat yields were raised 2 bushels per acre from the previous year.
CATTLE
Feeder cattle prices jumped sharply yesterday and gapped into new highs as the US/Mexico border was closed due to screwworm issues. The cash feeder index moved to a new record high. The longer the border stays closed, the tighter that feeder supplies will get.
HOGS
Like the cattle market, the hog market reacted very bullishly to the lowering of tariffs, resulting in very positive technical action with July hogs reaching their highest price level since February 19th. With exports taking 25% of total US pork production, significantly lowering tariffs could substantially change the export outlook over the next 90 days, following several weeks of minimal Chinese purchases. In addition, there is optimism regarding the many other trade deals in the works, which could also include new US pork demand.
MILK CLASS III
June Class III milk finished with a sizable weekly gain after reaching a 3 1/2-month high last Wednesday.
The USDA reported that milk production is generally strong nationwide.
ENERGIES
July Crude Oil is higher this morning but is has yet to take out yesterday’s highs, which came on the news that US and China had agreed to postpone the tariffs for 90 days. If it turns out that a “trade war” has been averted, this should support energy demand going forward. In the meantime, OPEC+ plans to boost production significantly in May and June, to the tune of 411,000 barrels per day each month.
July Natural Gas has failed to move above the 50-day moving average in two attempts in two sessions, and that area (4.112-4.125), could be a bull/bear range today. The trade agreement between the US and China was supportive to crude but not necessarily natural gas because higher crude prices would support US crude production and therefore support gas production in joint wells. The European Union’s Energy Commissioner said today that the bloc does not intend to revive its imports of Russian energy, even if there is a peace agreement between Ukraine and Russia.
DOLLAR INDEX
The June US dollar index was lower in the overnight session after the greenback surged on Monday, fueled by the trade developments between the US and China. A weaker-than-expected core CPI reading also pressured the greenback.
COCOA
July Cocoa was higher overnight, and it looks poised to test the April highs today. Ivory Coast farmers interviewed by Reuters yesterday said heavy rains are need to compensate for below-average rainfall last week and to fortify the last stage of the April-November mid-crop. They added that sufficient rain in May and June are crucial for crop development in August and September
COFFEE
July NY Coffee extended yesterday’s losses overnight to trade to its lowest level since April 22. Brazilian 2025/26 production forecasts have seen revisions higher in recent weeks. On Friday Safras & Mercado raised its the all-coffee production forecast for Brazil to 65.51 million bags, up from 62.45 million in December, crediting better weather conditions in January and February. This was in line with a forecast the group made in mid-April.
COTTON
The cotton market saw a sharp rally yesterday in the wake of the news that US/China trade talks produced a 90-day delay in the retaliatory tariffs, but the market gave up most of its gains as the euphoria eased. Perhaps there is some skepticism whether an agreement will result in more purchases of US cotton, especially with the Brazilian president visiting China this week. The USDA Supply/Demand report had US 2025/26 cotton production above expectations, but exports were better than expected, and this put ending stocks lower than expected and the stocks/use ratio below a year ago. That gave the report a slightly bullish tilt, but overall it had few surprises
SUGAR
July Sugar was higher overnight and came close to testing yesterday’s high. The UNICA report on Brazil center-south production for the second half of April will be released today. Recent rainfall there may have slowed the harvest down after it got off to a quick start.
PRECIOUS METALS
June gold futures edged higher in overnight trade after falling sharply on Monday. Increased risk appetite returned to the market after the US and China announced a temporary reduction in tariffs while they continue to negotiate a long-term trade deal. The news also brought strength to the dollar, which was up almost 1.25%, hitting over a one-month high, further weighing on the metal.
July silver futures rose in overnight trading, recovering some of Monday’s losses. This movement followed gold’s direction as safe-haven demand decreased due to increased risk appetite driven by positive trade developments.
July copper futures steadied around $4.65 following a volatile Monday as investors reassessed broader economic conditions following the trade agreement breakthrough between the US and China.
EQUITIES
Futures were relatively flat in overnight trade after finishing sharply higher on Monday. Stocks finished with their best day Monday since the beginning of March, driven by the US-China trade deal news. The tech-heavy Nasdaq surged by over 4%, driven by the positive impact of reduced tariffs on tech companies that manufacture and sell products in China. Strong earnings reports and trade deals with the UK and China have helped the S&P and Nasdaq recover all their losses since April 2nd. Weaker-than-expected CPI data for the month of April may lend support to markets, as the readings could add to expectations for the Fed to cut rates in the near future.
INTEREST RATES
Treasury futures were higher at the front end of the curve and fell lower at the long end. Treasurys were down sharply on Monday as the temporary trade deal between the US and China spurred a risk-on sentiment that led to a sell-off in the Treasury market.
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