Written Commentary
SOYBEANS
The soy complex is under heavy pressure after gapping lower on the daily chart following the holiday weekend. Prices rose late last week on optimism that President Trump would announce significant trade progress or a Chinese purchase deal. That did not happen, resulting in significant disappointment across the grain complex this morning. With no major change in the favorable weather pattern across the Midwest in the 2-week outlook, the bears have the edge.
SOYBEAN MEAL
Last week, agricultural commodities, including soymeal, rallied in anticipation of potential progress in Chinese trade negotiations and a possible change in the extended US Midwest forecast. However, the holiday weekend came and went without any clear trade progress with China, and the weather continues to look favorable for crop development over the next two weeks.
CORN
The market opened sharply lower following the lack of any Chinese purchase announcement over the holiday weekend, and a continuation of the active precipitation pattern across the Midwest. The US corn area under drought fell 4% last week to 12%, compared to 7% last year. This week will feature more rain across the center of the Midwest. There is no extreme heat in the 2-week forecast, and the first half of corn pollination looks very favorable for most of the Midwest.
WHEAT
Wheat gapped down following the other grains overnight on a lack of bullish fundamental developments over the holiday weekend, and no announcement of trade progress with China. Russia has dropped its wheat export duty to zero for the first time since it was introduced in 2021. The move aims to enable Russian prices to compete globally and increase export sales. If US prices rally and Russian and Black Sea values do not follow, US wheat will quickly lose any competitive advantage.
CATTLE
Cattle prices finished last week on a strong note, following Thursday’s robust jobs report, which keeps retail demand ideas strong and the bull trend intact. Cattle slaughter for the holiday week last week was historically low, and cash prices remained stable. Nineteen cattle groups are urging the USDA to keep the Mexican border closed to prevent the spread of screwworm into the US. Part of the cattle strength last week stemmed from optimism that a Chinese purchase package could be announced over the holiday weekend, but that did not happen, which could result in some weakness to start the week.
HOGS
August hogs resumed their downside correction on Thursday. Most Ag commodities rallied last week in anticipation that the President could announce a China purchase package over the long weekend, but hog prices did not. Thursday’s close on August hogs was the lowest in a month, and the downside correction of the up move since early April is ongoing.
MILK CLASS III
August Class III milk finished with a moderate weekly gain after falling to a new contract low on Wednesday, which broke a 4-week losing streak.
ENERGIES
September Crude Oil sold off sharply overnight on the news that OPEC+ had agreed to lift its quotas another 548,000 barrels per day in August, but the market is back near unchanged this morning. The increase in production was higher than expected and was above the 411,000 bpd increases that OPEC had announced for May, June and July. There is talk this morning that they are considering a 550,000 bpd increase in September, which would amount to a complete unwinding of the 2.17 million bpd cuts. This shows a willingness on the group’s part to accept lower prices for larger market share and to put pressure on US production.
September Natural Gas fell to its lowest level since December overnight. The NWS forecasts call for above normal temperatures to continue over the lower 48 states over the next two weeks, which should help boost demand and slow the expansion of US supply. However, the trade may be turning less bullish on LNG demand after South Korea’s new trade minister said on Friday that he might request an extension of the freeze on US tariffs that is set to expire within days when he heads to Washington for talks with U.S. officials. South Korea had expressed interest in a LNG project in Alaska, but Yeo said the feasibility of the project was still not clear and the U.S. would only provide more information later in the year.
DOLLAR INDEX
The USD index is higher as President Trump confirmed Sunday that his reciprocal tariffs would go into effect on August 1. Treasury Secretary Scott Bessent stated that tariffs could go back to their April 2 levels for countries that have not reached a trade agreement with the US by then. The dollar touched three-year lows last week, pressured by rising tariff risks, increased fiscal concerns, and expectations of a sooner-than-expected Fed rate cut.
COCOA
September Cocoa extended Thursday’s losses slightly overnight to its lowest since April 17, as the market is influenced by its break below the 200-day moving average on Friday. A lack of weather problems in West Africa is boosting expectations for the 2025/26 main crop, which officially begins October 1. Last week, Commodity Risk Analysis forecast a 325,000-ton global cocoa surplus for the upcoming 2025/26 season, which they said was the first surplus in three years.
COFFEE
September Coffee is lower this morning and is approaching last week’s 7 ½ month low. The market has been under pressure recently from an active harvest and a lack of a freeze threat in Brazil and a looser robusta supply Brazil’s 2025/26 arabica crop is expected to be down from last year, but it has been revised higher this spring. Vietnam’s National Statistics Office said the nation exported 943,000 metric tons of coffee from January through June, up 4.1% from the same period last year.
COTTON
West Texas could use some more rain and heat, but overall, crop conditions are generally favorable. As of last week’s conditions report, 51% of the US crop was rated good/excellent, the same as a year ago and ahead of the 5-year average of 46% for that point in the season. The new report is due out this afternoon. World Weather Service said most of the tragic, flooding rain in Central Texas missed cotton areas.
SUGAR
At last week’s low, October sugar had declined 22% from the March high and 30% from the contract high in 2023, which left it vulnerable short covering, and after weeks of reports of strong monsoons reaching India and southwest Asia, we had some reports of drier conditions in some areas. World Weather Service says that some of Thailand’s sugarcane areas are experiencing net drying and that rain is needed but not much is likely for a while.
PRECIOUS METALS
Gold futures are lower on a stronger dollar after Thursday’s labor data dulled any bets of a Fed rate cut in July while investors await details on the trade front ahead of the July 9 deadline. President Trump said Sunday that a dozen or more letters could go out this week and that letters will be delivered starting at noon Monday.
Silver futures are lower, pulling back from 13-year highs as markets await greater clarity on the trade front and the impact tariffs will have on safe haven and industrial demand.
Copper futures are lower ahead of the July 9 deadline for tariffs, with the rates set to take effect on August 1. President Trump also said any countries aligning with the “anti-American” policies of the BRICS group of developing nations would face an additional 10% tariff.
EQUITIES
Stock index futures are lower after President Trump confirmed that tariffs will take effect on August 1 while he confirms the final tariff rates set for other countries ahead of the July 9 deadline.
INTEREST RATES
Futures are relatively flat across the curve, with prices lower at the long end as markets await news about reciprocal tariffs this week. Yields jumped across the curve last week following the better-than-expected jobs report for June, which dulled any hopes for a July rate cut from the Fed
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