Written Commentary
SOYBEANS
Strong weather buying pushed beans above recent highs overnight, following shifts in the weather models since Thursday. The 6-10 day and 8-14 day forecasts are now showing below-normal precipitation across the Midwest and hot temperatures returning to the region.
SOYBEAN MEAL
The range-bound action over the past several weeks in soymeal has ended, and prices have broken out to the upside following the holiday weekend. Weather forecasts for the Midwest have taken a bullish shift, and a weather premium is now being built for upcoming hot/dry conditions. This is pulling soymeal higher and pushing the August contract well above the mid-June highs to its highest level since June 4th.
CORN
Corn finished last week on a strong note and jumped higher overnight following a shift in the forecast from last Thursday, which now shows a much hotter, drier pattern moving into the Midwest after this week. Despite very heavy rainfall and localized flooding across parts of Iowa, Illinois, Wisconsin, and southeast Minnesota over the holiday weekend, the market is directly focused on the week 2 forecast and beyond, which shows the heat dome moving back into the central Midwest. There is something else driving the rally, EU weather.
WHEAT
The market is extending recent gains following last week’s daily and weekly upside reversals. Spillover support is coming from strength in beans and corn amid a weather pattern shift back to hot, dry conditions after this week. The heat will help the US harvest move forward quickly after the 50% mark was passed last week.
CATTLE
The market finished the week poorly last week and has closed lower in the last 5 consecutive sessions. August live cattle hit moving average support on Friday, and the bulls will want to see an upside recovery to start the week. Hot weather across the Plains is expected to return next week, and cattle stress will remain high.
HOGS
Nearby hogs had a strong finish at the upper end of the week’s range on Thursday, finally seeing some upside follow-through. Choppy recent action through mid-last week likely means COT data later this afternoon will not show a significant change in the Managed Money short position. Trading volume on Friday was the highest since June 15. Strong weekly export sales last Thursday was one reason for the higher futures action, along with improving technicals.
MILK CLASS III
August Class III milk finished last week with a sizable loss after reaching a new contract low on Thursday.
CRUDE OIL
September Crude Oil was higher early Tuesday on reports that a Saudi-flagged crude oil tanker suffered damage near the Strait of Hormuz and that Iran’s Revolutionary Guards had fired missiles at ships moving through the Strait overnight. This comes after Iran’s foreign minister threatened to back away from talks and President Donald Trump’s threatened to “finish the job” unless a deal is done. The reaction in the market has been relatively muted, as the market is also confronted with more reports of tankers be moving through the Strait.
NATURAL GAS
August Natural Gas reached its highest level since June 30 early Tuesday but was seeing volatile action and a wide range. The worst of the heat wave over the US has abated, but the 6-10 and 8-14 day forecasts still show above normal temperatures across the lower 48 states, which should at least provide steady cooling demand.
DOLLAR INDEX
The USD index is little changed at 101.89 in quiet trade overnight for the currencies. The underwhelming US jobs report has led markets to trim 2026 hike expectations: roughly 29 bps of Fed tightening priced by December versus about 38 bps a week ago, leaving attention on inflation signals in upcoming data. Markets are now focused on Wednesday’s FOMC minutes for more detail on the committee’s reaction function under Warsh.
COCOA
September Cocoa extended its rally early Tuesday to reach its highest level since January 12, but it eased back to below Monday’s close as the session progressed. The market saw a sharp rally on Monday off elevated concerns about global production as El Nino sets in. However, Ivory Coast farmers interviewed by Reuters seemed more optimistic about crop prospects in light of the recent sunny weather that has allowed soils to absorb the recent heavy rains that have caused so much concern.
COFFEE
September Coffee was lower early Tuesday, but it was still inside the upper half of Monday’s big range-up day that took it to its highest level since last October. News over the weekend that Brazil’s harvest was still well behind last year triggered another round of short covering. Unseasonable, heavy rains in June delayed the harvest and raised concerns about crop damage. However, drier conditions in Minas Gerais over the past week have been better for harvest and drying. Safras and Mercado said on Friday that Brazil’s coffee harvest for the 2026/27 season had reached 52% of the planted area as of July 1 down from 60% seen at this point last year and the five year average of for that date of 55%.
COTTON
December Cotton was higher early Tuesday in the wake of the weekly Crop Progress report on Monday afternoon that showed another decline in US crop conditions. The report showed 46% of the US cotton crop was rated good/excellent as of July 5, down from 48% the previous week and 52% a year ago and below the five-year average for this date at 47%. Texas was 36% G/E, down from 39% last week and 42% a year ago but still above the five-year average at 34%. US and Texas declined for the second straight week. Georgia and Arkansas improved last week. Missouri and Mississippi declined. The report also showed 49% of the US cotton crop were squaring as of July 5 up from 47% a year ago and the five-year average for this date at 47%.
SUGAR
October Sugar was moderately lower early Tuesday but inside the upper half of Monday’s range. Market bulls may have been disappointed with the failure to take last week’s low on Monday. The market has seen a sharp rally off concerns about the European beet crop in the wake of extreme heat and drought in June. They are not out of the woods yet.
PRECIOUS METALS
August gold contracts are marginally higher, trading around $4,170 as investors largely await tomorrow’s FOMC meeting minutes. The geopolitical bid also stayed in focus as President Trump renewed threats of military action against Iran, while Iran’s foreign minister said negotiations on a final peace deal will not continue unless Washington abandons its threats.
Copper prices were mixed overnight. Benchmark three-month copper on the London Metal Exchange eased 0.3% to $13,360, while COMEX copper prices are up 0.17% at $6.24. Copper has been trading in a narrow range as the market is still awaiting a possible decision from Washington over tariffs on refined copper as outflows from LME warehouses to the US continue. The Trump administration had originally set a June 30 deadline to announce potential tariffs on the metal.
EQUITIES
Equity index futures were muted overnight in a wave of profit-taking concentrated in tech as investors fade yesterday’s chip rebound and ‘sell the news’ on Samsung’s blockbuster guidance. No major data on the calendar today should leave focus on the geopolitical side, being the NATO summit in Ankara as well as any news regarding the Strait. The Fed’s minutes tomorrow will be the highlight of the week, likely offering more details on policymakers’ thinking over the potential timing/scenarios in which the Fed should raise rates.
INTEREST RATES
Yields were little changed across the curve overnight, maintaining a tight range as traders await tomorrow’s Fed minutes. For Treasuries, the flattening in the 2/10 year spread appears to be reflective of a market that is focused on a “higher-for-longer” policy stance rather than on an inflation slowdown. Warsh’s perceived hawkishness has raised confidence that the Fed will tackle the inflation problem, but also raises rate forecasts.
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