Written Commentary
SOYBEANS
While beans closed firm on Friday with the second-highest close since July 3rd, prices this morning are showing signs of eroding back toward recent consolidation support beginning at $10.28. However, the soybean market should find support from recent strength in bean oil and from the prospect of further weakness in the US dollar. In retrospect, the $0.68 rally off the early August low was likely short-side profit-taking combined with a measure of weather-related buying.
SOYBEAN MEAL
Last week, the USDA delivered a bullish surprise with lower acreage and lower-than-expected ending stocks on beans, which gave meal prices a boost. But the market is pulling back to start the week after the recent rally. July NOPA crush was released on Friday and came out higher-than-expected and a new record high for the month at 195.7 million bushels, versus pre-report guesses of 191.6 million. Bean oil stocks were steady from June and in line with expectations.
CORN
Even though the corn market closed surprisingly strong on Friday and managed those gains in the face of a series of bearish headlines, we are not inclined to “pay up” for fresh longs with prices this morning trading $0.10 above last week’s lows. Some traders think last week’s washout to new contract lows exhausted the sellers, while others think a long-term pricing value might have been found.
WHEAT
The question for the wheat market this week is whether the market will see further support from soybeans and corn, or if broad-based grain market bearishness returns. The funds were not inspired by outside market strength after net selling over 6,500 contracts during the prior five trading sessions. Adding to the bearish environment is news from last week that Chinese July wheat imports were down by 48.3% on a year-over-year basis.
CATTLE
Another sharply higher day in the cattle complex Friday as rumors the USDA’s press conference in Texas would announce a reopening of the border were incorrect. Instead, an announcement of the construction of the new sterile fly facility in southern Texas was unveiled. Bloomberg reports the Mexican Ag Ministry says the US and Mexico signed a work plan that included measures to resume exports of cattle to the US. However, no timeline was given, and the border remains closed.
HOGS
Hog prices closed out last week on a strong note, boosted partly by pre-holiday retail buying ahead of Labor Day. The discount to the cash index continues to be a supportive factor. COT data showed Managed Money net longs were pared down by just under 1,500 contracts. Open interest on Friday rose nearly a thousand contracts on the rally. China’s pork imports in July were down 0.6% from July a year ago, and year-to-date imports are up 4.1%.
MILK CLASS III
September Class III milk finished with a moderate weekly loss after climbing up to a 6 1/2-week high on Tuesday.
ENERGIES
October Crude Oil is a little higher this morning, perhaps drawing support from comment by White House trade advisor Peter Navarro singling out India’s purchases of Russian crude oil in an article in the Financial Times, saying it had to stop. This counters some of what appear to be a more conciliatory tone towards Russia in the wake of last week’s meeting between Trump and Putin. Eyes will be on the meeting between President Trump and Ukrainian President Zelenskiy today to see what can be achieved towards a peace deal.
October Natural Gas gapped lower overnight, giving back some of Friday’s gains. The 6-10 and 8-14 day forecasts show an expanding area of cooler than normal temperatures over the lower 48, which will limit cooling demand and likely keep US storage injections running ahead of normal. The Baker Hughes rig count showed US natural gas rigs in operation were down 1 rig to 122 last week. This was up from 98 rigs a year ago and above the five-year average of 108 This is down slightly from a 6 ½-year peak of 124 as of August 1. The US National Hurricane Center said another system in the Atlantic Ocean has a 50% chance of strengthening into a hurricane over the next week as it moves toward Puerto Rico.
DOLLAR INDEX
The USD index edged higher ahead of a meeting between President Trump and his European and Ukrainian counterparts. Markets will also keenly await remarks from the Federal Reserve’s Jackson Hole symposium for policy signals. The symposium runs from Thursday through Saturday, with this year’s theme being ‘Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.’ The minutes to the last Fed meeting, due on Wednesday, will also be closely watched. Markets are pricing in an 84.9% chance of a rate cut from the Fed in September per CME data.
COCOA
December Cocoa extended Friday’s recovery overnight but backed off from the overnight highs. Ivory Coast port arrivals totaled 10,000 metric tons for the week ending August 17, down from 11,000 the previous week but up from 9,000 a year ago. Cumulative arrivals have reached 1.653 million tons, down 2.1% from this time last year. The market awaits the main crop, which officially begins on October 1. World Weather Service reported rains continued to stay north of the key growing areas in Ivory Coast and Ghana over the weekend. It was not completely dry, but conditions remained light.
COFFEE
December Coffee found support last week off the consistent decline in exchange stocks and reports that a frost may have damaged come coffee plants. ICE certified stocks did manage to increase 5,078 bags on Friday to 731,739, but this was their first daily increase since July 24 and only their second since July 15. They fell to their lowest level since May 2024 on Thursday. Despite press reports of possible frost damage to crops, World Weather Service says any damaged was minimal, and they maintain that coffee areas will not be vulnerable to any crop threatening cold weather in the next two weeks. Very warm temperatures and minimal rainfall are expected this week, which could lead to concern about tree stress.
COTTON
Last week’s USDA supply/demand report took the forecast for US 2025/26 stocks/use below the five year average for the first time this season, which puts the market in a less defensive posture. The next thing the bulls need is some sort of improvement in the US export outlook. US export sales for 2025/26 are starting out with their slowest past in more than a decade, but they did improve during the first week of August, with net sales of 242,000 bales. Last week’s US Drought Monitor showed 5% of the crop was in an area experiencing drought. This was up from 3% the previous week but still historically low.
SUGAR
October Sugar extended last week’s selloff overnight to trade to its lowest level since August 7. Concerns about Brazilian production have been eased by a recovery in output during July, and concerns about crops in India and Thailand have been alleviated by rainfall reaching area that had been deprived. The UNICA report on Friday showed that cumulative Brazilian Center South sugar production for the marketing year that began in April was 7.8% below a year ago, which was an improvement over being 9.2% behind as of July 16 and 14% behind at the end of June.
PRECIOUS METALS
Gold futures are higher, supported by lower US Treasury yields and uncertainty surrounding the outcome of a meeting between President Trump and President Zelenskiy and European leaders later Monday.
Silver futures climbed higher as investors looked to safe haven demand ahead of developments out of the White House today. Silver prices remain well-supported by a persistent structural supply deficit and robust investor demand. Industrial usage continues to expand, particularly in energy-related sectors such as solar power, electric vehicles, and electronics.
Copper futures are lower as a stronger dollar and uncertainty ahead of today’s meeting between President Trump and his Ukrainian and European counterparts weighed on the metal. Copper has felt recent pressure from data out of China, which showed that new yuan loans dropped unexpectedly in July.
EQUITIES
Stock index futures are lower as investors eye a US-Ukraine meeting following a summit between President Trump and President Putin. Markets will also be awaiting remarks from Fed Chair Powell’s speech on Friday at the Fed’s Jackson Hole symposium. On the data front, US purchasing managers’ surveys on manufacturing and services activity in August will be released on Thursday, and housing starts data for July will be released on Tuesday.
INTEREST RATES
Futures are higher across the curve as markets await the Fed’s Jackson Hole symposium and particularly Fed Chair Powell’s speech on Friday. Attention will also be paid to the minutes from the Fed’s last meeting, due on Wednesday. The minutes could offer clues as to how many on the committee are starting to see a September cut.
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.
