Written Commentary
SOYBEANS
A quiet start to the week with beans near unchanged following a strong weekly close on Friday, which kept the edge with the bull camp. Pro Farmer’s tour results of 53.0 BPA were under the USDA at 53.6. The tour found that more rain is needed in the eastern belt to finish the bean crop strong, and also noted some disease pressure. Pro Farmer’s state yield for Indiana was below last year, while Minnesota had the largest increase from a year ago.
SOYBEAN MEAL
The US cash soymeal market tightened significantly last week, pushing nearby September futures to their highest level since mid-June on strong daily trading volume. August plant downtime has slowed crush rates, and a crane collapse last week at the Destrehan, Louisiana, processing facility further squeezed meal supplies. Strength in bean oil added to the bullish support for beans. The seasonal crush slowdown is expected to extend into September, making it difficult for plants to rebuild meal availability quickly. Following the USDA’s soybean yield increase 2 weeks ago, the Pro Farmer tour late last week estimated yields at 53.0 BPA, compared to the USDA at 53.6.
CORN
The market made a solid technical trade last week, and it is starting this week by reaching a new high for the month. The bull camp is in control, supported by very strong export sales, lower-than-expected Pro Farmer numbers, and continued dryness in the eastern belt.
WHEAT
The market is seeing some minor strength this morning, but is still well within last week’s range after a 5th consecutive lower weekly close. Market action has been disappointing as the bean and corn rally has not translated into much support for wheat, but that could change if the market can push above last week’s highs.
CATTLE
Friday’s Cattle on Feed report was considered slightly bearish with higher placements than expected and somewhat higher on feed numbers. Newswires over the weekend reported the 1st case of a human transmission of screwworm found in a Maryland man who had returned from Guatemala. The market may start under pressure this morning. The detection highlights the challenges in keeping the pest out of the US.
HOGS
December hogs closed Friday on the highs of the week. The USDA Cold Storage report on Friday afternoon was friendly, with total pork stocks down more than 10% year-over-year. Pork production last week in the US was near unchanged from the previous week. COT data showed Managed Money reduced their net longs by just under 5,000 contracts to an 11-week low.
MILK CLASS III
October Class III milk finished with a moderate weekly loss after climbing up to a 1-week low on Friday.
ENERGIES
October Crude Oil was higher overnight after a Ukrainian drone attacks on Sunday attacks forced sharp drop in the capacity of a nuclear reactor at one Russia’s biggest nuclear power plants located east of the Ukraine/Russia border, and another one hit at a major fuel export terminal located on the Gulf of Finland. The threat of US sanctions on Russian crude oil seemed to grow on Friday after President Trump warned on Friday that he would impose more sanctions if there was no progress toward a peaceful settlement in Ukraine in two weeks. However, Vice President Vance said on Sunday that Russia had made “significant concessions” towards a negotiated settlement in its war with Ukraine and was confident progress was being made.
October Natural Gas gapped lower overnight and fell to its lowest level Since September 2021. The nearby contract has fallen to its lowest level since last November. The latest 6-10 day forecast has below normal temperatures stretching from the Great Plains to the East Coast, with above normal temperatures in the PNW, northern Rockies, and along the West Coast. US production has apparently been enough to offset any power needs this summer. LSEG said average gas output in the Lower 48 states has risen to 108.4 billion cubic feet per day so far in August, up from a record monthly high of 107.8 bcfd in July. LSEG projected average gas demand in the Lower 48 states, including exports, would ease from 111.0 bcfd this week to 106.7 bcfd next week and 104.7 bcfd in two weeks. The average amount of gas flowing to the eight big U.S. LNG export plants has risen to 15.8 bcfd so far in August, up from 15.5 bcfd in July but below the record monthly 16.0 bcfd from April. The Baker Hughes rig count showed US natural gas rigs in operation were unchanged at 122 last week.
DOLLAR INDEX
The USD index edged higher following a sharp fall on Friday after Fed Chair Powell’s dovish comments that opened the door for a rate cut next month. Markets are now pricing in a 83% chance of a 25 bps rate cut in September. Powell did note that risks to inflation remain elevated, causing some investors to scale back expectations for the amount of easing this year, which should give the dollar a solid floor. PCE inflation data due Friday will offer further clues on the inflation picture and possible moves from the Fed.
COCOA
December Cocoa is lower this morning but inside Friday’s range. The market extended its recent selloff on Friday and traded to its lowest level since August 5, but it bounced and closed higher on the day. London markets are closed today for the Summer Bank Holiday in UK.
COFFEE
December Coffee was sharply higher on Friday and traded to its highest level April 30. The Cecafe president told Reuters on Friday that the recent rally in global coffee prices was due to the 50% tariffs the US has levied on Brazilian imports, as it has made exports to the US unviable and disrupted the markets.
COTTON
December Cotton rallied on Friday on a break in the dollar that came in the wake of Fed Chair Powell’s speech, which opened the door for a rate cut at the September meeting. The market has been trading sideways since it put in a low following the announcement of the draconian tariffs in late April. It got a shot in the arm earlier this month when the USDA lowered its planted acreage estimate for the US crop this summer, but the crop appears to be performing well, with weekly crop conditions reports running much above average.
SUGAR
A Reuters poll of 10 analysts has sugar prices climbing from current levels as they view the shift from a modest global deficit 3 million metric tons in 2024/25 to a modest surplus of 3 million in 2025/26 as being priced into the market. The poll has expectations for Brazilian Center-South production around 39.7 million tons, down from a forecast of 41.6 million in February and below the last year’s 40.2 million.
PRECIOUS METALS
Gold futures slipped in the overnight session as a stronger dollar weighed on the yellow metal, easing from a two-week high hit on Friday after Fed Chair Powell opened the door for a rate cut.
Silver futures are sharply lower, reversing most of Friday’s gains as markets. On the industrial side, recent data showed that China’s solar cell exports surged more than 70% in the first half of the year, driven by robust photovoltaic demand from India.
Copper futures are higher.
EQUITIES
Stock index futures are lower, pulling back from records reached on Friday, which was fueled by rate cut hopes as markets now shift their attention to Nvidia earnings on Wednesday and PCE inflation data later in the week. At the Jackson Hole Symposium, Fed Chair Jerome Powell signaled concern over a weakening labor market and hinted at a possible rate cut in September. Markets now price in an 83% chance of a cut, pending confirmation from upcoming data, especially July’s core PCE inflation and August nonfarm payrolls.
INTEREST RATES
Futures are lower across the curve, reversing some of Friday’s gains after Powell opened the door for a rate cut during his speech on Friday. However, investors have turned cautious ahead of upcoming data this week, signaling a potential overreaction to what was a relatively well-balanced speech.
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