Written Commentary
SOYBEANS
Another new contract high was reached overnight in beans as the Bloomberg Agriculture Index during August is up 13%, its best monthly gain since 2012. Chinese buying of US beans was a bullish factor last week, and those purchases may continue into the September 24th China/US summit as the bulls have the clear edge.
SOYBEAN MEAL
Soymeal performed very strongly last week and closed higher in 12 of the last 13 trading sessions. The market is slightly lower today on end-of-month profit-taking, but last week’s unusual flash sales to the EU (100,000 tonnes to Germany and 100,000 to the Netherlands) provided strong demand support. Rising Brazilian and Argentine premiums keep the US export window open. In addition, Canada has spared US meal from its new retaliatory tariffs that begin September 8th.
CORN
A new contract high for December corn was posted overnight as the trend of higher highs and higher lows continues amid strong trading volume. Energy prices were sharply higher overnight as the US and Iran exchanged attacks over the weekend, and ongoing Black Sea attacks remain supportive. The hot/dry finish to the growing season is another important issue for the market, as above-normal temperatures are expected across the growing regions over the next 2 weeks with limited precipitation except in the northwestern Plains.
WHEAT
The market is pulling back this morning after sharp strength in the 2nd half of last week, hitting a new 3-year high. The market appears to be seeing a technical correction this morning, as there is nothing fundamentally that has shifted bearish.
CATTLE
Live cattle and feeders closed weaker on Friday, and weekly slaughter was well above the prior week. Live cattle futures are significantly discounted to the cash price, which may attract bargain hunters if futures continue to sink, although the overall trend remains lower. President Trump’s announcement that he would sign a legal order allowing ranchers to process their own meat drew a minor negative market reaction Friday.
HOGS
October hogs, after volatile action most of last week, staged a rally in the last hour of Friday to improve prospects for early this week, with prices closing at their best level in 2 weeks after testing the year’s lows early in the session. Managed Money traders as of mid-last week added another 32% to their net short position, which now stands at 31,135. Friday’s strong close may trigger some additional short covering early this week. Open interest rose to just under 2,300 contracts Friday, and the midday cutout was higher. Seasonal pressure peaks at the end of August with seasonals turning friendly in September.
MILK CLASS III
September Class III milk finished last week with a moderate loss after reaching a new contract low on Friday.
The USDA said milk production is steady to improving nationwide, aided by cooler temperatures in the East and Central regions.
CRUDE OIL
October Crude Oil was higher early Monday on the resumption of hostilities between the US and Iran over the weekend. The US struck two launchers on Iran’s Larak Island in the Strait of Hormuz on Sunday, and Iran’s Revolutionary Guards Corp said they attacked two US air bases in Jordan in response. Shipping data indicated five vessels per day crossed the strait over the weekend.
NATURAL GAS
October Natural Gas was higher overnight, after first falling below Friday’s low, forming an outside day. The 6-10 and 8-14 day forecasts show above normal temperatures for most of the US out through September 13, which should help support late season cooling demand and keep weekly builds below average for another couple of weeks. The offsetting factor is strong US production.
DOLLAR INDEX
The USD index slipped 0.12% to 99.58 following Warsh’s remarks on Friday that saw the dollar gain 0.55% as markets ramped up bets on September a rate hike. Warsh said the Fed will have work to do if policymakers are not confident that inflation is heading in the right direction, indicating that further tightening may be necessary to curb inflation.
PRECIOUS METALS
December gold contracts continued to feel modest pressure in the wake of Warsh’s speech and July’s PCE data. Warsh moderated his views significantly more than his previous comments, leading the market to unwind the recent increase in yields that was driven by concerns about his credibility.
Copper prices in the US are up 0.62% $6.60, while LME trade is quiet amid the holiday in the UK. The copper story has been little changed over the last week as fundamentals of tight LME-warehouse stocks and ongoing supply worries are still in place while a materially stronger dollar in the wake of Warsh’s Jackson Hole speech and last week’s PCE data have led to some profit-taking.
EQUITIES
Equity index futures are starting the week in a cautious risk-off tone as renewed US–Iran military action lifts oil and a hawkish Jackson Hole message from Chair Warsh drives a material repricing of September Fed-hike odds. The immediate pressure point is the combination of rising energy inflation and higher discount rates for technology equities. Strong Q2 results and guidance from megacap technology and AI software/infrastructure companies, especially Nvidia, have reassured markets that AI capex is translating into accelerating revenue growth.
INTEREST RATES
Yields are little changed across the curve following Friday’s flattening action during Warsh’s Jackson Hole speech. Warsh moderated his views significantly more than his previous comments, leading the market to unwind the recent increase in yields that was driven by concerns about his credibility. Warsh said that the Fed’s 2% PCE target is a “firm, fixed target”.
COCOA
December Cocoa was higher early Monday, extending its recent rally and reaching its highest level since last September. News that Ivory Coast and Ghana were expected to keep the fixed prices to cocoa farmers for their beans for the 2026/27 main crop season steady with last year. may have sparked concerns that growers will be less incentivized to harvest. Expectations that the start of the main crop harvest will be delayed due in part to a long mid-crop season lent support last week.
COFFEE
December Coffee was higher early Monday but inside the range of the previous two sessions after a steep selloff from near contract highs last week. The market saw a quick turnaround last week when Cecafé corrected the coffee shipment data on its website. The site had been showing cumulative totals for export registrations in August running 22.5% behind July , but they later corrected the data to show export licenses were up 20.5% as of August 26, turning the outlook suddenly bearish.
COTTON
December Cotton started off Monday’s session lower but then changed course to trade to another new contract high. World Weather Inc. says West Texas is not likely to see any significant rain during the next ten days to two weeks, although there may be a few spotty showers. It’s getting a bit late in the season to help the crop anyway. On top of that, it is very hot. India is on course for its weakest monsoon in nearly two decades, with rainfall expected to end the season around 15% below the long-term average, according to two senior weather department sources, which could lower production there as well.
SUGAR
October Sugar was higher early Monday but in the bottom half of Friday’s range. The market had an outside day lower on Friday by first trading to its highest level since April 2024 and then falling below the previous day’s low. The funds have moved into overbought territory, with the manage money net long reaching its highest level in more than two years.
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