Written Commentary
SOYBEANS
A tough start to the week for beans after China cut tariffs on corn and wheat but left the 10% tariff in place on beans, pressuring the market overnight. The bulls hoped stronger private Chinese crusher demand for US beans would return if the 10% tariff was eliminated. However, it appears China wants to keep it in place as leverage for future negotiations. This was certainly disappointing, and beans are testing the low end of this month’s range. In addition, US Ambassador to China Perdue said US policy on Taiwan is unchanged, and $11 billion in arms sales have been approved, which may be another reason the 10% tariff was left in place.
SOYBEAN MEAL
Meal turned lower at the start of the week after China did not reduce or eliminate its 10% tariff on US beans. Meal has been the bullish stalwart of the soy complex this month, as significant harvest delays have reduced bean availability to processors across the Midwest. Those harvest delays will continue this week, with heavy rains expected in eastern Nebraska, Iowa, and Missouri.
CORN
Corn rebounded from sharp weakness on Friday, but it is starting lower again this morning. Unlike beans, China dropped the 10% tariff on corn, but there is no indication of an immediate need for additional feedgrains. Also, any China purchases may still be well into the future, when prices reach a level they consider a bargain. Additional summit details are expected to be released today, but if they do not include any specific mention of bulk corn purchases or a yearly total commitment, bulls are likely to be disappointed, and the market may struggle to hold its ground.
WHEAT
Although wheat recovered late in the session on Friday, the downswing has resumed this morning, and the technical outlook remains weak. China cut tariffs on US wheat, but the market reaction suggests little confidence in an immediate demand boost, as US prices remain well above other origins.
CATTLE
The cattle complex finished the week strong on Friday, and lower feedgrains this morning may give the market a reason to open higher, keeping the edge with the bulls. China cut tariffs on a range of US products, including US meat, and with China’s domestic beef prices hitting a 2-year high, they may consider additional US imports. ICE operations last week in Southwest Kansas affected operations in some meatpacking plants due to employee absences.
HOGS
The hog market finished Friday near the lows of the week on moderate fund selling. Cash hogs were down $0.27 nationally Friday, and the Lean Hog Index fell again, but the cutout bounced. Hogs continue to struggle with a lack of buying enthusiasm as Managed Money traders increased their net short to a record high of just under 36,000 contracts. Daily trading volume last week slipped back to average after strong volume the prior week.
MILK CLASS III
November Class III milk finished last week with a mild loss after reaching a new contract low on Friday.
CRUDE OIL
November Crude Oil was higher early Monday after President Trump over the weekend rejected Iran’s offer to reopen the Strait of Hormuz (if certain conditions were met). He did indicate that he expected US negotiators to engage in more talks this week. Perhaps Trump feels he has the upper hand given the reports of a recovery in Middle East that Crude oil exports this month, estimated at 12.8 million barrels per day, the highest since the war started in February, according to data from Kpler. This is still about 6 million bpd down from 18.8 million bpd in February, but it is a vast improvement.
NATURAL GAS
Once again the natural gas saw a sharp rally that quickly got overblown. Last week November Natural gas traded to its highest level since early July on news that a major pipeline in Appalachia had sent out a force majeure notice to customers, indicating a need for “an immediate pressure reduction” on a portion of the line. The estimated impact was 1.8 billion cubic feet per day, and this news appeared to spark a wave of short covering in the futures. The market gapped lower early Monday, putting it back inside a two month trading range.
DOLLAR INDEX
The USD index rose 0.12% overnight to 101.09, following moves in oil. August PCE, September payrolls, ISM manufacturing PMI, and several Fed speakers will play a large role in validating or rejecting market expectations of an October hike and consequently the dollar’s move higher since 9/16. Fed speak is expected to be hawkish, which will leave direction dependent upon this week’s data releases.
PRECIOUS METALS
December gold contracts fell sharply overnight as the dollar strengthened and as yields rose amid a rise in oil prices.
December silver contracts are down 4.89% to $61.62.
Copper prices on the LME fell 1.8% at $14,364 as weak data out of China, rising oil prices, and a stronger dollar hurt buying conditions and dampened demand prospects following last week’s rally. Industrial profit growth in China slowed in August despite strength in technology manufacturing.
EQUITIES
Equity index futures moved lower as oil prices rose 3-4% after President Trump rejected Iran’s peace proposal. Data from LSEG shows the 60-day rolling correlation between oil prices and stock index futures is at its highest level since late May, suggesting traders are increasingly treating oil as a direct-impact macro variable. The move in oil underscores an already-sensitive point in the rates cycle, with markets assigning a 66% probability of an October hike, and are fully priced in for a second rate hike by January.
INTEREST RATES
Yields moved higher across the curve amid the rise in oil prices. August PCE, nonfarm payrolls, ISM manufacturing PMI, and several Fed speakers will play a large role in validating or rejecting market expectations of an October hike. This week’s Fed speakers are expected to issue hawkish remarks leaving more emphasis on this week’s data; weak data could push back tightening expectations and see a modest pullback in yields.
COCOA
December Cocoa was higher early Monday. Rainfall patterns in Ivory Coast and southwestern Ghana remain light enough to raise concerns about main crop production. Ivory Coast cocoa arrivals were estimated at 16,000 metric tons for the week ending September 27. This was the same as the previous week, bringing the total for the 2026/27 marketing year so far to 36,500 tons. Ivory Coast started their marketing year on September 1, one month earlier than normal, as they were wanting to prepare for the new reporting methods designed to meet EU deforestation rules.
COFFEE
December Coffee was near unchanged early Monday following a strong rally on Friday that took the market to its highest level in a week. After a 71.25-cent, 21% decline from near contract highs in just one month, the market had become short-term oversold. Last week, Conab raised its forecast for Brazil’s 2026 coffee production to a record 67.6 million bags, up from a previous forecast of 66.7 million, but the market avoided any steep selloff from that news. Arabica production was increased to 48.2 million bags from previous estimate of 45.8 million, up 34.8% from 2025. Active harvest and exports in Brazil eased have what had been historically tight supplies.
COTTON
December Cotton saw choppy action early Monday but turned lower as the session progressed. News that cotton was not on the list of US agricultural goods that China was lowering tariffs for may have encouraged some of the selling. The US dollar is hovering around 18-month highs, which raises concern over US export prospects. The nearby dollar index reached its highest level since July 29 last week but backed off slightly from those levels.
SUGAR
March Sugar saw choppy traded early Monday as the market weight tight supplies against a burdensome net long held by the funds. Underlying support comes from lowered expectations for global supply in light of drought in Europe this summer, el-Nino-inspired reduced monsoon rainfall in India, and excessive rains in Brazil that have disrupted harvest and cane crushing. In India, the Maharashtra government has decided to begin the sugar-crushing season on October 15, two weeks earlier than usual. This is facing blowback from farmers’ associations on concerns that starting harvest before crops have reached full maturity will result in lower yields, which are already under stress due to the uneven monsoon this year.
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