Written Commentary
SOYBEANS
A minor overnight bounce could not hold, and the bean market started the week under pressure. The weather could hardly be more ideal this week, with rain expected right over the heart of the Midwest growing region. The favorable forecast is offsetting the gains in crude oil this morning after Iran and Israel exchanged missile attacks over the weekend.
SOYBEAN MEAL
The meal market is in “free-fall” along with beans, as the July contract has dropped down to a 4-month low today. July meal has also fallen below all 3 of the major moving averages. COT data showed Managed Money traders increased their net long by just over 4,000 contracts and are holding a net long of just over 127,000. The sharp selloff in the second half of last week (after the COT data was gathered) means the net long is likely to be smaller now, but it is still large enough to trigger additional speculative liquidation if prices continue to decline.
CORN
The market opened slightly higher last night, but speculative selling pressure continued this morning as the market fell to a new contract low in July corn and retested the contract low from August 2024 in the December contract. Daily trading volume was well above average on Friday.
WHEAT
Wheat was the only grain market late last week to show signs of stabilizing after a recent decline of nearly $1.20. Chicago wheat open interest dropped by over 10,500 contracts on Friday, and by over 11,000 in Kansas City, a potential indication that the shorts were beginning to take profits as prices stretched to very oversold levels.
CATTLE
Over the weekend, a second case of screwworm was detected 5.6 miles from the original case in South Texas last week. The Texas governor declared a state of disaster for the region, and Canada temporarily banned imports of Texas livestock. The state of Georgia also banned livestock from several South Texas counties. The movement restrictions could create cattle supply dislocations in some areas.
HOGS
The hog market had another disappointing week after a strong rally early last week once again failed to follow through higher, which has been the case since early March. The weekly chart was set for a potential reversal higher until the major selloff on Friday. COT data showed Managed Money flipped to the short side of hogs for the first time since the latter part of 2024, selling nearly 20,000 contracts, and the net short stands just over 6,500.
MILK CLASS III
July Class III milk finished last week with a minimal gain after reaching a 2-week high on Tuesday and a 1 1/2-week low on Thursday.
CRUDE OIL
August Crude Oil was higher early Monday but off its overnight highs. The market rallied off reports of Iran and Israel trading strikes, but it back off its highs after Iranian state media reported that Iran’s armed forces had announced an end of military operations against Israel (unless Israel attacks again).
NATURAL GAS
July Natural Gas gapped lower on Monday as cooler temperatures were forecast for the US, thus extending a selloff that was put in motion on Friday. The 6-10 and 8-14 day maps show an area of below normal temperatures covering the eastern Rockies, the great plains and the Midwest from the Canadian border down into Texas.
DOLLAR INDEX
The USD index is down 0.13% to 99.93, after surging demand for dollar liquidity on Friday saw it break out of the 99.00-99.30 range is has largely maintained since mid-May. May’s nonfarm payrolls data has set up conditions for the Fed to raise rates if they choose.
COCOA
July Cocoa was higher early Monday following a steep selloff on Friday. El Nino could pose a threat to the West African crop, eventually, but in the meantime the region is getting adequate to ample rains.
COFFEE
July Coffee was higher early Monday, managing to hold above Friday’s 18-month lows. Dry conditions in Brazil’s key production areas have allowed the harvest to advance, but increased rainfall this week could cause some interruptions.
COTTON
July Cotton held Friday’s low on early Monday and was trading both sides of unchanged. The market has been under heavy liquidation pressure for the past few weeks once timely rains arrived to the cotton belt, particularly west Texas, but rainfall amounts have been short of what is needed. Adding to the pressure on the market has been a strong US dollar, which reduces the competitiveness of US cotton exports.
SUGAR
July Sugar was higher early Monday but inside Friday’s range. The market has traded in a sideways, choppy pattern recently, finding support from prospects of lower production this year due to a greater focus on ethanol and the problems that El Nino could pose to monsoon rainfall amounts in India and southeast Asia.
PRECIOUS METALS
August gold contracts moved 0.24% lower to $4,355, still under pressure from May’s nonfarm payrolls figures, which bolstered the Fed’s position to raise rates. Payrolls rose +172,000 in May, essentially in line with the upwardly revised April gain of +179,000.
Copper prices on the LME and COMEX rose as LME data showed that warehouse levels fell, as traders continue to look ahead to the end of June for the Trump administration’s decision over a potential tariff on copper.
EQUITIES
Equity index futures moved higher overnight despite the hangover from Friday and the recent escalation in events in the Middle East. Friday’s massive selloff, resulting from May’s nonfarm payrolls report, triggered fears of reduced AI spending in the economy as it reinforced expectations that the Fed could be moving rates upward.
INTEREST RATES
Yields are little changed across the curve, with a wave of buying coming after Iran announced it would cease strikes against Israel, providing traders optimism that the move could be seen a gesture to continue peace negotiations. May’s nonfarm payrolls data have likely provided the Fed with enough support to move with a rate hike without worrying over consequences to the labor market – if they choose to move higher on rates.
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