Written Commentary
SOYBEANS
Light pressure to start the week on the soy complex is coming from an expected improving trend in South American weather over the next 2 weeks and new tariff threat worries. Trump said he would be putting tariffs on steel and aluminum imports, which raised fears that retaliation against US exports could be imminent.
SOYBEAN MEAL
The soymeal market started the week with more subdued trading action compared to previous weeks, lacking major weekend announcements. However, Trump’s comments yesterday reaffirmed tariffs as a key policy tool, announcing new aluminum and steel tariffs on US metal imports, with more potentially on the way, rekindling worries retaliatory tariffs against US Ag products could be coming. It is clear from Trump’s US Trade Representative nominee and Trump himself that tariffs will be a major part of the new administration’s policies, which should be no surprise following Trump’s rhetoric during the campaign trail.
CORN
The corn market closed Friday near the day’s lows and is starting off steady this morning as South American forecasts show potential improvement this week and next. In addition, Trump’s move to impose steel and aluminum tariffs on US metal imports will likely trigger a harsher response and raise the odds for potential retaliatory tariffs against US Ag products. Trump is still waiting for China to make the 1st call to start tariff negotiations.
WHEAT
March Chicago wheat hit a new high for the move Friday morning but closed weaker on strong trading volume. Stats Canada came out with a slightly bearish wheat stocks estimate Friday, which may account for the lower close. Cold temperatures are moving into the Plains this week, accompanied by snow. However, private weather forecasters indicate that winterkill risk is low.
CATTLE
While live cattle and feeders closed near unchanged on Friday but were significantly lower for the week on tariff worries and the resumption of Mexican cattle imports into the US. The Managed Money net long position did not decrease significantly last week, and funds are still holding over 150,000 contracts long in live cattle. Feeder cattle longs declined by only 704 contracts. This suggests that further liquidation could be made across the cattle complex.
HOGS
April hogs tested the January highs on Friday but fell just short of a new high for the month. Estimated US pork production for the week ending February 8 is 553.1 million pounds, down from 561.8 the previous week and down from 567.5 a year ago. CME Lean Hog Index as of February 5 was 85.05, up 0.45 for the day and up 1.99 versus a week ago. The USDA estimated hog slaughter came in at 489,000 head Friday and 102,000 head for Saturday. This brought the total for last week to 2.536 million head, down from 2.569 million the previous week and down from 2.624 million a year ago. The USDA pork cutout, released after the close Friday, came in at $95.66, up $1.99 from Thursday and up from $92.81 the previous week.
MILK CLASS III
March Class III milk finished on Friday with a moderate weekly gain after reaching both a 2-month low and a 1-week high earlier in the week.
ENERGIES
March Crude Oil is higher this morning, as the market is putting aside fears of trade wars that may have emerged with the announcement of 25% tariffs on all steel and aluminum imports into the US yesterday. The trade may be less inclined to rush to judgement with each new tariff announcement and may be more inclined to view them as negotiating tactics.
March Natural Gas is slightly higher this morning, extending the rally off the late January lows. The 6-10-day forecast shows a colder than normal trend dominating the upper half of the lower 48, with some much below normal temperatures centered in the upper Midwest and New England. Reuters reported that at least three vessels carrying LNG from Oman and Australia are heading west for delivery, with one sailing through the Red Sea, as high prices in Europe continue to draw more supplies.
DOLLAR INDEX
The U.S. dollar index is higher, extending its gains for a third consecutive session as new tariff threats from U.S. President Donald Trump fueled concerns about inflation, which could limit the scope for interest rate cuts from the Federal Reserve.
COCOA
May Cocoa was lower overnight but stayed above Friday’s six-week low. Ivory Coast cocoa arrivals totaled 32,000 metric tons for the week ending February 9, down from 47,000 the previous week and 41,000 for the same period a year ago. Cumulative arrivals for 2024/25 have reached 1.322 million tons, up from 1.092 million a year ago up but below the five-year average of 1.415 million.
COFFEE
May Coffee edged higher overnight to an 11th consecutive all-time high. Brazil exported 245,281 metric tons of green coffee in January, up from 223,975 tons for the same period last year. Dealers told Reuters on Friday that the market was keeping a close watch on whether the recent surge in prices for arabica coffee may lead to a reduction in demand. May London (robusta) futures have been trading in a sideways pattern since posting all-time highs on January 31.
COTTON
March Cotton is sharply higher this morning and is approaching the February 5th high. A move through that level would mark a second leg up off the contract lows from February 3. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 8,834 contracts of cotton for the week ending February 4, increasing their net short to 62,407, which was a new record.
SUGAR
March Sugar is a bit higher this morning but inside Friday’s range down. Brazil exported 2.062 million metric tons of sugar in January, down from 3.170 million a year ago. Reuters reported this morning that at least 37 sugar mills in India’s leading cane-producing states halted operations last week, nearly two months earlier than usual, due to lower cane supplies caused by adverse weather, according to an industry official.
PRECIOUS METALS
Gold futures advanced to a new all-time high, fueled by safe-haven demand following U.S. President Donald Trump’s announcement of new global tariffs on all steel and aluminum imports, which heightened concerns over a potential trade war.
March silver futures are higher, recovering some of the previous session’s losses as tariff warnings from U.S. President Donald Trump resulted in increased safe-haven demand for precious metals.
Copper futures advanced due to strong market fundamentals. Concerns are growing about tighter supplies from Chile, which is the world’s leading copper producer, as repairs and aging mines are causing production delays. Chinese demand has increased following the Lunar New Year celebrations, and U.S. demand remains strong as buyers stock up ahead of possible tariffs.
EQUITIES
Stock index futures are higher across the board as traders digest news of new tariffs and are awaiting key economic data. Consumer price index, producer price index and retail sales reports will be released this week.
INTEREST RATES
Futures are narrowly mixed. Federal Reserve Board Governor Adriana Kugler on Friday said a stable labor market gives the Federal Reserve time to make decisions, and she wants to make sure inflation progress continues.
Please contact us at 1.877.690.7303 or via email at sales@admis.com for any questions or comments on this report or would like more information about ADMIS research.
>>Explore more here
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.
