Written Commentary
SOYBEANS
Market fundamentals favor the bear camp as the soy complex is starting the week lower on Brazil harvest pressure and the forecast for rains in Argentina this week. The Rosario Grain Exchange says recent rains have improved the Argentine bean crop more than expected. Although temperatures have been above normal recently, they are expected to moderate this week as showers move across the region. AgRural estimates Brazil bean planting at 39% complete but lowered their production estimate to 168.2 million tonnes, down from 171 million.
SOYBEAN MEAL
Soy markets are easing lower to start the week, though soymeal prices have been moving sideways for over a week. The US is experiencing a sharp warmup following last week’s extreme cold, and soy processing plant operations should return to normal this week. Rainfall in Argentina is anticipated over the next 10 days following the recent 100-degree heat. Brazil’s soybean harvest is now 38% complete, with an estimated 65 million tonnes already out of the fields. Crushers and exporters are rapidly filling pipelines, but they are still catching up from early-season delays.
CORN
The market is under modest pressure to start the week after a poor close on Friday. The bear camp may assert control this week as improvements are expected in South American weather, and traders will be focusing on larger US spring acreage in the Outlook Forum later this week. US spring acreage is expected at 93.5 million, up from 90.6 million last season, and US ending stocks for 2025/26 expected at 1.907 billion bushels, up from the current season’s 1.540 billion.
WHEAT
Prices continue the pullback that began last week following the extreme cold temperatures in the Plains. Well above normal temperatures are expected this week across the Plains, but precipitation is expected to be very limited. However, winter wheat crops are dormant and moisture needs are currently low, although timely spring rains will be needed to keep crop stress from rising.
CATTLE
Friday’s USDA Cattle on Feed report was considered slightly friendly based on lower placements than expected and opening calls are higher this morning. The report may be the catalyst to spark a price rebound after the significant weakness since late January. CFTC data showed Managed Money net long positions dropped 7,240 contracts to a 10-week low of 128,469 contracts, but feeder cattle longs were up 1,702 contracts to a new record high of 30,069.
HOGS
April hogs extended their break Friday and closed below the 100-day moving average for the 3rd time since August last year. A sharp rebound over the following week followed the other two instances in January and early February. If April prices can turn higher early this week, look for first resistance at 89.27 and then at 90.87. Commitment of Trader’s data showed Managed Money added 11,522 contracts to stretch their net long to 114,148 contracts, an 8-week high. However, that data is as of Tuesday of last week, just before prices plummeted the 2nd half of the week on long liquidation.
MILK CLASS III
March Class III milk finished with a sizable weekly loss after falling to a 2 1/2-week low on Friday.
ENERGIES
April Crude Oil opened lower overnight but is back near unchanged this morning. The market has poked below the February consolidation lows to its lowest level since December 30. The trade awaits news on progress on a Ukraine/Russia peace agreement. The prospect of the US dropping sanctions on Russian oil pressured the market last week on ideas is would open up more supply. OPEC+, which includes Russia, is scheduled to start unwinding some of its production curbs in April. They are currently holding back about 5.85 million barrels per day, or 5.7% of global demand. The group has postponed plans to do so several times, and they may decide to do that again if demand looks weak.
Natural Gas prices reached 26-month highs last week but they have started off on a weak note today. The April contract gapped lower overnight and fell to its lowest level since Tuesday. After several weeks of colder than normal temperatures in the US, mild weather has returned. The 6-10-day forecast has above normal temperatures covering most of the lower 48, with mostly normal elsewhere.
DOLLAR INDEX
The U.S. dollar index is slightly higher. Traders are now focused on this week’s second estimate of fourth-quarter gross domestic product growth and the PCE price index report, which is the Federal Reserve’s preferred inflation measure.
COCOA
May Cocoa was slightly higher overnight but was in the lower part of Friday’s big range down. The market collapsed on Friday after falling below technical support at the 9-day moving average and then below the February 7 low. The rainy season appears to be developing in West Africa, which is easing concerns about the upcoming mid-crop after hot and dry conditions had developed in late 2024. World Weather Service indicated that rain and thunderstorms occurred over the weekend from portions of interior southern Ivory Coast through portions of southern Ghana to much of Nigeria, and more is expected through the week and into early next week. Day to day rainfall is expected to be light and occasionally moderate, and most areas could see some moisture. Ivory Coast cocoa arrivals totaled 19,000 metric tons for the week ending February 23.
COFFEE
May NY Coffee extended last week’s selloff overnight and fell to its lowest level since February 5. The market broke below the 9-day moving average on Thursday, setting off some technical selling, and it has not recovered from that move. Rabobank on Friday seemed to downplay the threat that the recent dry conditions have placed on the upcoming crop in Brazil, saying that there should be enough moisture to maintain the “reduced” cherry load, assuming rains return shortly. However, World Weather Service expects the lighter than usual rainfall to continue through the next seven to 10 days, which they warn will threaten the yield and quality of cherries. Weather in Vietnam, Indonesia and west central Africa has been good and looks to continue that way.
COTTON
May Cotton was higher overnight and was pushing up against technical resistance at the 9-day moving average. Industry group Cotton Australia said today that they expect Australia to harvest more than 4.8 million bales of cotton in 2024/25. This is below the record 5.6 million from 2021/21 but well above the average of the last 10 years. In their last WASDE report, USDA put Australia’s 2024/25 production at 5.4 million bales, so the lower number from Cotton Australia could be offering some support. Australia’s harvest has begun and should last into May. Last week, a survey by the National Cotton Council of America put US 2025/26 cotton plantings at 9.6 million acres, down from 11.18 million in 2024/25. The USDA Outlook Forum this week will provide a peak at where USDA sees plantings this year.
SUGAR
May Sugar is close to taking out Friday’s 2 ½ month high this morning. Since January, the market has rallied 3.14 cents (19%) off 22-month lows on lowered expectations for crops in India, Brazil and the US. Louisiana cane growing areas saw their second freeze event of the winter last week, which lowered expectations for the upcoming crop even further. Of the 9.37 million short tons of sugar the US was expected to produce in 2024/25, 2.02 million (22%) was expected to come from Louisiana. The US was expected to import 2.893 million tons this year, and substantial losses in the Louisiana crop could cause the US to allow more imports. Earlier this year India announced it would allow exports of 1 million metric tons, but recent reports have suggested that exports may top off at 700,000. Brazil has been dry in recent weeks, which has lowered expectations for the 2025/26 crop, which begins in April.
PRECIOUS METALS
April gold futures advanced to a new record high on Monday, fueled by safe-haven demand and recent weakness in the U.S. dollar. The yellow metal gained further support as concerns increased over U.S. President Donald Trump’s proposed tariffs, which could heighten global trade tensions. Weakness in the U.S. dollar makes gold more affordable for foreign investors.
April silver futures are lower and remain in a fairly narrow 5-day trading range. A weakening U.S. dollar has been supportive. However, this bullish influence is being offset by prospects of a Federal Reserve that will be slow to add to accommodation.
March copper futures are lower and are trading at their lowest level since February 7. This decline was fueled by growing expectations that copper would not be included in the U.S. trade restrictions, increasing the supply outlook for North America.
EQUITIES
Stock index futures are higher in an attempt to recover from Friday’s sharp sell-off. The January Chicago Federal Reserve national activity index was -0.03 when 0.21 was expected.
INTEREST RATES
Futures are steady at the front of the yield curve, and are lower elsewhere on the curve. The U.S. Treasury will auction two-year notes today.
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