Commodities Overview May 2025 Edition

MONTHLY FUTURES MARKET OVERVIEW

>>Read the complete May 2025 Edition HERE

KEY HIGHLIGHTS

GRAINS

Corn Prices likely put in an intermediate low shortly after the May USDA WASDE report. While much of the US crop has been planted in a timely manner, there is a growing concern that the last 10-15% will be delayed, given the cool, damp conditions across portions of the central and eastern Corn Belt.

Soybean prices continue to hold in a sideways pattern, with most of the volatility in the complex being seen in soybean oil. There is still a great deal of uncertainty surrounding biodiesel tax policy and RVOs, not to mention a potential trade deal with China.

The wheat market is showing signs of life, with prices bouncing off contract lows that were established shortly after the May USDA WASDE report was released.

 

 

COCOA

Persistent concerns about the West African mid-crop have lifted cocoa prices back up above $10,000 per metric ton. The arrival of the rainy season offered some relief, but rains were below normal the first part of May. The lower forecast has been underscored by the slowdown in Ivory Coast port arrivals. For the week ending May 18, Ivory Coast port arrivals totaled 22,000 metric tons, down from 24,000 the previous week and 58,000 a year prior.

COFFEE

Brazilian 2025 coffee production forecasts are edging higher, and this has helped pull the market back from its all-time highs. The Brazilian Institute of Geography and Statistics put the 2025 all coffee output at 55 million bags, up 2.3% from its April estimate. Arabica production is expected to reach 37 million bags, up 3.5% from the April forecast but still down 7.5% from 2024. (This is the off-year in the crop’s biennial cycle.) The Brazilian Agricultural firm Safras & Mercado increased its arabica forecast to 40.46 million bags in May from 38.35 million in December.

COTTON

The May USDA supply/demand report put US 2025/26 cotton production at 14.50 million bales, up from 14.41 million in 2024/25. US exports were forecast at 12.50 million, up from 11.10 million in 2024/25 and the highest since 2021/22. 2025/26 ending stocks were forecast at 5.20 million bales, up from 4.80 million for 2024/25 and the highest since 20219/20. This put the stocks/use ratio at 36.6%, down slightly from 37.5% in 2024/25 but still above the five year average of 28%.

SUGAR

The International Sugar Organization raised its forecast for a global sugar deficit to 5.47 million metric tons in 2024/25 from a previous estimate of 4.88 million in, due primarily to lower than expected production in India and Pakistan. However an industry meeting in New York in early May produced estimates for a global surplus for 2025/26 ranging from +400,000 tons to +1.53 million. Brazil’s 2025/26 was expected to be up 4% to 5% from 2024/25, although one forecast called for a 2% decline. India’s production was expected to be up 22% to 24%, and Thailand’s was expected to be up 11% to 14%.

CRUDE OIL

The crude oil market has staged an impressive recovery off the lows it made after the selloff in the wake tariffs announcements, but the rally stalled in the face of larger production out of OPEC+, which has begun to lift its quotas that it put in place post-Covid. The group had been planning to do so since last year but kept postponing the move because of weak Chinese demand. But then they surprised the market with planned production increases of 411,000 barrels per day for May, about three times what was expected, and they agreed to a similar increase in June.

NATURAL GAS

When crude oil prices collapsed in the wake of the tariff announcements, the natural gas market rallied on fears that sharply lower crude oil force the closure of some that produce crude oil and natural gas. When crude oil prices recovered, the gas market was able to focus on low demand bought on by mild weather and the steady build in US supply. Weekly storage builds have been above average in eight out of the last nine weeks, and total storage has gone from being 11% below the five year average in March to 1.9% above in early May.

LIVE CATTLE

Live cattle have been in a five-year bull market since bottoming-out at $81.45 in April 2020, during the COVID pandemic. The market had appeared to top several times during the bull run, and on April 2, as President Trump’s tariffs were announced, buyers began liquidating. After reaching new contract highs on April 2 at $210.90, April 2025 began to sell off, falling to $197.75 by April 9. But with the US cattle inventory at 75-year lows, prices for cash cattle and boxed beef recovered and reversed the futures decline, with April Cattle going off the board at a new contract high of $217.67.

LEAN HOGS

From the beginning of December through April, traders were liquidating lean hog contracts, and by the time April arrived, market activity was dominated by spread trading, mostly buying cattle and selling hogs. When there were periods of buying, it mostly consisted of sellers liquidating. The CME Lean Hog Index began April at $88.78 and ended the month at $89.95. The CME Pork Cutout Index started the month at $96.46 and ended at $96.97, with small fluctuations in between. April Lean Hog futures went from a high of $88.32 on April 1 to $85.47 by settlement on April 14.

STOCK INDEX FUTURES

Stock index futures have trended higher recently, marking a return to year-to-date gains following the steep declines in April in the wake of the new US tariff policies. Major trade developments have largely been responsible for the rebound in prices, as agreements with the UK and China boosted market confidence and ushered in risk-on sentiment.

US DOLLAR INDEX

The US Dollar Index has seen a steady recovery since late April after a flight away from the currency in early April. The dollar drew support from positive trade developments, a strong labor market in the US, and renewed investor sentiment in US assets. Uncertainty surrounding the future of the US economy and potential inflationary pressures from tariffs have led the Fed to reiterate a wait-and-see approach to monetary policy, holding rates steady for the near future and offering support for the dollar.

EURO CURRENCY

The euro has weakened over the last month, pressured by dollar strength and the European Central Bank dropping its key interest rate by 25 bps in mid-April. The ECB is expected to continue lowering rates in June, and additional cuts are possible with headline and core inflation rates softening. April’s annualized CPI came in at 2.2%, which matched expectations and was steady with the previous reading.

BRITISH POUND

The British pound has maintained its strength for the most part, with the June contract hovering around $1.33. In early May the Bank of England cut its benchmark rate by 25 bps to 4.25% in a widely expected move. The BoE has eased policy more cautiously than its European counterparts, and it will likely remain cautious through the rest of the year, taking a “careful and gradual” approach to monetary policy.

INTEREST RATES

The Treasury market has experienced a period of volatility from late April and into May, as yields have bounced up and down following trade developments and economic data. Overall, Treasury prices have trended downward on stronger-than-expected labor market data, hawkish comments from the Fed, and concerns over persistent inflation. The Fed kept the Federal Funds rate steady at its most recent meeting, saying the Bank is poised to respond to any changes in the US economy. These developments have caused interest rate expectations tighten, with markets now expecting 50 bps of easing this year with the first cut expected in September.

GOLD

After making historic gains into mid-April, the gold market has come under pressure in recent weeks due to a waning of safe-haven demand and a stronger dollar. On April 22, June Gold hit a record high $3,509, but the price have fallen more than 6% since that date, reflecting the volatility of the greater macro picture. The main catalyst behind the decline was the 90-day tariff-pause agreement between the US and China that saw the US scale back tariffs on China to 30% from 145 and China lower its tariffs from 125% to 10%.

 

 

COPPER

Copper prices have fallen since late April, as oversupply concerns in the US and uncertainty surrounding near-term demand have weighed on prices. The market has been signaling that it expects a 25% tariff to be imposed on the copper imports. In recent weeks, supply has flowed into the US from around the globe, causing CME stocks to increase more than 81% since the beginning of the year to an eight-year high of 152,919 metric tons. The premium of CME copper over LME copper has fallen from $1,600 per metric ton to $600.

 

 

 

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