Commodities Open February Under Broad Selling Pressure; Energy Leads Declines
NEW YORK/LONDON — Commodity markets greeted February with a wave of selling pressure on Monday, painting trading screens red across nearly all sectors at the week's open. The stark contrast was provided by U.S. Treasury futures, which traded higher amid shifting expectations for Federal Reserve policy.
The Barchart Futures Market Heat Map in early Monday trading showed losses pervasive in energies, metals, and grains. The energy complex was the hardest hit, posting an average decline of 7.3%, led by a dramatic 15.9% plunge in natural gas futures—a contract notorious for its volatility, often dubbed the "Widow Maker." Meanwhile, gold remained under pressure while silver managed a modest rebound from Friday's sell-off.
The strength in Treasury futures follows market speculation that the Federal Open Market Committee (FOMC) may pivot toward rate cuts by mid-year, despite the next policy meeting not scheduled until March. Fed funds futures currently price in a 25-basis-point cut for June.
Grains Face Dual Headwinds
In the grains sector, corn, soybeans, and wheat all opened lower. March corn futures traded down, extending losses from the previous session. While some commercial support was noted in futures spreads, the national average basis calculation remains weak by historical standards. Fund positioning data as of late January showed managed money held a net-short position, though it had been reduced from the prior week.
The soybean market faced particular pressure, with March futures falling sharply overnight. The focus is shifting decisively to South America, where the bulk of Brazil's substantial soybean harvest will be collected and shipped this month. Enhanced infrastructure, partly funded by major trade partners, has drastically reduced Brazilian logistics timelines, dimming the near-term export prospects for U.S. beans. Current U.S. export shipments are running significantly behind last year's pace.
Wheat markets were lower across the board. Traders are assessing potential crop damage from Winter Storm Fern, which recently swept across U.S. Plains and Midwest growing regions. However, the resilience of winter wheat crops often tempers concerns over winterkill. Current futures spread activity suggests measured commercial interest but lacks a strongly bullish signal.
Market Voices
"The opening sell-off isn't surprising given the macro picture," said Michael Chen, a portfolio manager at Horizon Capital Advisors. "Energy is reacting to warmer weather forecasts and inventory data, while grains are caught between South American supply and uncertain demand. The Treasury move is the real story—it's betting on a policy shift."
"This is a classic February setup for soybeans—the U.S. gets sidelined," noted Sarah Elwood, an independent grain analyst based in Chicago. "The Brazilian harvest is a freight train, and with their logistics improved, our export window slams shut earlier every year. The sales data confirms it."
"Calling natural gas the 'Widow Maker' is cute, but it distracts from the real issue: these wild swings show the market is fundamentally broken," argued David R. Klein, a veteran energy trader and outspoken market commentator. "Algorithmic trading and speculative froth amplify every weather model shift. The 15% drop overnight isn't rational price discovery; it's a casino game where producers and consumers get hurt."
"The winter wheat chatter is mostly noise," added Anya Petrova, an agronomist with Black Earth Consulting. "The crop is dormant and built for cold. The focus should be on spring moisture, not a storm that passed through last week. The market sometimes forgets what 'winter' in winter wheat means."
Disclosure: The original author, Darin Newsom, reported no positions in the securities mentioned. This analysis is for informational purposes only and was originally sourced from Barchart.com.