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The U.S. dollar is ending the year on a weak note, potentially providing a welcome tailwind for agricultural commodities. They sure can use it (more on that further below).
The ICE U.S. Dollar Index, which measures the currency against a basket of six major rivals, fell 0.4% on Tuesday, on track for its lowest close since Oct. 3 and down 9.7% for the year to date. The focus was on the Japanese yen, which fell out of bed last week but was roaring back with a vengeance after Japan’s finance minister said she had a “free hand” to intervene in forex markets to boost the currency.
At 13.6%, the yen is the second-highest weighted currency in the DXY basket (behind the euro at 57.7%). The euro traded near a three-month high versus the dollar. With the euro and the yen up, the DXY was getting pummeled. A weaker U.S. dollar is viewed as a positive for commodities priced in the unit because it makes them less expensive to users of other currencies. Dollar weakness is seen as a factor in robust U.S. corn and wheat exports in 2025 and as a cushion to soybean and product sales dented by the U.S.-China trade war.
Japan, as Evening Report pointed out last week, is worth watching from a macro standpoint. A stronger yen or rising Japanese government bond yields, particularly if they occur quickly, can unsettle global markets.
Soybean growers nervous about FCC’s foreign-drone ban
The American Soybean Association on Tuesday warned that new restrictions on foreign-made drones could put an undue burden on producers. The Federal Communications Commission on Monday said it would bar imports of all new models of foreign-made drones and critical components, including from China’s DJI and Autel, saying they pose unacceptable risks to U.S. national security.
“Soybean farmers depend on modern technology to stay competitive, efficient, and sustainable,” said Scott Metzger, ASA president and Ohio farmer, in a news release. “While we recognize the importance of addressing national security concerns, it’s critical that policymakers fully consider the real-world impacts these decisions can have on farmers who rely on these tools every day. Taking proven technology out of farmers’ toolboxes without workable alternatives only adds cost and uncertainty at a time when farmers can least afford it.”
Ag commodities left behind
Another day, another round of records for gold and silver – as metals leave agricultural commodities in the dust for 2025. Or, as analysts at Bespoke Investment Group put it in a Tuesday morning note: “anything commodity-related that doesn’t hurt when it’s dropped on your head hasn’t had much of a year in 2025.”
Gold futures briefly topped $4,500 an ounce for the first time on Tuesday and have rallied TK% so far in 2025. Silver was trading above $71 an ounce and has well more than doubled in the year to date. Rising geopolitical tensions are getting the credit for the most recent strength, particularly as news reports said the Trump administration had moved a special-operations aircraft, troops and equipment into the Caribbean area this week as it ratchets up pressure on Venezuelan leader Nicolas Maduro.
The Bespoke analysts noted that coming into Tuesday’s session, the DB Agriculture Fund, an exchange-traded fund with weighted positions in futures contracts for corn, live cattle, soybeans, live hogs, feeder cattle, SRW wheat, soybean oil, cocoa, HRW wheat, soybean meal and coffee, was down 4.3% in the year to date. The DB Oil Fund has had it worse, down 14.1%. Meanwhile, the SPDR Gold Shares ETF, widely known by its symbol “GLD,” was up 68.6%. The iShares Silver Trust ETF was up 137.3%, with the abrdn Physical Platinum Shares ETF not far behind, up 130.9%.
GDP soars
The S&P 500 rose 0.5% to close at a record Tuesday, with tech leading the way after delayed data showed the U.S. economy grew at a 4.3% annualized pace in the third quarter, the fastest in two years and easily exceeding expectations.
It wasn’t all rosy. The price index for gross domestic purchases, a closely watched measure of price pressures, rose 3.4%, the fastest since the first quarter of 2023. That stirred fears of sticky inflation and slightly damped expectations for first-half rate cuts by the Federal Reserve.
The strong rise in GDP “was flattered by a rise in defense spending and a big contribution from net trade as imports declined, but underlying measures are consistent with a solid expansion,” said Michael Pearce, chief U.S. economist at Oxford Economics, in a note. “While Q4 numbers will be dinged by the federal government shutdown, we expect the consumer and a rebound in non-AI investment spending will drive a pickup in growth in 2026.”