Good morning!
Getting ready for WASDE… As of 6 a.m. ET, December corn was up ½ cent. November soybeans were 6 ½ cents higher, while December soybean meal rose $2.90 and December soybean oil gained 29 points. December soft red winter wheat was ¾ cent higher, while December hard red winter wheat rose 1 cent. Traders were largely on the sidelines aside from last-minute positioning ahead of USDA’s Crop Production and World Agricultural Supply and Demand Estimates (WASDE) due at 11 a.m. CT (more in item below). A pickup in harvest activity in the western Corn Belt and continued progress elsewhere may bring some increased harvest pressure for corn and soybeans.
Key outside markets see oil futures modestly lower, with WIT trading below $91 a barrel. The yield on the 10-year Treasury note was at 5.252%, while the ICE U.S. Dollar Index was flat, trading not far below an 18-month high set earlier this week. U.S. stock-index futures pointed to a positive start for equities on Wall Street.
What to watch: Key market expectations for this morning’s USDA data include:
- Corn: Traders watch if USDA lowers new-crop yields toward the 177.8 bu/acre analyst average (down from 178.5). Quarterly stocks rose to 2.095 billion bushels, meaning a yield near 175–176 bu/acre is required to push stocks-to-use back below 10%.
- Soybeans: Yield estimates average 52.9 bu/acre, up 0.1 bushel from USDA’s September estimate.
- Wheat: Production was raised 3 million bushels in the Small Grain Summary on Sept. 30.The balance sheet may see export forecast cuts due to slow demand and a stronger U.S. dollar.
- Cotton: Analysts expect a 230,000-bale production cut following Southeastern rain damage, though lack of Chinese demand caps upside. Read Pro Farmer’s USDA preview here.
Oil pulls back… Oil futures were modestly lower early Friday after President Donald Trump said the previous day that the U.S. wouldn’t attack Iran before the November midterm elections. Nymex WTI crude was down 0.9% after it and Brent crude soared more than 4% on Thursday. Renewed attacks on tankers in the Gulf and elsewhere also helped lift oil futures Thursday. The threat to U.S. Gulf Coast refinery capacity from Hurricane Isaias (see item below) has fallen to fewer than 500,000 barrels a day in Alabama and Mississippi, down from the 2.5 million barrels a day feared earlier this week, the Wall Street Journal reported, citing S&P Global Energy.
Black Sea riskier than Hormuz... Attacks on shipping in the Middle East escalated sharply the past week, but the Black Sea presents an even greater threat, said Christopher Louney, analyst at RBC Capital Markets, in a Thursday note. Attacks on ships in the region as Russia and Ukraine trade attacks have risen, with vessels, including some carrying grain, hit near Romania and Bulgaria. Energy vessels have also been targeted. “Attacks are rising dramatically, with shipping experts deeming it the most dangerous arena despite receiving less attention,” the analyst wrote. “Black Sea port calls have plummeted, forcing operators toward Danube alternatives that offer substantially lower capacity and face their own attacks.”
- Louney says that “even operators in the Mideast Gulf have expressed reluctance about the Black Sea, finding it riskier.”
Hurricane Isaias approaches Gulf Coast… Hurricane Isaias strengthened into a Category 2 storm and is expected to make landfall along the U.S. northern Gulf Coast late Friday or early Saturday. The National Hurricane Center said a storm surge warning is in effect from the mouth of the Mississippi River to the Swanee River, with a life-threatening storm surge is expected along the coast with damaging wind gusts extending well inland. Areas of heavy rainfall are forecast throughout much of the Southeast U.S. World Weather has warned that open-boll cotton in affected areas could be vulnerable to a further quality hit and stringing as recent rains have already damaged the crop in the Florida panhandle.
El Niño getting stronger… The El Niño weather pattern continues to strengthen, says NOAA’s Climate Prediction Center. The agency’s latest update indicates the phenomenon will continue to strengthen through the end of the year and that chances remain high for a historic event that exceeds the strength of previous El Niño events going back to 1950, widening the window for potentially severe weather events. “With an event of this magnitude, the chances of experiencing impacts consistent with El Niño are larger, though not guaranteed,” the CPC said.
China’s yuan trades at 4-year high… China’s yuan hit a four-year high against a basket of currencies after the People’s Bank of China rejected claims the unit was undervalued and defended its management of the exchange rate, Bloomberg reported. A replica of the CFETS RMB Index rose to its highest level since April 2022, the report said, for a year-to-date gain of over 5%. The yuan also sits near a multi-year high versus the U.S. dollar. A strengthening yuan helps mitigate the headwind for agricultural commodities caused by the broad strength of the U.S. currency, which has jumped versus most major rivals as oil and fuel prices have surged.
A marine opportunity for ethanol… A report Thursday from the Maersk McKinney Moeller Center for Zero Carbon highlighted maritime shipping as a major potential market for ethanol. The report said researchers found ethanol performs seamlessly in dual-fuel methanol engines with a simple software recalibration, offering higher energy density than methanol. For the vast diesel fleet, ethanol-diesel lower emissions but require onboard blending technology or partial retrofits to safely manage ethanol’s low flashpoint and stability issues, the report said.
- “This new report from one of the world’s leading marine industry research institutes shows the tremendous potential for using ethanol in the maritime shipping sector,” said Renewable Fuels Association President and CEO Geoff Cooper.
War disrupts Russia sunoil shipments… A shipment of Russian sunflower oil bound for India was canceled and other cargoes were delayed after attacks on Black Sea ports disrupted exports from Russia, Reuters reported, citing an industry official and trade sources. A 20,000-ton shipment of Russian sunflower oil bound for India was “washed out” after the supplier was unable to deliver it because of damage to port infrastructure in the Black Sea region, Sandeep Bajoria, president of trade body the International Sunflower Oil Association, told Reuters. The Russia-Ukraine conflict has also delayed about 60,000 tons of sunflower oil bound for India, prompting Indian buyers to step up palm oil purchases ahead of the festival season, the report said. Russian sellers are now seeking to ship sunflower oil from Baltic Sea ports such as St. Petersburg and Ust-Luga as shipments from the Black Sea have become more difficult.
Palm oil set for weekly gain… Malaysian palm oil futures saw slight gains Friday, trading near MYR 4,670 a ton, following a strong rally supported by firmer edible oils on the Dalian and Chicago markets and brisk Indian buying, according to TradingEconomics. Indian buyers have secured around 150,000 tons of palm oil in three days amid tight sunflower oil supplies (see item above) ahead of November’s festive season, the report said. Traders were also awaiting Malaysia’s 2027 state budget for details of potential industry support.
Cattle see corrective pullbacks… December live cattle fell $0.225 to $223.55 on Thursday, ending nearer the daily high. November feeder cattle lost $0.925 to $334.875, near mid-range.The live and feeder cattle futures markets saw modest corrective price pullbacks and some mild profit taking. USDA reported very light cash cattle trading late this week, at $218.00. The agency Monday said the average cash cattle trading price last week came in at $219.80, while the noon report today showed declines in boxed beef prices.
No respite for hogs… December lean hog futures fell $0.50 to $68.60, near mid-range, on Thursday. Cash hog market and CME cash index prices continue to trend down. Friday’s projected CME index price is down $0.50 at $78.41. The national direct five-day rolling average cash hog price quote for Thursday was $75.32. The USDA noon pork report Thursday showed cutout value was down $0.14 at $81.57, led by losses in loins and bellies.