Good morning!
Grain futures mixed overnight… As of 6:00 a.m. CST, December corn was down 1/4 cent and January soybeans were 2 3/4 cents higher. December HRW and SRW wheat futures markets were 4 3/4 cents 5 1/2 cents lower. Trading in the grains may be more subdued and range-bound ahead of Friday’s monthly USDA supply and demand report, which will be the first major economic data from the agency in over a month. The key outside markets early this morning see the U.S. dollar index a bit firmer. Nymex crude oil prices are weaker and trading around $60.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.09 percent.
Midwest weather warm-up the rest of this week… The National Weather Service today said in the eastern U.S. strong winds will diminish and the polar airmass will moderate, but some weak lake-effect snow will linger through Thursday. Meanwhile, a large upper ridge will gradually migrate into the central U.S. over the next couple of days. A southerly flow into the West and central U.S. will generate above-average temperatures for much of the Plains. Highs in the 60s and 70s will represent +20-30 degree anomalies for much of the Northern and central Plains on Thursday and Friday. Out West, a strong surface low pressure system will likely bring strong winds, heavy rain and heavy mountain snow, with the heaviest precipitation focusing over California on Thursday. Winter storm warnings are in effect for portions of the southern Sierra, while winter weather advisories are in effect for northern portions of the Sierra for this Thursday.
House votes today on reopening U.S. government… U.S. House of Representatives members are returning to Washington, D.C. today for a vote to end the 43-day U.S. government shutdown. House Speaker Mike Johnson said he believes the legislation, a hard-fought compromise forged in the Senate and endorsed by President Trump, will pass quickly. “But he’ll need to keep his fractious party in line in the face of stiff resistance from House Democrats whose leaders are urging them to vote against the legislation,” reports Bloomberg. “The problems caused by the shutdown, the longest in U.S. history, have worsened in recent days, adding urgency to efforts to find a political resolution,” said Bloomberg. Transportation Secretary Sean Duffy warned on Tuesday there would be “massively more disruption as we come into the weekend if the government doesn’t open.” It could still take days for air travel to return to normal and possibly longer for most of the 42 million low-income Americans in the SNAP program to receive delayed benefits. Other lengthy backlogs and delays are likely across the federal government as it reopens. Trump, who must sign the legislation after House passage, played a hands-off role in the negotiations, refusing to meet with Democrats during the shutdown. But his endorsement of the deal will help Johnson get Republican backing despite some lingering reservations about some aspects of the deal.
China’s U.S. soybean buys have gone silent… China’s purchases of U.S. soybeans appear to have stalled out less than two weeks after the U.S.-China trade truce that signaled thawing relations between the world’s two biggest economies. “After a flurry of orders late last month — which were the first of this season — Chinese imports of U.S. cargoes seem to have faltered, according to traders who asked not to be identified discussing confidential information,” Bloomberg reports. “They said they were not aware of new shipments. The pause is fueling uncertainty over whether the biggest consumer of American soybeans will import as much as U.S. President Donald Trump’s administration claims to expect.” Washington said Beijing had pledged to buy 12 million tons of soybeans by the end of this year, followed by 25 million tons annually over the next three years. China has yet to confirm the specific purchase commitments mentioned by the Trump Administration but Beijing has reduced tariffs on U.S. soybeans and lifted import bans on three U.S. exporters, including CHS Inc., reciprocating similar conciliatory actions from the U.S. “Within the industry many view the reported commitment by China to purchase 12 million tons of U.S. soybeans to be more of a diplomatic gesture than a firm trade deal,” said Kang Wei Cheang, an agricultural broker at StoneX Group Inc. in Singapore and as reported by Bloomberg. China has spent the past few months buying massive amounts of South American beans in a bid to diversify its sources. Thus, Chinese demand is expected to be lower in the coming months regardless of any trade deal with the U.S., according to Vitor Pistoia, senior grains and oilseeds analyst at Rabobank, Bloomberg reported. “Chinese crushers will need to cover some December–January shipments before new-crop supplies from top exporter Brazil become available, but those are expected to be only a few million tons, according to some industry estimates. That would still put the need for U.S. cargoes well below the purchasing target for this year cited by Washington, said Bloomberg.
China flush with soybeans… Meantime, Reuters today reported soybean stocks at Chinese ports reached a record 10.3 million tons on Nov.7, up 3.6 million tons on the year, while crushers held 7.5 million tons, the most since 2017, data from Sublime China Information showed and as reported by Reuters. Physical prices for soybean meal have dropped more than 20% from an April peak in key coastal regions. Chinese crushers have faced losses since mid-year, with a negative margin this week in the processing hub of Rizhao. Traders expect margins to stay negative until at least March. “There is not much room for China to increase soybean imports,” said a trader at an international house that runs oilseed processing units and as reported by Reuters. “Soybean stocks are huge and demand for the feed sector is very slow,” said the trader.
Analysts’ estimates for Friday’s USDA supply and demand report… USDA will release its monthly World Agricultural Supply and Demand report for November on Friday morning at 11:00 a.m. CST. The agency did not release a monthly report in October due to the federal government shutdown. The averages of a Bloomberg poll of grain analysts’ forecasts show the following:
--U.S. corn production: 16.566 billion bushels per acre versus 16.814 billion in its September report.
--U.S. average corn yield: 184.0 bushels per acre versus 186.7 bushels reported by USDA in its September report.
--U.S. soybean production: 4.271 billion bushels versus 4.301 billion in reported by USDA in its September report.
--U.S. soybean average yield: 53.1 bushels per acre versus 53.5 in the September USDA report.
--2025-26 Argentina corn production: 53.3 million MT versus 53.0 million MT in USDA’s September report.
--2025-26 Brazil corn production: 132.8 million MT versus 131.0 million MT in USDA’s September report.
--2025-26 Argentina soybean production: 48.6 million MT versus 48.5 million MT in USDA’s September report.
--2025-26 Brazil soybean production: 175.7 million MT versus 175.0 million MT in USDA’s September report.
--2025-26 U.S. corn ending stocks: 2.168 billion bushels versus 2.110 billion bushels in USDA’s September report.
--2025-26 U.S. soybean ending stocks: 306 million bushels versus 300 million bushels in USDA’s September report.
--2025-26 U.S. wheat ending stocks: 869 million bushels versus 844 million bushels in USDA’s September report.
--2025-26 world corn ending stocks: 283.2 million MT versus 281.4 million MT in USDA’s September report.
--2025-26 world soybean ending stocks: 124.4 million MT versus 124.0 million MT in USDA’s September report.
--2025-26 world wheat ending stocks: 265.9 million MT versus 264.1 million MT in USDA’s September report.
A billion barrels of oil floating in tankers at sea… A buildup of 1 billion barrels of oil on the world’s oceans includes a disproportionately large amount of crude from nations subject to some kind of sanctions — a sign the measures are bringing a degree of disruption to the crude oil trade, according to a Bloomberg report. “Of the surge in oil on tankers since the end of August, as much as roughly 40% of the increase is barrels from Russia, Iran, Venezuela, or unclear origin, according to vessel-tracking data from Vortexa, Kpler and OilX,” said Bloomberg. “Even the lowest estimate, at about 20%, is a larger share of global crude production than the three nations have. The buildup doesn’t mean the barrels will never sell, but it is a threat to the revenues of sanctioned petro-states, with further ramifications for a global oil market that’s forecast to be headed for oversupply.” The fate of all that crude on water, affected by sanctions or not, will go a long way to shaping how oil prices move over the next few months, traders said. The buildup in restricted oil is led by Russian supplies, according to a Bloomberg analysis of the data from the vessel-tracking firms. Iranian shipments have also surged, hitting the highest level in seven years in October. “It’s clear that there is a lot of crude on the water now,” said Brian Mandell, executive vice president of marketing and commercial at Phillips 66, said on an earnings call late last month and as reported by Bloomberg. A billion barrels of crude oil floating at sea makes it difficult to see gasoline and diesel fuel prices at the pump rising much in the coming months.
A bull market in palm oil in 2026?… Indonesia plans to expand its domestic biodiesel mandate from 40% to 50% by the second half of next year, Bloomberg reports, which is expected to slash palm oil supplies available for export. “The initiative may drive up global vegetable oil prices, shift flows of vegetable oils and stoke food inflation if buyers are forced to seek costlier alternatives,” said Bloomberg. The price of palm oil may climb to as high as 5,000 ringgit per MT in the January-June period if the Indonesian government pushes ahead with the B50 program, said Eddy Martono, chairman of the Indonesian Palm Oil Association. The price of palm oil — used in everything from chocolate to cosmetics — has fluctuated in recent months as investors weigh swelling stockpiles and uncertain demand, said Bloomberg.
Malaysian palm oil futures dip… Malaysian palm oil futures on Wednesday fell below MYR 4,150 per MT, snapping gains from the previous two sessions amid a stronger ringgit and weakness in Dalian palm olein. Meanwhile, data from the Malaysian Palm Oil Board showed end-October stocks at a 6-1/2-year high, while production surged 11.02% to its highest since August 2015. On the export front, cargo surveyors reported shipments of Malaysian palm oil dropped between 9.5–12.3% during the first ten days of November, on softer foreign demand. Still, losses were capped by estimates that top producer Indonesia may raise its biodiesel mandate to 50% from 40% by H2 2026, potentially affecting major importers like India and China. Meantime, the northeast monsoon, expected later this week and to persist through March 2026, could disrupt harvesting activities, providing additional support to prices.
Cattle futures markets see early signs market bottoms in place… The live and feeder cattle futures markets on Tuesday saw some mild to moderate losses, but still not a bad day for the bulls following Monday’s strong to limit-up price gains. This week’s price strength in cattle futures markets begins to suggest near-term market bottoms are in place. Steady-to-higher price action in cattle futures the rest of this week would better suggest such. Improved risk appetite in the general marketplace this week has also benefitted the cattle futures market bulls. U.S. lawmakers appear very close to reaching a deal to reopen the U.S. government as soon as this week. Cash cattle trading this week has been very light so far, with USDA at midday Tuesday reporting the average steer price at $228.00 and the average heifer price at $228.48. USDA Monday reported cash cattle trading activity last week occurred at an average of $228.70. That’s down $2.16 from the week prior’s USDA average cash cattle trade of $230.86.
Lean hog futures also showing signs market has bottomed out… Lean hog futures on Tuesday saw a pause after Monday’s solid gains that pushed prices to a three-week high. A six-week-old downtrend on the daily bar chart for December lean hogs has been negated to suggest a market bottom is in place. Improved risk appetite in the general marketplace this week and strong gains in the cattle futures markets have also supported buying interest in the hog futures. More upside price action today in hog futures would begin to suggest a near-term market bottom is in place. The latest CME lean hog index is down another 64 cents at $89.41. Today’s projected cash hog index is down 24 cents at $89.17. Tuesday’s national direct 5-day rolling average cash hog price quote was $84.51.