Good morning!
Grain prices trade mixed overnight… As of 6:00 a.m. CDT, December corn was up 1 1/2 cents, November soybeans down 4 cents and December winter wheat futures markets were 3/4 cent lower. The corn market bulls have regained some momentum on this last trading day of the week and of the month. Thursday’s price gains kept alive a price uptrend on the daily chart for December corn. Soybean bulls are losing momentum as the meal futures market has faded badly this week. Meal will be the most important market to watch in the soy complex in the near term. The high-range closes in winter wheat futures markets Thursday may begin to suggest the wheat bears are exhausted, but the bulls have some heavy lifting to do in the near term to pull their markets out of price downtrends. The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are slightly lower and trading around $64.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.23 percent.
Cooler holiday weekend weather for much of the U.S. … After a taste of fall-like weather this past week, a sweeping cold front will bring another reinforcing shot of cooler-than-normal air to much of the Great Lakes, Ohio Valley, Northeast, and Mid-Atlantic the next few days, says the National Weather Service. High temperatures will mostly top out in the 60s and 70s, with overnight lows dipping into the 40s and 50s. Some of the typically colder spots may even drop into the 30s. While much of the Lower 48 are experiencing temperatures that are more common in September and October, summer-like warmth continues to hold strong across parts of south Texas, the desert Southwest, and the Pacific northwest. Temperatures in these hot spots will soar well into the 90s, with some places climbing into the triple digits. Wet and stormy weather is in store across much of the Plains. The slow motion of these systems combined with well-above-normal moisture will set the stage for frequent rounds of downpours and the possibility of localized to scattered instances of flash flooding.
Key U.S. inflation report out this morning… Traders and investors will closely examine this morning’s U.S. personal income and expenditures data, including the inflation readings. The Federal Reserve is said to watch the personal income inflation data closely. The July PCE price index is seen coming in at up 2.6%, year-on-year, with the “core” PCE reading (excluding food and energy) seen coming in at up 2.9%. In the June report, the PCE was up 2.6% and the core PCE was up 2.8% annually. Then many traders and investors will hit the exit doors early to get a jump on a three-day U.S. holiday weekend.
Fed governor Waller calls for September rate cut… Federal Reserve Governor Christopher Waller in a speech in Miami Thursday called for lower U.S. interest rates, saying he would support a rate cut at the September FOMC meeting. Waller said he anticipates additional rate cuts over the next three to six months, with the pace driven by incoming data. Waller said the chances of an undesirable weakening in the labor market have increased, and proper risk management means the FOMC should be cutting rates now. Waller is reportedly in the running to be the next Federal Reserve chairman.
Brazil set to retaliate against U.S. tariffs… Brazilian President Luiz Inacio Lula da Silva has authorized the start of a process to retaliate against the 50% U.S. tariffs, Brazil’s Vice President Geraldo Alckmin said, according to a Bloomberg report. The U.S. government will be formally notified of the decision today, according to a person familiar with the matter. The move was reported earlier by the O Estado de S. Paulo newspaper. Brazil’s Chamber of Foreign Trade now has up to 30 days to analyze the U.S. tariffs and determine whether they fall under the reciprocity law passed by Brazil’s congress earlier this year. If the chamber approves, a group of ministries will study which countermeasures to apply.
China, India may be getting cozier… Bloomberg reported Thursday that Beijing made a quiet outreach to New Delhi in March to test the waters on improving ties. Chinese President Xi Jinping wrote a letter to his Indian counterpart, Droupadi Murmu, expressing concern about any U.S. deals that would harm China’s interests, an official in New Delhi familiar with the matter said. China’s Foreign Ministry said today that Xi’s meeting with Modi in Kazan, Russia in October last year led to a restart in relations. “The competent authorities of China and India have earnestly implemented the important consensus reached by the leaders of the two countries, promoted the resumption of institutional dialogue and conducted normal exchanges,” it said and as reported by Bloomberg.
Brazil cracks down on illegal cattle operations… Brazil’s environmental authorities seized around 7,000 illegal head of cattle in the Amazon and issued fines to several ranchers and slaughterhouses, including JBS NV, reports Bloomberg. Nearly a quarter of Brazil’s beef exports to the U.S. come from slaughterhouses located next to areas where illegal deforestation is rampant, according to the Earthsight environmental group.Raising cattle is the main driver of deforestation in Brazil’s Amazon, along with opening roads. Between 1985 and 2023, an area slightly larger than France has been converted into pasture, said the Bloomberg report. Currently, 13 Amazon-based slaughterhouses have approval to export to the U.S. Five of them are located in Rondonia state, where lawmakers passed legislation that regularized hundreds of cattle ranchers who had converted a protected conservation area into pasture for more than 200,000 head of cattle.
Malaysian palm oil futures lower… Malaysian palm oil futures slipped almost 1% to around MYR 4,400 per MT to end the trading week Friday, and marking losses for the second session in a row to notch their lowest level in two weeks. A stronger ringgit and weakness in rival edible oils on the Dalian and Chicago exchanges weighed on sentiment, while caution grew ahead of the official August PMI in the mainland, with traders watching closely as China remains a key buyer of palm oil. Broader energy markets also offered little support, with crude oil heading for its first monthly drop in four.
Cattle futures markets see profit-taking pressure…The live and feeder cattle futures markets Thursday saw what is so far just routine profit-taking pressure from the speculators, after prices hit contract/record highs Wednesday. Cash cattle and beef market fundamentals remain solid and the charts are still overall technically bullish. That suggests the record-setting bull market runs may have farther to go on the upside. Still-light cash cattle trade had occurred as of midday Thursday, with steers so far averaging $242.19 and heifers averaging $240.00.
Lean hog futures see technical strength… More chart-based buying was featured in lean hog futures Thursday, as the near-term technical posture has turned significantly more bullish this week. Recent cash hog and wholesale pork weakness does worry the lean hog futures bulls, however. The latest CME lean hog index is down another 23 cents to $106.63 as of Aug. 26. Friday’s projected cash index price is down another 20 cents at $106.43. Thursday’s national direct 5-day rolling average cash hog price quote is $108.51.
Today’s USDA reports—Friday
--Ag Prices 2:00 pm CDT
--Citrus Fruits 2:00 pm CDT
--Peanut Prices 2:00 pm CDT
--Weekly Cotton Market Review p.m.
--National Weekly Cattle & Beef Summary p.m.