Good morning!
Grain prices mostly firmer overnight… As of 6:00 a.m. CDT, November soybeans were up 9 3/4 cents and hit a three-week high, December corn futures up 1 3/4 cents and December winter wheat futures were 3/4 cent higher to a penny lower. Corn bulls are working to stabilize their market following Tuesday’s surprisingly bearish USDA report. They are hoping Tuesday’s big downdraft was a capitulation-type price move that would suggest a market bottom is in place or close at hand. Price action the rest of this week will be extra important for the corn market. If the corn bulls can continue to work prices up from Tuesday’s contract low into Friday’s close, such would be one clue that a market bottom is in place. However, a close near the weekly low in December corn on Friday would suggest more bleeding to come for that market. Soybean bulls have gained momentum following Tuesday’s friendly USDA report. However, it will be tougher for soybean and wheat markets to sustain price rallies if corn prices continue to slump. The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are weaker and trading around $62.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.25 percent.
Growing marketplace expectations for Fed rate cut in September… More Wall Street firms are forecasting the Federal Reserve will begin cutting U.S. interest rates in September as the labor market weakens and inflation remains relatively tame. The Fed will likely lower the main interest rate by 25 basis points at the September FOMC meeting, followed by two more cuts in December and March, Nomura economists forecast. Markets are also pricing in Fed rate cuts, indicating a September cut and positioning for another reduction in December. U.S. consumer price data Tuesday showed the core reading (minus food and energy) increased 3.1% in July, year-on-year, which was just above market expectations but not considered problematic.
World oil supplies building… Global oil markets are on track for a record crude oil supply surplus next year as demand growth slows and supplies rise, the International Energy Agency reported today. Oil inventories will accumulate at a rate of 2.96 million barrels a day, surpassing even the average buildup during the pandemic year of 2020, data from the IEA’s monthly report showed. The IEA said “Oil-market balances look ever more bloated as forecast supply far eclipses demand towards year-end and in 2026,” and said “It is clear that something will have to give for the market to balance.”
Loan demand in China drops in July… China’s credit expansion rebounded less than expected in July from a year ago, with a key loan gauge falling to the lowest since 2007, despite a boost from a rise in Chinese government bond sales. Aggregate financing, a measure of credit, increased 1.2 trillion yuan ($167 billion) in July, according to Bloomberg calculations based on data released by the People’s Bank of China on Wednesday. Banks are usually in no rush to meet their quarterly loan targets in July, putting the brakes on financing activity. A year ago, bank credit to the real economy contracted for the first time since 2005, as domestic demand slumped with the economy caught in a deflationary cycle. Policymakers aren’t close to injecting more stimulus any time soon, given China’s solid economic growth in the first half of this year. Analysts generally expect the PBOC to roll out monetary easing in the fourth quarter, following cuts to interest rates and banks’ reserve requirement ratio in May.
U.S., China will continue trade talks in coming months… U.S. Treasury Secretary Scott Bessent said Tuesday that U.S. trade officials will reconvene with their Chinese counterparts within two to three months to discuss the future of bilateral trade between the world’s two largest economies. His comments followed this week’s extension of a 90-day tariff truce between the two nations, which temporarily averts more duties on each other’s goods. Bessent also said the U.S. would require “months, if not quarters, if not a year” of sustained progress in curbing fentanyl flows from China before considering any tariff reductions.
Thailand cuts interest rates… The Bank of Thailand cut its key interest rate and signaled it will remain accommodative as higher U.S. tariffs risk setting off a prolonged period of economic weakness. The central bank’s Monetary Policy Committee voted unanimously Wednesday to cut the one-day repurchase rate by 25 basis points to 1.5%. The move was not a surprise. The BOT has now delivered a total of 100 basis points in rate cuts in an easing cycle that began last October.
China rapeseed prices rise to two-year high… Rapeseed meal prices in China jumped the most in two years on supply concerns after Beijing decided to place levies on imports of canola from top grower Canada following an anti-dumping probe. Futures prices surged as much as 6.4% — the biggest intraday gain since July of 2023 — on the Zhengzhou Commodity Exchange, before surrendering some gains, according to Bloomberg. The price spike comes after the world’s top buyer of rapeseed said it will impose a preliminary 75.8% duty from Aug. 14. China earlier this year imposed a 100% tax on rapeseed (canola) oil and meal from Canada, in response to Canadian levies on Chinese-made electric vehicles, steel and aluminum.
Palm oil futures extend rally… Malaysian palm oil futures rose over 1% to around MYR 4,450 per MT Wednesday, advancing for the fourth session in a row and at their highest price since early April. Gains were supported by higher edible oil prices on the Dalian exchange and strong exports, with cargo surveyors noting shipments in the first 10 days of August rising over 23%.
USDA forecasts rise in cattle, hog prices to end the year and into 2026… USDA on Tuesday forecast higher cattle prices for both the third and fourth quarters of this year, based on recent price strength and resilient demand for beef. The higher cattle price forecasts are also carried into 2026. USDA’s 2025 hog price forecast was also raised based on recent prices, with increases continuing into 2026 on tighter pork supplies. Broiler price forecasts for 2025 were reduced for the second half of the year based on recent price declines through early August, with reduced prices carrying into next year. The egg price forecast for 2026 was unchanged, said USDA.
Cattle futures bulls again show resilience… The cattle futures bulls needed to step up and show price strength this week, following last Friday’s big downdrafts, and they have done just that. Live cattle futures discounts to the cash cattle market continue to support buying interest in futures. Strong gains in the beef market so far this week are also supporting futures. Solid losses in the corn futures market Tuesday, following a price-bearish USDA report, gave feeder cattle futures an extra boost. There has been no cash cattle trade reported so far this week. Last week’s cash cattle trading average was $242.01.
Cash hog and pork market fundamentals weaken a bit… The lean hog futures market so far this week is seeing limited buying interest amid weakening cash hog market fundamentals. However, sellers are also timid amid the early-week strength in the cattle futures markets. The latest CME lean hog index is down 23 cents to $110.02 as of Aug. 8. Wednesday’s projected cash index price is down 18 cents at $109.84. The national direct five-day rolling average cash hog price quote Tuesday was $110.73.
Today’s reports—Wednesday
1:00 pm Dairy Monthly Tables and Dairy Quarterly Data
1:00 pm Season Average Price Forecasts
1:00 pm Wheat Data
2:00 pm Broiler Hatchery
2:00 pm Turkey Hatchery