Good morning!
Grains see mixed overnight performance… As of 6 a.m. CT, December corn was down 2 ¼ cents. November soybeans were down 6 ¾ cents. December soybean meal was down $5.00. December soybean oil was 23 points higher. December soft red winter wheat futures were up 3 cents, while December hard red winter wheat futures gained a ¼ cent.
A late bounce in Thursday’s session saw December corn eke out a close above $5 after dipping below the psychologically important mark. Corn is limping into the weekend after a midweek tumble sparked by a bearish surprise in USDA’s quarterly Grain Stocks report. A surge in crude oil futures after a report the U.S. is sending another carrier group and more troops to the Middle East provided late support, but energy futures are under pressure this morning as Europe weighs a release of crude and fuel stocks (see item below).
Key outside markets see the ICE U.S. Dollar Index, a measure of the currency against six major rivals, down 0.1%. The yield on the 10-year U.S. Treasury stands at 5.233%. Nymex WTI crude oil futures are down 3.7%. U.S. stock-index futures point to a positive start for equities.
Oil, diesel futures fall sharply… Oil futures were down more than 3% and diesel futures fell sharply in the U.S. and Europe Friday morning after news reports of a potential release of diesel and crude stocks. Reuters reported that European Union member states were discussing a French proposal to release additional diesel reserves. The Trump administration this week reportedly told European officials it would impose a ban on U.S. diesel exports unless the EU moved to release emergency fuel stockpiles. Politico reported that France, during a meeting of senior European energy officials on Friday, suggested EU countries release 50 million barrels of crude oil and 50 million barrels of diesel, the report said, and comes after U.S. Energy Secretary Chris Wright asked European countries to release 120 million barrels from stockpiles over a three-month period or else face export restrictions. November Nymex diesel futures were down 2.9%.
It’s Jobs Friday!... It arguably now plays second fiddle to inflation readings, but the monthly employment report remains a crucial economic indicator, particularly as signs of a strengthening economy add to upward pressure on interest rates. That means all eyes will be on the release of the September jobs report this morning due at 7:30 a.m. CT. Economists polled by the Wall Street Journal, on average, expect the report to show the U.S. economy added 84,000 jobs last month after a remarkably strong rise of 162,000 in nonfarm payrolls in August. Strong jobs data could give Federal Reserve policymakers more leeway to further raise interest rates as they focus on the inflation side of their policy mandate.
- “Clearly, the monthly jobs reports are always a macro highlight, but this is an important one, as the continued data resilience has been a huge factor supporting U.S. risk assets, and it’s also given the Fed space to start hiking rates,” said Jim Reid, macro strategist at Deutsche Bank, in a note.
Eurozone inflation hits 3-year high… Consumer prices across the 20 countries that share the euro currency were up 3.8% in September from their level a year ago,, after escalating conflicts in the Middle East and Black Sea sent oil and natural gas prices surging. Inflation accelerated from 3.2% in August and topped the 3.6% average forecast produced by a Wall Street Journal survey of economists. Eurostat said energy prices were up 18.8% year over year. The European Central Bank last month raised its benchmark interest rate rate for a second time to 2.5%, citing rising energy costs as inflation runs above its 2% target.
Wet weather lingers across Southern Plains… The National Weather Service said a wet weather pattern lingering across the Southern Plains will gradually shift eastward into the Gulf Coast and the Southeast this weekend as an anomalous October heatwave builds across the western U.S. NWS said the pattern will deliver another day of moderate to heavy rainfall near a stationary front across eastern Texas to eastern Oklahoma where the Weather Prediction Center maintains a slight risk of excessive rainfall for today and into tonight. The weather pattern has allowed the front to be more progressive across the northern tier of the country with a round of showers and a few thunderstorms moving through the Midwest and the Northeast today, the NWS said.
Global food prices near 4-year high… The United Nations’ index of food-commodity prices rose further last month to its highest reading since November 2022, reflecting mounting geopolitical and weather disruptions around the world, Bloomberg reported. The index rose 1.5% from August, led by grains and sugar. A 5.1% monthly increase in grain prices was the main driver, with world wheat prices up 6.3% to their highest since August 2023. “We are seeing a persistent and increasingly broad based build up in global commodity prices, " said U.N. Food and Agricultural Organization Chief Economist Maximo Torero. “If sustained, these pressures will soon pass through to consumer food prices.”
SovEcon cuts Russia wheat export forecast… The ongoing war between Russia and Ukraine isn’t expected to be resolved until some point after 2027, SovEcon said in a note this week, according to Dow Jones Newswires. As a result, the firm has reduced its forecast for Russian wheat exports by 4.7 million metric tons to 36.7 million tons in the 2026/27 marketing year. That’s 20% below last year, says the firm, and the lowest since 2021/22.
India’s weak monsoon may be misleading… The Indian Meteorological Department says this year’s monsoon underperformed, making for the first drought year since 2015, which also happened to be the last strong El Nino year, noted Drew Lerner of World Weather Inc. But he warned that the statistics may be misleading and urged caution when speculating over the potential for smaller Indian crops. He emphasized that the most important statistic was the 94% of normal rainfall that fell across the “Monsoon Core Zone,” which is where the majority of India’s Kharif, or summer, agricultural belt exists. World Weather contends rain reported in the region was timely and sufficient enough to support crops relatively well.
Malaysian palm oil set for weekly drop… Malaysian palm oil futures extended a decline, remaining below MYR 4,550 per ton to trade at their lowest level since mid-July, according to Trading Economics. Futures were on track for a second straight weekly decline, down around 3.1%. The report said sentiment was pressured by rising inventories, with August stocks hitting an eight-month high and on track to top 3 million tons in September.
Cattle bulls remain in charge… December live cattle rose $0.475 to $223.175 Thursday, closing at a two-week high. November feeder cattle gained $2.05 to $336.35, scoring a nine-week high. The live and feeder cattle futures markets saw modest chart-based buying, with price uptrends in place on the daily bar charts. Also, overall supply and demand fundamentals remained bullish for cattle and beef markets, despite solid losses in the boxed beef market Thursday.
Hog futures stuck in a funk… December lean hog futures fell $0.50 to $68.925, hitting a contract low on Thursday. The lean hog futures market continues to see technical selling pressure, with price downtrends firmly in place. Cash hog fundamentals aren’t helping. The latest CME lean hog index was down $0.27 at $80.94. Thursday’s projected CME index price was up a penny at $80.95. The national direct five-day rolling average cash hog price quote for Thursday was $78.02. USDA’s noon pork report Thursday showed cutout value was up $0.10 at $85.05, led by gains in butts.