Good morning!
Grains mixed… As of 6 a.m. CT, December corn was up 1 ½ cents. January soybeans rose 1 ¼ cents, with December soybean meal down $1.80 and December soybean oil 20 points higher. Chicago soft red winter wheat fell 3 ¼ cents, while December hard red winter wheat dropped 4 ¼ cents. A steep stock-market selloff last week added to a negative tone, while attention this week shifts to Tuesday’s USDA Crop Production and WASDE reports. USDA is expected to further nudge up its soybean yield estimate, while corn is expected to see a modest cut. Export demand has materialized at lower prices.
Key outside markets see oil futures sharply lower, with Nymex WTI crude oil down nearly 3% to $88.19 a barrel after President Trump further indicated that a re-escalation of fighting with Iran is unlikely. The yield on the 10-year Treasury note stood at 4.86%, while the ICE U.S. Dollar Index fell 0.5%. U.S. stock-index futures pointed to a higher start, shaking off pre-market weakness in Nvidia sparked by news reports the company is investigating whether CEO Jensen Huang gave away company or national-security secrets while conducting an affair with a woman linked to Chinese intelligence (see item below).
China extends trade truce… China on Monday said it had effectively extended its trade truce with the U.S. by two months to Jan. 10, formalizing an agreement reached by President Donald Trump and Chinese leader Xi Jinping at a summit meeting in Washington in September. China will suspend retaliatory measures, such as a 24% additional tariff on U.S. goods for another two months and hold off from charging special fees on U.S. ships docking at its ports until Jan. 10, Bloomberg reported. Meanwhile, signs of tensions between Washington and Beijing over China’s trade commitments were on the rise late last week (see item below).
Bessent presses China on trade commitments… Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer spoke with China’s Vice Premier He Lifeng, Bloomberg reported Friday, expressing concerns about China’s recent actions. Trump and Xi are expected to meet later this month in Shenzhen when China hosts the Asia-Pacific Economic Cooperation summit. “Secretary Bessent emphasized the importance of China fully and immediately implementing its commitments made in Busan and raised concerns about recent Chinese actions,” according to a readout from the Treasury Department on Friday. “He underscored that continued progress depends on concrete results and that the United States will closely assess China’s implementation of the arrangement.” In a separate statement, Greer’s office said he emphasized during the video call that it was crucial for China to take “concrete actions” to implement pledges, specifically on “agricultural purchases, rare earths, and other critical minerals.”
- Craig Singleton, an expert on U.S.-China relations at the Foundation for Defense of Democracies think-tank, told the Financial Times that Bessent’s warning to Beijing was “pretty pointed diplomatic language.” He added that Washington “appears unwilling to negotiate new concessions until Beijing delivers on existing commitments. If the two sides cannot even agree on what they already promised each other, extending the truce could get considerably messier.”
Nvidia probing spy scandal… Chip giant Nvidia, the bellwether of the AI tech rally, has opened an investigation into reports that its CEO, Jensen Huang, was the target of a spying operation after a romantic relationship with an executive suspected of working for a Chinese intelligence agency, news reports said. The probe is investigating whether Huang shared sensitive national-security information or Nvidia information with Alice Huang, the Wall Street Journal reported. Given the CEO’s close relationship with President Donald Trump and the sensitive nature of the technology used in Nvidia’s AI chips, national-security officials are concerned about valuable information reaching Chinese leaders, the report noted.
Iran strikes ‘highly unlikely’... President Donald Trump over the weekend said it was “highly unlikely” that he would order extensive strikes on Iran. But that will depend on Iran signing a “very strong agreement,” he told CNN. The remarks came after Secretary of State Marco Rubio played down prospects of an imminent breakthrough in negotiations, Bloomberg reported, describing Tehran’s demands to date as unacceptable and in some cases “outrageous and ridiculous.”
Rain for eastern Corn Belt… Quick-moving low pressure systems will bring a couple rounds of scattered showers to portions of the lower Great Lakes and Interior Northeast, the National Weather Service said. The first round of showers is expected to pass through today, followed by the next round Tuesday night to Wednesday morning. Otherwise, the rest of the country should be mostly dry, the NWS said. Another chilly night is forecast across the Tennessee Valleys and into portions of the Southeast after Frost Advisories are in effect this morning for portions of these areas, the NWS said. However, mild to unseasonably warm air dominating the remainder of the country will reach into the Southeast as the new work week begins.
Brazil precip outlook ‘erratic’... Brazil will see a “good mix” of rain and sunshine over much of its key center west, center south and far southern parts during the next two weeks, “supporting most crop needs,” said World Weather Inc. Sunday night. The precipitation “will be erratic with some areas getting more beneficial rain than others, but over the two-week period all crop areas should be impacted and sufficient rain will support crop development even though some of it may not be enough to fully restore subsoil moisture to normal.”
Russia-Ukraine talks this week… Russian, Ukrainian and U.S. negotiators are scheduled to hold talks for the first time since February this week, with security guarantees at the top of the agenda, the Associated Press reported. The prospect of negotiations has contributed to a decline for wheat futures in recent weeks as traders took out a risk premium despite continued targeting of shipping in the Black Sea region.
Funds now short corn… Friday’s Commitments of Traders report from the Commodity Futures Trading Commission showed large speculators continued to cut net long positions in soybeans in the weekly period ending Nov. 3. Net long positions fell 52,601 contracts, or 28%, to 132,799. Speculative traders cut long positions by 28,380 contracts and boosted short positions by 50,463 for a net short position of 22,900 contracts. Net short positions in Chicago soft red winter wheat and Kansas City hard red winter wheat each grew.
- “Reduced longs across the soybean complex were increasingly offset by growing shorts in corn and wheat, leaving the combined grains and oilseeds net long at just 166k contracts, an 83% reduction in six weeks,” said Ole S. Hansen, head of commodity strategy at Saxo Bank. “The most striking reversal has been in corn, where an 18% price slump since September has driven positioning from a record net long of 431k contracts to a net short of 23k.”
Cattle tumble for 2nd week…December live cattle futures fell $0.35 to end Friday at $214.05, hitting an 11-month low early on for the contract and posting a weekly loss of $6.90. January feeder cattle futures lost $1.95 to $318.375, suffering a six-week low early and losing $13.40 on the week. It was the second week of heavy losses for cattle, with weak cash trade and a plunge for the stock market stoking the selloff.
Hogs still searching for a bottom… December lean hog futures fell $1.575 Friday to end at $53.525, hitting yet another contract low and suffering a weekly fall of $5.35. Weak cash and wholesale fundamentals and spillover pressure from cattle kept the pressure on the market. Monday’s projected CME index price is down another $1.29 to $61.57.