Good morning!
Corn consolidates in mixed grain trade… As of 6:00 a.m. CT, December corn was up 2 ¼ cents. November soybeans were 1 ½ cents lower, December soybean meal was up 20 cents and December soybean oil was 35 points lower. December soft red winter wheat was up 3 ½ cents, while December hard red winter wheat gained 7 ½ cents.
Corn saw some consolidation in overnight trade after a Wednesday drubbing. USDA’s quarterly grain stocks report lived up to its reputation for sparking market volatility. USDA pegged corn stocks at 2.095 billion bushels, above the top end of estimates and 177 million bushels above the average pre-trade guess. December corn ended 21 ¼ cents lower Wednesday at $5.00 ¾, hitting a five-week low. The question is whether the $5 level can hold after December suffered technical damage, with bears looking for a test of $4.92. On the supply side, the key fundamental question is now whether the current corn crop continues to get smaller, eroding the extra cushion provided by Wednesday’s sharp stocks adjustment.
Key outside markets see the U.S. dollar trading near its highest level of the year, providing a headwind for commodity markets. The dollar has been on an upside tear courtesy of a relentless rise Treasury yields fueled by strengthening economic growth, concerns over inflation pressures, a huge government debt load and a surge in corporate debt issuance. The yield on the 10-year Treasury note stood at 5.296% after posting its highest close since May 2002 at 5.292% on Wednesday. WTI crude oil futures were up 1.1% near $91.37 a barrel.
Better harvest weather on the way… Western Corn Belt producers will be glad to see a historically wet September in the rearview mirror. October appears likely to bring drying conditions that should provide a better harvest environment, said Drew Lerner of World Weather Inc. in a Wednesday note. “Iowa has been at the center of concern more recently because of too much moisture. A few locations in the state reported some of the greatest rainfall on record for the month of September and no matter how you look at it, the region is too wet,” Lerner wrote. “October promises to squelch some of the rain that has fallen recently and the break from wet biased conditions should be timely across the Great Plains and western Midwest.” Lerner noted rainfall totals for September hit the 10-to-15 inch rain in south-central and east-central Iowa, with the area on track for another 1 to 3 inches and local totals of more than 4 inches through Thursday. World Weather expects October precipitation in the Midwest to be near to below normal, with the best drying conditions seen in the first half of the month. Conditions won’t be completely dry, but bouts of rain should be brief and light, having a low impact on net drying conditions and harvest progress, Lerner said, but acknowledged that for crops standing in water it will still take a couple weeks to get excess moisture out of the soil and farmer back into the their fields.
Heavy rainfall seen from Southwest to the Plains… The National Weather Service said moisture from the Gulf will pool along and ahead of a front over the Southern Plains, producing showers and thunderstorms with heavy rain on Thursday, leading the Weather Prediction Center to issue a Moderate Risk warning of excessive rainfall over parts of the region, and a Slight Risk warning of excessive rainfall over parts of the Central Plains, the Middle Mississippi Valley, and parts of the Great Lakes for Thursday. On Friday, rain will develop along and ahead of the front from parts of the Northeast to the Ohio Valley, while showers and thunderstorms will continue along and ahead of the front from the Southern Ohio Valley to the Southern Plains, producing heavy rains.
U.S. reportedly tells Germany, France to tap diesel stocks…The Trump administration has told Germany and France to draw down emergency diesel inventories to help to ease global fuel prices or face a potential US diesel export ban, Reuters reported, citing three people close to the discussions. The U.S. wants the European Union to release 120 million barrels of diesel, according to one source, the report said. The warning escalates pressure on Europe as President Donad Trump weighs a potential diesel export ban to bring down surging U.S. fuel prices ahead of November’s midterm elections. Reuters reported that the EuropeanCommission, France, Italy, Ireland and Britain plan to hold a call on the possible need to release diesel stocks. The administration has debated whether to ban exports or take other steps, but has held off amid fears that an export embargo would push up fuel prices over the long run. President Donald Trump on Wednesday said he was still “thinking about” banning diesel exports but noted concerns that doing so could have a “negative impact on gasoline,” saying his aides think such a move could help ease diesel prices “but it might raise the price of other things,” CNBC reported.
Biggest jump in global crop prices since ‘22… The third quarter is in the books and global agriculture prices booked their biggest quarterly jump since Russia’s invasion of Ukraine in early 2022 as measured by the Bloomberg Agriculture Spot Index. The index which tracks 10 key crops from coffee to soybeans rose 13% in the quarter, the biggest rise since the quarter ending March 2022, Bloomberg reported. China’s purchases of U.S. soybeans provided support along with escalated fighting between Russia and Ukraine, which has choked off flows of grain from the Black Sea, leaving buyers to scramble for supplies elsewhere. A strengthening El Nino has further enhanced fund-buying interest in ag commodities. Bloomberg noted that Chicago corn and wheat futures both saw gains of 15% for the quarter, while soybeans were up 15%.
Estonia says Russian grain unwelcome… Estonia has banned the transit of Russian and Belarussian grain through its territory, Estonian Foreign Minister Margus Tsahkna said Thursday, according to Reuters. The move comes after reports last month said Russian companies were repurposing fertilizer, coal and other cargo terminals at Russia’s Baltic and Arctic ports to handle grain exports after Black Sea shipments were disrupted by Ukraine drone attacks. “Russia cannot wage a war of aggression and expect us to help keep its trade flowing,” Tsahkna said on X. “We will not finance its war or make its aggression easier to sustain.”
China’s grain demand outlook… China is reiterating plans to expand domestic grain capacity—targeting 725 million tons by 2030—to ensure supply security against global volatility and growing domestic demand, the South China Morning Post reported Wednesday. Agriculture and Rural Affairs Minister Zhang Zhu noted Tuesday that while staple grains are ample, feed grains like corn remain tight and foreign soybean dependence stays high for edible oil and livestock feed, emphasizing that “the string of food security must always be kept taut.”
Meanwhile, Reuters reported that Chinese soybean buying is expected to cool due to weak animal feed demand and negative crush margins. Private oilseed processors have covered most needs through early February’s Lunar New Year via South American imports and state reserves. Because soybeans were excluded from tariff relief at a recent U.S.-China summit, a 10% tariff renders U.S. crops uneconomical for private crushers. Consequently, private buyers are sticking strictly to South American cargoes, while Chinese state-run companies have bought approximately 13.7 million metric tons of U.S. soybeans.
India’s weakest monsoon in a decade… India recorded its lowest monsoon rainfall in more than a decade during the June-September season, Reuters reported, as the El Niño weather pattern dampened precipitation. The country received 12.6% below average rainfall during the season, the report said,citing an official from the state-run India Meteorological Department.
Malaysian palm oil extends declines… Malaysian palm oil futures extended recent declines to hover near MYR 4,600 a ton to trade at their weakest since mid-July, pressured by weaker soyoil prices and sluggish exports, according to Trading Economics. The report noted that cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia saw Malaysian palm oil product exports down 17.1% to 28.8% month-on-month in September, while inventories hit an eight-month high in August and were expected to top 3 million tons in September. At the same time, palm oil production in Malaysia was up 20.8% in the first 25 days of September, adding to supply pressure.
Corn slump buoys cattle… December live cattle rose $1.90 to $222.70 on Wednesday, nearer the daily high and hit a two-week high. November feeder cattle gained $3.40 to $334.30, nearer the session high and hit a nine-week high.Cattle markets saw more technical buying with price uptrends in place on the daily bar charts. Solid losses for corn on Wednesday gave an added lift to feeders. USDA Monday reported cash cattle trading last week averaged $220.67, down $1.20 from last week’s cash trade average of $221.87. The noon report Wednesday showed mixed boxed beef prices, with Choice grade up $0.01 at $382.67 and Select grade down $2.41 at $362.07.
Hog market pauses… Lean hog futures edged lower Wednesday and a bearish price trend remains in place. But cash hot fundamentals may be stabilizing. The latest CME lean hog index is down $0.27 at $80.94. Thursday’s projected CME index price is up a penny at $80.95.