Good morning!
Grain futures weaker overnight… As of 6:00 a.m. CDT, December corn was down 1 3/4 cents. January soybeans were 9 1/2 cents lower. December HRW and SRW wheat futures markets were down 7 1/4 to 8 cents.The grain futures markets today are seeing corrective price pullbacks that are arguably healthy in their existing price uptrends. Corn, soybeans, meal and winter wheat futures markets bulls still have the overall near-term technical advantage. That means the path of least resistance for prices remains sideways to higher in the near term. The key outside markets early this morning see the U.S. dollar index lower. Nymex crude oil prices are firmer and trading around $60.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.14 percent.
Chilly weather coming for much of the U.S. Friday and over the weekend… The National Weather Service today said that across the continental U.S. through Friday the primary weather features will be a new quick-hitting atmospheric river in the Pacific Northwest and a new set of cold fronts moving through the Midwest/Great Lakes and into the eastern U.S. High pressure will largely control the weather pattern across much of the Southwest U.S. and out across the southern Plains, resulting in pleasantly warm and dry conditions. Temperatures today are expected to be above normal for this time of year. However, by Friday, a strong cold front moving in from Canada will allow for much colder temperatures to surge into portions of the Dakotas, and especially the Upper Midwest, which will set the stage for a cold start to the weekend with below normal temperatures. Low pressure associated with the inclement weather across the West will be ejecting out across the northern Plains and Midwest by Saturday and this will set the stage for at least a swath of light snowfall north of the low track. Returning moisture ahead of these fronts will set the stage for showers and thunderstorms to impact much of the Ohio and Tennessee Valley region. Rain will also overspread portions of the Great Lakes and the Northeast. There may be some severe weather focused across portions of the Ohio and Tennessee Valleys in particular.
U.S. Supreme Court listens to Trump tariff arguments with skeptical ears… President Trump’s tariffs faced a barrage of skeptical questions at the Supreme Court Wednesday that signal it may be ready to intervene. “Businesses and countries suffering from the duties and looking for resolution, though, are set for months of uncertainty,” said a Bloomberg report. “Whether or not the high court rules Trump wrongly imposed tariffs on dozens of nations by invoking the 1977 International Emergency Economic Powers Act, the reality is that the president loves tariffs. And trade lawyers and experts say there are plenty of other laws he can draw on to fill the gap if needed, even if none offers the immediacy Trump relishes,” said Bloomberg. “That means uncertainty will hang over big geopolitical negotiations with China, the European Union and other trading partners, and the day-to-day conduct of business for the thousands of companies paying the duties or trying to find ways around them. Betting markets late Wednesday showed declining odds that Trump will prevail, and shares of large U.S. retail brands rallied on hopes for relief from import taxes he imposed this year,” said the report. The Trump administration put on a brave face after Wednesday’s 2 1/2-hour arguments, which featured skeptical questioning by key conservative justices of the government’s case. Speaking in an interview with Fox News, Trump said that he was told the case “went well” and warned that the “entire world would be in a depression” had he not been able to implement the levies on goods from trading partners. “It’s one of the most important, maybe the most, but one of the most important cases in the history of our country,” Trump said and as reported by Bloomberg.
U.S. flights to be reduced by 10% at high-volume airports…The U.S. Department of Transportation and the Federal Aviation Administration will cut flight capacity by 10% at 40 high-volume markets to alleviate pressure on air traffic controllers and the aviation system during the U.S. government shutdown. The reductions will be staggered, with U.S. carriers informed to cut flight volumes by 4% on Friday and 5% on Saturday, building to 10% sometime next week. International flights won’t be affected. The cuts are necessary to maintain air travel safety, according to Transportation Secretary Sean Duffy, who said “the data will dictate what we do” and additional restrictions could be seen if the data goes in the wrong direction. This news likely puts more pressure on U.S. lawmakers to reopen the federal government.
Saudi Arabia reduces its crude oil price to 11-month low… Saudi Arabia lowered the price of its main oil grade to Asia for December to the lowest level in 11 months, days after OPEC+ signaled a cautious approach by pausing its supply increases for early next year. State producer Saudi Aramco will cut the price of its flagship Arab Light crude by $1.20 a barrel to a premium of $1 above the regional benchmark for next month, according to a list seen by Bloomberg. Aramco was expected to trim the price by $1.25, according to a survey of refiners and traders. Saudi Arabia and some other key OPEC+ members said on Sunday they would halt their output increases during the first quarter — after making another modest hike in December — as they try to balance a push for market share against signs of an emerging surplus. The hiatus comes during a period of weaker seasonal demand, and as the market closely watches how U.S. sanctions on Russia’s two biggest oil producers impact supply, said the Bloomberg report.
U.S. layoffs in October at 22-year high for that month; AI to blame… U.S. companies announced the most job cuts for any October in more than two decades as artificial intelligence reshapes industries and cost-cutting accelerates, according to data from outplacement firm Challenger, Gray & Christmas Inc. U.S. companies last month announced 153,074 job cuts, nearly triple the number during the same month last year and driven by the technology and warehousing sectors. It’s the most for any October since 2003, when the advent of cellphones was similarly disruptive, said Andy Challenger, the company’s chief revenue officer. “Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes,” Challenger said in the report. “Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market.” Year-to-date U.S. job cuts have exceeded 1 million, the most since the pandemic. In the same period, U.S.-based employers have announced the fewest hiring plans since 2011. Seasonal hiring plans through October are the lowest since Challenger started tracking them in 2012.
Bumper India rice crop pressuring global rice prices… Rice prices in Asia are poised to fall further as a bumper Indian rice harvest adds to plentiful global supplies, while the world’s biggest importer curbs its overseas purchases to support local farmers, reports Bloomberg. Some importers are currently sitting on rice inventories that cover three to five months of consumption, said Nitin Gupta, the deputy country head at Olam Agri India Pvt., citing countries in West Africa. The market is facing a swelling surplus, which will weigh on regional prices, he added. Asia’s benchmark rice price dropped to a 10-year low last month, offering relief for household budgets but squeezing the income of farmers from India to Thailand. The Philippines, the world’s top buyer, plans to broadly extend its ban on overseas purchases until April to support its agricultural industry. Benchmark Thai white rice 5% broken fell to $351 a ton on Oct. 22, according to the Thai Rice Exporters Association, the lowest since September 2015. Millers in Thailand, Pakistan and Myanmar are offering white, parboiled and broken varieties at prices at least 3% cheaper than Indian supplies, Gupta said in an interview on the sidelines of a conference in New Delhi last week, the Bloomberg report said. Global rice output is forecast to reach a record 556.4 million tons in 2025-26, according to the United Nations’ Food and Agriculture Organization. Farmers in the South Asian nation started harvesting their crop in late September, with collection due to finish by the end of the year. “The bearish trend will persist as India is producing too much rice,” said Samarendu Mohanty, a former senior economist at the International Rice Research Institute. Domestic prices could drop another 10% to 15% due to oversupply and soft overseas demand, he added and as reported by Bloomberg.
Malaysian palm oil futures firmer… Malaysian palm oil futures on Thursday hovered above MYR 4,100 per MT, partly recovering from losses in the previous session, supported by strength in rival edible oils on the Dalian exchange. Prices tried to emerge from a recent 12-week low amid bargain hunting and stronger October export estimates, with cargo surveyors reporting shipments up between 4.3%–5.2%. However, the contract is on course for a third straight weekly fall, pressured by growing caution ahead of key October trade and inflation data from China, a major consumer. Meanwhile, expectations of increased rapeseed oil supply from India, driven by record planting this year, could add further pressure to palm oil sentiment. India’s palm oil imports dropped to a five-month low in October, pushing total purchases for the 2024/25 marketing year to their lowest level in five years. Separately, Reuters projected Malaysia’s palm oil stockpiles likely rose 3.5% in October to 2.44 million MT, the highest since October 2023.
Expanded daily trading limits today for beleaguered cattle futures markets… December live cattle on Wednesday fell the $7.25 daily limit to $220.525 and hit a 3.5-month low. January feeder cattle fell the daily trading limit of $9.25 to $319.975 and hit a three-month low. Daily trading limits will be expanded today. The live and feeder cattle futures markets Wednesday saw heavy technical selling pressure before locking down the daily trading limits. Price action this week has seen bearish downside “breakouts” from pennant patterns that formed on the daily bar charts for live and feeder cattle futures. Measuring implications from these bearish chart patterns suggest significantly more downside price potential in both markets in the near term. Meantime, World Weather Inc. says said extreme low temperatures this weekend may slip to the upper single digits and teens in a part of the northern Plains and immediate neighboring areas, especially if light snow accumulates in the region—potentially causing some livestock stress. Low temperatures in the remainder of the northern and central Plains and western Midwest will slip to the teens and 20s, with Sunday coldest in the northern and central Plains and the western Midwest coldest Monday. USDA Wednesday reported very light cash cattle trading activity at an average of $235.00. Last week’s USDA average cash cattle trade was $230.86 versus the week prior’s average of $237.89.
Lean hog futures see short-covering rebound Wednesday… December lean hogs Wednesday rose 67 1/2 cents to $80.60. The lean hog futures market Wednesday saw short covering and perceived bargain hunting after prices Tuesday hit a 3.5-month low. The cash hog market appears to be stabilizing, which also encouraged the hog futures bulls. Bulls also got some help from December hog futures’ discount to the cash index. The latest CME lean hog index is down another 8 cents at $90.90. Today’s projected cash hog index is down 4 cents at $90.86. Wednesday’s national direct 5-day rolling average cash hog price quote was $84.70.