Good morning!
Grain futures edge lower… As of 6 a.m. CT, December corn was off ¼ cent. November soybeans fell 8 ½ cents, with December soybean meal down $1.70 and December soybean oil declining 88 points. December soft red winter wheat was off ¼ cent, while December hard red winter wheat lost 1 ½ cents. Soy complex futures were undercut by a pullback in crude oil prices, while wheat futures were consolidating after hitting multi-month lows on reports Russia had opened the Sea of Azov to shipments. Weekly export sales data from USDA are due this morning.
In outside markets, Nymex WTI crude oil futures were down 1.6% at $101.18 a barrel after Vice President JD Vance was reported to have sought to revive talks with an Iran hardliner (see item below). The ICE U.S. Dollar Index was marginally lower. The yield on the 10-year Treasury note stood at 5.005%. U.S. stock index futures pointed to a lower start.
Vance sends letter to Iran hardliner… Vice President JD Vance sent a letter to Iranian security chief Mohsen Rezaei, one of the country’s most powerful hardliners, in a bid to revive peace negotiations, the Wall Street Journal reported Wednesday. The report said the letter was sent at President Donald Trump’s direction, noting that some U.S. officials say talking to Iranian hardliners, who have amassed power in Tehran since the war’s outset, might yield a better diplomatic result. Rezaei is secretary of Iran’s Supreme National Security Council, its top security body, and previously was the longest serving commander of the Islamic Revolutionary Guards Corps, the Journal said. Oil futures rose Wednesday after reports the U.S. and Israel are preparing to resume attacks on Iranian targets after next week’s U.S. midterm elections.
Fertilizer production threat… European natural gas prices broke above 100 euros per megawatt hour this week (equivalent to more than $30 per million British thermal units) for the first time since 2022, driven by fears of an imminent escalation in fighting in the Middle East and expectations for a cold snap to hit northwestern Europe next week. Surging natural gas prices are seen potentially leading European fertilizer producers to curtail production.
- “The key question is whether these higher prices will destroy demand...Chemical company Yara recently reported curtailments of ammonia production in Europe due to high gas prices,” said Warren Patterson, commodity strategist at ING, in a note. “This led the company’s European gas consumption to fall more than 7% YoY in 3Q26. This trend is expected across European industry, especially with gas prices even higher now.”
Bolsonaro declares himself ‘leader of Brazil’... Flavio Bolsonaro, who fled Brazil for Florida following his defeat in Sunday’s presidential election runoff, declared himself “leader” of the country, saying “I will lead the opposition from here.” Bolsonaro, who made allegations of election fraud, left the country after he was ordered by a Supreme Court judge to surrender his passports. Bolsonaro lost Sunday’s runoff to President Luis Inacio Lula da Silva. Rogerio Marinho, the leader of Bolsonaro’s Liberal Party in the Senate, told reporters in Brasilia that he was in “solidarity” with the former candidate, describing him as a “political exile,” AFP reported. However, he distanced himself from Bolsonaro’s statement, and refused to back up Bolsonaro’s claims of electoral fraud. “The Liberal Party cannot make that claim,” Marinho said. “There is no evidence of that.” The Brazilian real plunged alongside Brazilian stocks and financial markets following Lula’s election victory, putting pressure on soy complex futures. The real has consolidated after Monday’s historic plunge.
Upper Midwest set for rains… Showers and thunderstorms will produce a multi-day flash flooding threat across parts of the southern High Plains and Southwest through the weekend, the National Weather Service said. A front extending from the upper Great Lakes to the southern High Plains will advance eastward off the Northeast coast by Friday evening. The system will produce rain with embedded thunderstorms over the upper Great Lakes and rain over the Lower Great Lakes through late Thursday night, the forecast said. Additionally, scattered light rain showers will develop over parts of the Northeast through Friday evening. Easterly flow off the Atlantic will bring rain with embedded thunderstorms over parts of Florida through Saturday.
Bunge tops Wall Street estimates… Grain trader Bunge topped Wall Street estimates for third-quarter adjusted profit on Thursday, Reuters reported, with the company benefiting from robust processing margins for soybeans and other oilseeds. Missouri-based Bunge posted an adjusted profit of $2.56 per share for the three months ended September 30, compared with analysts’ average estimate of $2.44 per share, according to data compiled by LSEG.
Fed stands pat, with 2 dissents… The Federal Reserve, as expected, left interest rates unchanged, but market participants see further tightening in the pipeline. The rate-setting Federal Open Market Committee voted 10-2 in favor of a hold, with two policy makers dissenting in favor of a quarter-point rate hike. In its policy statement, the Fed said, “Inflation remains elevated. The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation” to the Fed’s 2% goal.” Fed Chairman Kevin Warsh, in keeping with his aversion to forward guidance, said no conclusions were reached on whether more rate hikes were needed.
- “There was no hike in October, and the message from Kevin Warsh was balanced enough to keep December firmly in play without making the market feel as though the central bank has suddenly rediscovered its inner Volcker,” said Stephen Innes, managing partner of SPI Asset Management, referring to former Fed chief Paul Volcker who presided over aggressive rate hikes in the late 1970s and early 1980s that were credited with quelling runaway inflation.
NWS found in dog… A dog in Arizona was infested with New World screwworm, the first detection of the parasitic worm in the state. USDA said the Animal and Plant Health Inspection Service and Arizona authorities were implementing a response in line with the agency’s NWS response playbook, including establishing a 20 kilometer infested zone around the latest detection, increasing live animal surveillance and trapping, releasing sterile flies, and contacting local producers, veterinarians and communities. Since the first detection of NWS in the U.S. in June there have been a total of 71 cases, with 18 currently active.
Group urges rejection of UPF white paper… A group of 16 organizations is urging the Office of Management and Budget to reject the Department of Health and Human Services and Food and Drug Administration’s proposed white paper defining ultraprocessed food, Agri-Pulse reported. Ross Marchand, executive director of Taxpayers Protection Alliance, one of the groups that signed the letter to OMB Director Russ Vought, said there’s no evidence linking food processing to the overall healthiness of food.
Rural bank CEOs grow more downbeat… The October Creighton University survey of rural bank CEOs in 10 agricultural and energy-dependent states saw the Rural Mainstreet Index sink to 42.5, marking its fifth month below growth neutral in the past six. High diesel and fertilizer prices driven by supply chain disruptions continue to suppress economic confidence, which sits at 27.5. Conversely, farmland values edged higher to 50.3 due to a positive long-term agricultural outlook, while farm equipment sales remained weak for the 38th consecutive month at 36.8.
ECB President Lagarde to step down… European Central Bank President Christine Lagarde announced Thursday that she will step down from her position on Feb. 7, according to an ECB statement. Lagarde succeeded Mario Draghi as ECB chief in 2019. Her term was due to end in October 2027. Her early departure will intensify a political battle among eurozone member countries to name her successor.
Palm oil sees 2-week low… Malaysian palm oil futures dropped more than 1.5% to trade near MYR 4,600 a ton, extending a recent decline to hit their lowest since mid-October, according to Trading Economics. The report said a stronger Malaysian ringgit and weaker Dalian palm oils and Chicago soybean oil weighed on sentiment, while a pullback in crude prices reduced palm oil’s appeal as a biodiesel feedstock.
Profit-taking pressures cattle… December live cattle fell $3.525 to $227.325 on Wednesday. November feeders declined $3.275 to $346.75. Routine profit-taking pressure weighed on cattle after moves to recent highs. Bulls will want to see the market avoid follow-through selling Thursday or Friday. Cash trade was very light at midweek, averaging $228.40, while the midday report on Wednesday showed lower boxed beef prices.
Hog futures extend slide… December lean hog futures dropped $3.425 to $58.60 on Wednesday, marking another contract low. Pro Farmer technical consultant Jim Wyckoff says this week’s downside moves suggest a “washout” that, from a time perspective, signals a market bottom is close at hand. Cash fundamentals remain weak. Thursday’s projected CME index price is down $1.06 at $68.30.