Good morning!
Corn, soybeans extend slide… As of 6 a.m. CT, December corn was down 1 ½ cents. January soybeans dropped 9 cents, December soybean meal was $1.70 lower and December bean oil dropped 63 points. December soft red winter wheat was unchanged and December hard red winter wheat gained 3 ¼ cents.
Pre-election jitters were seen adding to a negative tone for the ag complex in recent sessions, with bulls hoping the lifting of uncertainty around the outcome would provide relief, reviving risk appetite in broader financial markets. U.S. stock index futures did reverse back to the upside and point to a solidly higher start Wednesday morning after an initial drop. That won’t hurt, but grain and soy complex futures continue to trade heavy. Bears are targeting the June low of $4.25 ¾ for corn, while November soybeans could test the psychologically important $12 level.
In outside markets, U.S. stock index futures point to a higher start, reversing sharp losses for tech stocks seen as results initially pointed to a blue wave. The ICE U.S. Dollar Index is down 0.4%, while the 10-year Treasury yield has declined 3.6 basis points to 4.938%. Nymex WTI oil futures are down 1% at $95.15 a barrel.
Democrats take Congress… Democrats on Tuesday won control of Congress in a stunning manner, flipping seats in districts and states previously viewed as solidly Republican. Several key farm-state races broke Democratic, with the party winning Senate seats in Michigan, Texas, Iowa, Ohio, South Carolina, North Carolina. In Kansas, challenger Adam Hamilton was the first Democrat to be elected to the Senate since 1932. With some races still too close to call, Democrats are seen holding at least 225 seats – 218 are needed for a majority. With races in Mississippi and Alaska yet to be determined, Democrats so far hold a 54-44 edge in the Senate. The vote was widely seen as a rebuke to President Donald Trump amid frustration over the Iran war and surging fuel prices, as well as other affordability issues. Rural voting districts and states were widely focused on amid signs that previously solid support for Republicans could ebb due to anger over beef imports, as well as surging diesel costs and the high price of inputs. Trump, in a Truth Social post, argued the results weren’t about him. “I wasn’t on the Ballot and if I was, we would have won in a LANDSLIDE!”, he wrote. Trump told the Wall Street Journal in an interview, however, that Iran likely was partly to blame for the outcome but that he didn’t regret launching it.
What’s next for farm bill?... Democrats are seen as likely to want to hold off on working on the farm bill during a lame duck session. The House passed a farm bill earlier this year while Senate legislation has cleared the chamber’s ag committee but hasn’t advanced to the floor. Senate Democrats, who have insisted on a two-year delay to SNAP cost-sharing requirements for states, may feel inclined to wait until the next Congress when they have more leverage. Also, getting a farm bill over the line in a time-constrained lame duck session may simply be too tall of a task, experts say.
Iran still a wild card… Iran’s chief negotiator on Wednesday said the U.S. midterm results underline U.S. voters’ rejection of the war, CBS News reported. Trump on Tuesday again said he didn’t plan to resume intensified attacks on Iran as both sides have emphasized prospects for talks. But despite the diplomatic push, ships have continued to come under fire in the Strait of Hormuz, CBS noted, with Iran’s Islamic Revolutionary Guard saying that four oil tankers caught fire after hitting mines in the waterway. Renewed attacks. News reports have said U.S. Gulf allies had continued to prepare themselves for a potential ramp up of fighting. “Asset prices will clearly prove far more sensitive to things like the destruction of Iranian oil facilities or the retaliatory attacks against other regional countries by Iran than how many Republicans lose their seat in government,” said Steve Barrow, head of G-10 strategy at Standard Bank in London, in a note.
Ukraine peace talks... Russia will hold three-way peace talks with Ukraine and the United States in Abu Dhabi from November 10-11, the Kremlin confirmed on Tuesday, according to a Reuters report. Vladimir Medinsky, an aide to Russian President Vladimir Putin, will serve as Moscow’s chief negotiator at the talks, Kremlin spokesman Dmitry Peskov told reporters on a conference call. While hopes for a breakthrough remain low, the talks have sapped war premium for wheat as well as corn tied to Black Sea bottlenecks that have curtailed grain exports from the region.
StoneX raises corn, soybean yields... StoneX on Tuesday estimated average U.S. corn yield at 183.1 bushels per acre,above USDA’s estimate of 181.2. Soybean yield was pegged at 55 bushels per acre versus USDA’s record 53.1 bushels.
Heavy rains for Mississippi Valley… A cold front approaching the Mississippi Valley will bring heavy rainfall and isolated severe thunderstorms to the region, the National Weather Service said. Thunderstorms will have the potential to produce isolated severe wind gusts and perhaps a brief tornado or two. The trailing cold front continues to track towards the Ohio Valley and Southeast. Showers and thunderstorms are expected to focus along the front for the next few days, while steady rainfall wraps around the associated surface low over the Upper Midwest and Great Lakes, the forecast said.
Brazil needs rain in north… Soybean and first-crop corn planting has advanced at a rapid pace in Brazil, thanks in part to a lack of regular rain in western and northern areas, said Andy Karst of World Weather on Tuesday. Greater rain is needed in those areas to improve soil moisture, while October rain – before the last week of the month – was greater than desired by farmers from southern Paraguay into Parana, Santa Catarina, and northern Rio Grande do Sul, though fieldwork advanced around the precipitation, he said. Frequent rain and sometimes heavy rain is expected into Saturday from Rio Grande do Sul into Parana and wheat harvesting will be stalled in much of the region, Karst said, while corn and soybean planting should resume when rain becomes less frequent Sunday into next week.
Palm oil futures weaker... Malaysian palm oil futures traded around MYR 4,500 per ton, touching their lowest in over a month. Losses in Dalian and Chicago edible oil markets and concerns over ample supplies weighed on sentiment, while palm oil stocks hit a record high in September, according to Trading Economics.
Live cattle see follow-through pressure… December live cattle fell $1.55 to $218.15 Tuesday, hitting a six week low. January feeder cattle fell $4.30 to $328.375,hitting a four-week low. USDA at midday Monday reported cash cattle trading last week averaged $223.65, which is down $3.41 from the week prior average of $227.06. USDA today reported no cash cattle trading activity so far this week
Lean hogs see short covering… Lean hog futures hit another contract low in early trade Tuesday but finished up $0.425 at $58.60 on mild short covering and perceived bargain hunting. Wednesday’s projected CME index price is down $0.76 at $64.99. The noon report Tuesday showed pork cutout up $2.24 at $74.52.