Good morning!
Grain markets see follow-through selling overnight… As of 6:00 a.m. CDT, December corn was down 2 1/4 cents and hit a four-week low. November soybeans were down 5 1/2 cents and scored a six-week low. December HRW and SRW wheat futures markets were around 5 cents lower and hit fresh contract lows. A mostly bearish USDA quarterly grain stocks report on Tuesday delivered a body blow to the grain futures markets, inflicting fresh technical damage that suggests more downside price pressure in the near term. The U.S. government shutdown has added some more risk aversion to the general marketplace at mid-week, to also keep speculative grain bulls in check. Corn and soybean market bulls now have an even tougher row to hoe right during harvesting of big U.S. crops. The key outside markets today see the U.S. dollar index slightly weaker. Nymex crude oil prices are lower and trading around $62.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.152 percent.
U.S. government shuts down… A midnight U.S. government funding deadline passed with no agreement among Congress members, triggering the government’s first shutdown in nearly seven years and shuttering the government, aside from essential duties. The shutdown could be prolonged due to a stalemate over health care subsidies, with the White House’s budget office ordering agencies to begin executing their plans for a funding lapse. The shutdown would disrupt the jobs of hundreds of thousands of Americans, upend many public services and could have economic effects, including a potential spike in the unemployment rate and delays in key economic data, including this Friday’s Labor Department employment situation report for September.
Gold at record high as bulls eyeing $4,000 … The U.S. government shutdown and other geopolitical concerns have pushed the price of gold to a new all-time high above $3,900.00 overnight. The yellow metal is now in easy striking distance of $4,000.00 an ounce. Gold has soared more than 48% this year, putting it on track for the biggest annual gain since 1979. Silver prices overnight scored a 14-year high near $48.00 an ounce and are closing in on the all-time record high of just above $50.00, hit in 1980.
Summertime returns to the Midwest… The National Weather Service today reports a highly amplified upper-level high-pressure ridge located over the heart of North America has been responsible for the unseasonably hot weather across a large portion of the country east of the Rockies the last few days. With the ridge forecast to go nowhere anytime soon, this summer-like heat will continue through at least the end of the week. This will especially be the case from the northern/central Plains to the upper Midwest, where high temperatures will soar well into the mid/upper 80s and low 90s. These temperatures are roughly 15 and 25 degrees above normal, making for a toasty end of September and start to October. A few daily high temperature records could fall this weekend as a result. This weather pattern will keep the combines rolling strong in corn and soybean fields.
No China purchases of U.S. ag products anytime soon: U.S. ambassador to China… Republican lawmakers said China won’t begin purchasing U.S. agricultural products anytime soon after a briefing from David Perdue, the U.S. ambassador to China. “We recognize that China has intentionally not bought farm goods. We don’t expect them to change that. That’s part of the long-term stuff,” Senator Mike Rounds, a South Dakota Republican, said after the briefing Tuesday and as reported by Bloomberg. China has yet to book a single shipment of U.S. soybeans this new marketing year. Rounds said China has intentionally not bought U.S. farm goods and is not expected to change that. The U.S. and China are in a trade détente until November. President Trump expects to meet with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation summit in late October to discuss trade. The Chinese are “using farmers as leverage in this negotiation,” said Senator John Hoeven, a North Dakota Republican. “We have to make sure we keep our farmers in the game. We have to take steps so that (China) can’t exploit any weaknesses.”
Crude oil glut may drop prices into the $50s per barrel… One firm is forecasting crude oil prices to drop into the $50s a barrel range in the coming quarters on expectations for “punishing oversupply” as output expands. Macquarie Group analysts remain “fundamentally bearish the energy complex” due to crude-supply growth from OPEC-plus and drillers outside the group, as reported by Bloomberg. A global crude surplus is projected, with Macquarie forecasting a surplus of 4.63 million barrels a day in the first quarter of next year, followed by smaller surpluses in each of the next three quarters. Last month, the International Energy Agency projected that world output would exceed consumption by an average of 3.33 million barrels a day in 2026. That would be a historic overhang in annual terms.
Malaysian palm oil futures rise… Malaysian palm oil futures rose modestly Wednesday to around MYR 4,370 per MT, snapping a three-session fall as a weaker ringgit supported prices. Meanwhile, the Malaysian Palm Oil Board projected that stocks could fall to 1.7 million MT by year-end, with output easing seasonally and exports rising on festive demand. In India, the world’s largest edible oil importer, authorities raised base import prices for some commodities, including all vegetable oils, to reflect higher global benchmarks. Edible oil imports there are expected to hit a record 17.1 million MT in 2025/26. Separately, top producer Indonesia set its crude palm oil reference price at USD 963.61 per MT for October, up from USD 954.71 in September.
Cattle futures markets rebound… The feeder cattle futures market showed very good strength Tuesday, while live cattle futures showed more modest strength. Feeders were boosted by ongoing tight cattle supplies as the New World Screwworm matter continues to keep Mexican cattle out of the U.S. The cattle and fresh beef market fundamentals have weakened recently. Consumer sentiment has also deteriorated the past week as the U.S. government has now shut down and the Trump administration is threatening mass firings in federal agencies. Also, the latest U.S. consumer confidence reading on Tuesday came in at a five-month low. That could keep the cattle futures bulls more tentative the rest of this week. USDA reported cash cattle trading last week averaged $232.65, down $4.86 from the week prior. No cash cattle trading has been reported so far this week.
Profit taking in lean hog futures… The lean hog futures market on Tuesday saw more routine profit-taking pressure following recent gains that saw December hogs hit a contract high last Friday. The bulls are still strong but do not want to see more selling pressure today that would mark three down days in a row and begin to suggest a market top is in place. Futures’ discounts to the cash hog index should continue to limit selling interest in futures. However, cash and fresh pork fundamentals are starting to weaken. The latest CME lean hog index is down 5 cents at $104.78. Today’s projected cash hog index is down 5 cents at $104.73. Tuesday’s national direct 5-day rolling average cash hog price quote is $103.14, down over $1.00 from Monday’s quote.