Good morning!
Grain futures weaker overnight… As of 6:00 a.m. CST, March corn was down 2 3/4 cents and hit a five-month low. March soybeans were down 7 1/4 cents, while March SRW and HRW wheat futures were down 2 to 4 cents. The grain markets overnight saw follow-through selling pressure after Monday’s USDA data that leaned mostly bearish—especially for corn. It’s very likely the corn bulls are going to have to right their ship before the wheat and soy markets can also begin to recover. And if the corn market continues to see price erosion so, too, would wheat and soy markets. The key outside markets today see the U.S. dollar index slightly up. Nymex crude oil futures prices are higher and trading around $60.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.2 percent.
Warmer today but wintry weather headed for parts of the Midwest… The National Weather Service reports unseasonably mild weather will persist across much of the lower 48 states today. Highs over parts of the nation’s heartland could climb into the 50s and even upper 60s this afternoon--25-30 degrees above average. However, the passage of a modest cold front this evening will kick off a cooling trend east of the Mississippi River. Much colder air arrives tomorrow as a secondary cold front wraps around a deepening cyclone in Quebec, where highs could dip into the 20s and 30s on Thursday over parts of the Ohio Valley and Appalachians. The cold air provided by tomorrow’s front will also spread wintry weather from the Midwest into the Appalachians and Northeast. Heavy lake-effect snow is expected to begin tomorrow morning downwind of Lake Michigan over parts of northern Indiana and southwest Michigan. Otherwise, impacts from this event on Thursday appear minor, although some uncertainty remains with the forecast.
Trump’s latest tariff threat may undermine U.S.-China trade truce… President Trump’s announcement on Monday of new tariffs on goods from countries trading with Iran risks derailing his one-year trade truce with China, the world’s top buyer of Iranian oil. “Any Country doing business with the Islamic Republic of Iran will pay a tariff of 25% on any and all business being done with the United States of America,” Trump posted on social media Monday and as reported by Bloomberg. The levy is “effective immediately,” he added, without elaborating on the scope or implementation of the charges. It’s unclear if Trump will stack the latest tariffs on top of existing rates or announce carve-outs for China, after his administration previously signaled higher fees could inflict domestic pain. If the U.S. doesn’t respect its deal with China, Beijing has the right to take “appropriate action,” said Zhou Mi, a senior researcher at a think tank affiliated with the Ministry of Commerce. Trump has said he was mulling potential options in response to reports of deadly crackdowns on Iranian demonstrators. China will protect its rights and interests, Foreign Ministry spokeswoman Mao Ning said Tuesday at a regular press briefing in Beijing, when asked about Trump’s tariff remarks. Earlier, China’s embassy in Washington slammed Trump’s threats as “coercion” in a statement to the South China Morning Post, vowing that Beijing would “take all necessary measures to safeguard its legitimate rights,” Bloomberg reported.
Growing civil unrest in Iran; at least 648 killed… Iranian protests appeared to persist in localized pockets overnight as an activist group warned of imminent executions by the state and said the civilian death toll from the unrest could be in the thousands, Bloomberg reports. The Oslo-based Iran Human Rights group said at least 648 people had died in the protests, while estimating the toll could be as high as 6,000. The group warned the “risk of mass and extrajudicial executions of protesters is extremely serious.” In one video that’s been verified by the BBC as coming from a mortuary on the outskirts of Tehran, at least 180 bodies can be seen. The US-based Human Rights Activists News Agency reported that more than 10,700 people had been detained in connection with protests by Monday, and put the death toll at 646. German Chancellor Friedrich Merz said Iran’s regime is in its “final days” due to mass protests. Merz’s comments came as politicians and investors weigh the possibility of the Islamic Republic’s collapse and its consequences on geopolitics and energy markets.
U.S. consumer price index on deck… The annual inflation rate in the U.S. likely remained at 2.7% in December, while the core rate probably edged up to 2.7% from 2.6% in November, which was the lowest level since early 2021. On a month-over-month basis, today’s headline CPI is expected to have increased by 0.3%, with core CPI (minus food and energy) also seen rising by 0.3%, driven mainly by higher goods prices. Month-over-month figures for November were not published by the Bureau of Labor Statistics, as the agency was unable to collect data during the government shutdown. The December report may point to a reversal of the downward inflationary pressures observed in November. However, concerns over data quality remain as distortions linked to the shutdown may still be affecting the figures, according to TradingEconomics.com.
World’s central bankers back Fed’s Powell… Global central bankers threw their support behind Federal Reserve Chairman Jerome Powell after the Trump administration ratcheted up its already unprecedented pressure campaign against the Fed. Reacting to the threat of criminal charges being leveled at Powell and the Fed, central banks, including the European Central Bank and the Bank of England, said in a statement they “stand in full solidarity” with the Fed and Powell. Powell, himself, has also adopted a combative tone in recent days, accusing President Trump of seeking to wrest control over U.S. monetary policy after complaining for months that interest rates are too high.
Malaysian palm oil futures trade higher… Malaysian palm oil futures rose near 1% to near MYR 4,130 per MT on Tuesday, extending gains from the prior session and notching a five-week top amid firmer edible oils on the Dalian and Chicago markets. The latest monthly data from the industry regulator showed December production fell 5.5% from a month earlier to 1.83 million MT, tightening supply conditions ahead of the Lunar New Year and Ramadan. Meanwhile, shipments rose 8.5% to 1.32 million MT in December after earlier weakness. Separately, cargo surveyors noted that exports of palm oil products for January 1–10 jumped between 17.7% and 29.2% from December. Buying interest strengthened in India, the world’s largest importer, where purchases are expected to rise in January after hitting an eight-month low in December. However, upside was tempered by a stronger ringgit, caution ahead of upcoming data due this week from key buyer China, and uncertainty over the pace of the B50 biodiesel plan in top supplier Indonesia.
Cattle futures rebound… February live cattle on Monday rose $1.525 to $235.25. March feeder cattle gained $1.475 to $356.175. The cattle futures markets saw corrective bounces from Friday’s losses. Bulls were impressive Monday, after Friday’s technically bearish weekly low closes that seemingly gave the bears the edge to start the trading week. Beef packer margins that are presently in the red did and that somewhat limited buying interest in cattle futures Monday. USDA reported cash cattle trading last week average at $231.86, which is up 18 cents from cash cattle trade the prior week at $231.68.
Lean hog futures see profit taking, weak long liquidation… February lean hog futures on Monday fell 87 1/2 cents to $84.425 and hit a three-week low. The market saw profit taking and weak long liquidation, amid a backslide in the cash hog market and the CME lean hog index. Futures traders may also be thinking the February lean hog futures contract’s premium to the latest CME lean hog index had gotten too rich. The latest CME lean hog index is down 13 cents to $80.85. Today’s projected cash index price is down another 25 cents at $80.60. Monday’s national direct 5-day rolling average cash hog price quote was $68.56.