Good morning!
Grain futures show follow-through strength overnight… As of 6:00 a.m. CST, December corn was up 1 1/4 cents. January soybeans were 3 1/4 cents higher and hit another 17-month high overnight. December HRW and SRW wheat futures markets were up 1/2 to 1 3/4 cents. After last Friday’s beat-down, the grain market bulls could not have asked for a better trading day on Monday. Monday’s price action suggests the grain futures markets have good underlying strength and that bulls are confident to step in and buy the dips. Corn, soybean and meal futures markets are enjoying near-term price uptrends, while the wheat bulls are working on restarting their near-term price uptrends. The key outside markets early this morning see the U.S. dollar index near steady. Nymex crude oil prices are near steady and trading around $60.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.1 percent.
Rain and snow showers across much of the central United States… The National Weather Service today said low pressure over the middle Mississippi Valley will advance eastward to off the Mid-Atlantic Coast by Wednesday. Light snow will develop along the northern edge of the precipitation shield over parts of the Upper Mississippi Valley/Great Lakes, extending into parts of the Ohio Valley today. Rain and a few embedded thunderstorms will develop over parts of the Ohio Valley today, tapering off by Wednesday. In addition, rain will move into the Central Appalachians and Mid-Atlantic this afternoon, continuing into Wednesday morning before tapering off. Rain and showers are forecast for much of the Midwest today.A second area of low pressure will develop along the western edge of the front over the Southern Plains on Wednesday morning. The low will move northeastward to the central Plains/Middle Mississippi Valley by Thursday. Showers and thunderstorms will develop along the boundary over the southern Plains on Wednesday, expanding into parts of the middle/lower Mississippi Valley by Thursday. On Wednesday afternoon, a front over South-Central Canada will move into the Upper Mississippi Valley, producing light rain over parts of the Upper Mississippi Valley/Upper Great Lakes on Wednesday evening into Thursday.
China buying U.S. soybeans this week… China has bought nearly 1 million MT of U.S. soybeans, a move that ends a temporary pause and appears to signal commitment to a trade truce agreed late last month. State-owned agriculture trader Cofco Group booked nearly 20 cargoes of U.S. soybeans on Monday for delivery in December and January, according to people familiar with the matter who asked not to be identified because they’re not authorized to speak to media, and as reported by Bloomberg. The shipments were from Pacific Northwest ports and Gulf Coast terminals in the U.S., they said. The purchases have reignited market optimism around the soybean trade between the two agricultural powerhouses, which was worth more than $12 billion last year and will underpin any trade agreement. Cofco did not immediately reply to a request for comment. Beijing’s latest purchases still leave plenty to be done in the coming months, however, at a time when stockpiles are plentiful. Washington has said Beijing pledged to buy 12 million MT of U.S. soybeans by end of this year, followed by 25 million MT annually over the next three years. While China has yet to confirm the specific purchase commitments, it has moved to reduce tariffs on the crop and lifted import bans on three American exporters, including CHS Inc., reciprocating similar conciliatory actions from the U.S.
U.S. jobless claims on the rise… Initial jobless claims in the U.S. totaled 232,000 for the week ending October 18th, remaining firmly above the averages from the period since the end of the second quarter. It was the first data update by the Department of Labor since the U.S. government shut down its federal operations the first day of October, which risked the employment standing for a large portion of federal government workers. With the new entries, outstanding unemployment claims rose to 1.957 million in the previous week on non-seasonally adjusted basis, remaining relatively close to the highest level since 2021, and aligning with other evidence of lower hiring activity in the U.S. economy, according to the U.S. Department of Labor.
U.S., global stock markets turn wobbly… Following a rout in the U.S. stock indexes on Monday, stock markets sold off across the globe overnight. “The artificial intelligence trade has started to wobble as investors worry the amount of borrowing needed to fund its buildout will become a burden. Just Monday, Amazon.com Inc. tapped the credit market for $15 billion in a bond sale. The U.S. economy is showing signs of slowing, particularly in the labor market, and low-end consumers appear increasingly under pressure. With technical indicators also flashing warnings — both the S&P 500 and Nasdaq 100 closed below their average price for the past 50 days, for example — Wall Street strategists are questioning whether a year-end rally is in the cards,” Bloomberg reported overnight. “The rest of the week is shaping up as critical for any run back toward all-time highs. Consumer giants like Walmart Inc., Home Depot Inc. and Target Corp. will deliver results and commentary on the looming holiday shopping period. Nvidia Corp. is the last of the big seven to give its business update. And government economic data, absent for the past seven weeks, will begin trickling out.” Bitcoin’s slide below $90,000 worsened a slump across global financial markets, fueling concern that leveraged investors would set off a spiral of selling pressure. “The decline of the world’s most popular cryptocurrency comes as investors fret about the pace of U.S. interest rate cuts and shift their focus to high-profile earnings. A sell-off across markets can become self-reinforcing even without the amplifying effect of leverage, with cryptocurrencies having boomed alongside stocks this year before hopes started to fade,” said Bloomberg.
“Sell Japan” trade emerges… Japanese stocks and government bonds extended losses today on concerns about a diplomatic spat between Japan and China, and fiscal health at home. Investor worries deepened that a coming economic package from Prime Minister Sanae Takaichi would strain Japan’s public finances, causing longer-maturity government bonds to tumble. Concerns about lofty tech valuations also weighed on Japanese stocks, with AI-related stocks dragging down the Topix and chip-gear makers among the Nikkei’s worst performers. “There’s rising uncertainty about government finances, as well as nerves around Japan’s relationship with China,” said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan Ltd. “Overall market sentiment is worsening, and it’s fueling a ‘sell Japan’ movement,” he added and as reported by Bloomberg.
China stocking up on gold… China added an estimated 15 tons of gold to its forex reserves in September as central banks accelerated their purchases of bullion after a seasonal summer lull, according to Goldman Sachs Group and as reported by Bloomberg. Analysts estimated that central banks globally bought 64 tons of gold in September, more than tripling from the month before. The buying spree is likely continuing in November, according to Goldman. “Central-bank buying has been a key driver of gold’s ferocious run in the past three years, with prices reaching all-time highs above $4,380 an ounce in October before pulling back in recent weeks. Despite the sovereign purchases’ key role in gold’s prices, they are shrouded in mystery as countries often under-declare their buying,” said the Bloomberg report.
Malaysian palm oil futures rise… Malaysian palm oil futures held above MYR 4,150 per MT on Tuesday, sustaining gains from the prior session and rebounding from a four-month low hit last week. A weaker ringgit supported sentiment, while firmer Dalian oils provided further lift after Reuters said that China’s state-owned trader COFCO purchased at least 14 cargoes of U.S. soybeans for December–January shipment. However, upside was limited after the Malaysian Palm Oil Board announced a lower crude palm oil reference price for December. In India, the largest buyer, palm oil imports fell to a five-month low in October as buyers shifted to soybean oil amid higher palm prices, with 2024/25 imports down 16% to a five-year low of 7.56 million MT. Meanwhile, cargo surveyors estimated Malaysian palm oil product exports for November 1–15 fell 10% to 15.5% from the previous month. Additional pressure came from policy uncertainties in top producer Indonesia, including land-seizure issues and its biodiesel mandate.
Cattle futures bulls starting to dig out of their hole… December live cattle on Monday rose $2.125 to $221.275. January feeder cattle gained $5.725 to $326.275. The live and feeder cattle futures bulls Monday showed needed strength as they try to halt the near-term price downtrends. However, weakening cash cattle prices are likely to limit the upside potential in cattle futures in the near term. USDA at midday Monday reported last week’s average cash cattle trading price was $225.06, down $3.64 from the week prior.
Lean hog futures pause to begin the trading week… December lean hogs on Monday rose 7 1/2 cents to $78.575. The lean hog futures market Monday saw a pause in the near-term price downtrend, but the market still looks heavy. Steadily falling cash hog prices and weakening pork cutout values limited the upside in futures Monday. The latest CME lean hog index is down another 89 cents at $87.94. Today’s projected cash hog index is down 94 cents at $87.00. Monday’s national direct 5-day rolling average cash hog price quote was $81.50.