Good morning!
Grain prices mixed to firmer overnight… As of 6:00 a.m. CDT, December corn was down 1 cent, November soybeans up 2 1/4 cents and December winter wheat futures markets were 3/4 to 1 1/2 cents higher. The corn market bulls continue to enjoy a price uptrend in place on the daily chart for December futures. The chart-based speculators will continue to look to buy price dips in corn in the near term. The soybean market bulls faded badly last week and prices are now starting to trend down on the daily chart. The winter wheat futures markets continue to be mired in price downtrends, with new contract lows occurring nearly every week since mid-July. Grain traders’ focus this week will be on Friday’s monthly USDA supply and demand report. The key outside markets today see the U.S. dollar index slightly lower. Nymex crude oil prices are higher and trading around $63.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.089 percent.
Frost and light freezes in upper Midwest during the weekend… World Weather Inc. Sunday reported U.S. upper Midwest frost and light freezes during the weekend “likely had a very low impact on summer crop production.” Lowest temperatures were just slightly below freezing with most of that in eastern North Dakota and northern Minnesota. Most of the lowest temperatures were 30-32 degrees, while other readings were in the middle and upper 30s. Lowest temperatures in Iowa were mostly in the upper 30s and lower 40s with a few readings of 34, which may have resulted in light frost in the north part of the state. Saskatchewan, Manitoba, western North Dakota and eastern Montana with a few areas in northwestern Nebraska and neighboring areas of southwestern South Dakota reported lows in the upper 20s and lower 30s. Damage was greatest to immature late-season canola, corn and soybeans produced in southeastern Saskatchewan and to a lesser degree from central Saskatchewan to southern Manitoba. Damage in eastern Montana and western North Dakota “was light, although not absent, depending on the crop and the duration of subfreezing temperatures.” Meantime, for the next 10 days the U.S. lower and eastern Midwest, Delta and interior southeastern states will be drier than usual. Any showers that occur will be brief and light and unlikely to ease long-term dryness. “Summer crop yields and quality may decline additionally because of chronic dryness in the northern Delta, western Tennessee River Basin and lower Midwest,” said World Weather.
China soybean imports at a record high in August… China imported a record volume of soybeans for August to build a buffer against possible shortages as a protracted trade war with the U.S. — its second-largest supplier — drags on, reported Bloomberg. China, the world’s biggest soybean importer, purchased 12.28 million MT in August, the highest ever recorded for the month, shoring up local availability before U.S. supplies begin to dominate the global market. “China has traditionally sourced a large share of its soybean imports from the U.S., but ongoing trade tensions have pushed it to favor Brazil. The recent purchases reflect a strategic move to reduce reliance on the U.S. shipments ahead of the export season that’s expected to peak in the coming months,” said the report. Abundant imports, mainly from Brazil, have left Chinese crushers better prepared for a winter possibly without U.S. soybeans. China’s stockpiles of imported soybeans totaled about 6.8 million tons as of last Friday, near the highest since March, said Bloomberg.
China’s export growth continued to slow in August; imports rise a bit… China’s export growth slowed to the weakest in six months as a slump in shipments to the U.S. deepened again, although a surge in sales to other markets kept China on track for a record trade surplus of over $1.2 trillion this year. Overall Chinese sales abroad rose 4.4% in August from a year earlier to $322 billion, according to a statement from the General Administration of Customs on Monday. Exports to the U.S. fell 33%, the fifth month of double-digit declines. China’s imports climbed 1.3% in August, leaving a trade surplus of $102 billion. China’s surplus is still on course to exceed last year’s record of almost $1 trillion, with overseas sales making up for weaker domestic demand.
French government may collapse today… Prime Minister Francois Bayrou’s government will likely fall today, Bloomberg reports, a victim of his push to reduce France’s massive debt load. Bayrou will face a confidence motion in France’s lower house, a vote he called in a bid to pressure lawmakers to back his budget proposals. He said over the weekend that it was needed as a “clarification.” His plan may have backfired, however, as opposition parties in the National Assembly have mobilized against Bayrou’s minority government. “There are moments when we need a rude shock,” Bayrou told a French television station on Saturday. “There’s never been a situation as blindingly clear as this one.” Bayrou will make a policy speech starting at 3 p.m. Paris time, followed by interventions by the political groups in the National Assembly. The vote will take place in the evening, with the result expected between 8:00 and 9:00 p.m, said Bloomberg.
Downbeat U.S. jobs data Friday strengthens case for Fed rate cut next week… Friday’s jobs report showed the U.S. job market cooled further in August, with nonfarm payrolls rising by just 22,000, well below forecasts of 75,000 and a sharp drop from July’s revised 79,000. The U.S. unemployment rate edged up to 4.3%, the highest since 2021, signaling a slowdown in hiring momentum. That’s not good news for the U.S. economy and the stock market sold off following the news. Continued selling pressure in the stock market in the near term could crimp consumer confidence this fall, which would dampen consumer confidence. However, on the positive side of Friday’s jobs report, the markets read the data as meaning the Federal Reserve will cut interest rates by at least 0.75% by the end of this year. That should be friendly for consumers this fall, who will have lower borrowing costs. Lower interest rates are also a positive for most commodity markets, suggesting improved demand. Gold prices hit a record high overnight, with Comex December gold futures reaching a peak of $3,657.50 an ounce.
OPEC-plus to raise crude oil production only modestly… Crude oil futures prices rallied overnight after OPEC-plus agreed on Sunday to raise its collective oil production at a modest rate. The Organization of the Petroleum Exporting Countries and its partners will add 137,000 barrels a day to the cartel’s production starting in October, a move that marks the reversal of cuts set to remain in place until the end of 2026. The actual volume of the production increase is likely to be lower than announced, as some OPEC-plus members face pressure to forgo their share of increases or lack spare capacity.
Malaysian palm oil futures down a bit to start trading week… Malaysian palm oil futures edged lower to around MYR 4,440 per MT Monday, after modest gains in the prior session, as trade resumed from last week’s shortened holiday break. Sentiment was weighed by a stronger ringgit and weakness in edible oils on the Dalian market. Traders stayed cautious ahead of monthly data from the Malaysian Palm Oil Board due later this week. Reuters projected stocks to rise for a sixth straight month in August, with production continuing to outpace exports despite signs of demand recovery. In China, a major buyer, August trade figures grew less than expected amid U.S. tariffs and weak domestic demand.
Profit taking in cattle futures Friday… October live cattle futures Friday fell 97 1/2 cents to $235.975 and for the week were down $3.675. September feeder cattle futures closed steady at $359.925 and for the week lost $4.95. Friday’s technically bearish weekly low close in October live cattle futures sets the stage for follow-through chart-based selling pressure early this week. Cash cattle trading turned more active late last week. USDA at midday Friday reported steers fetched an average price of $242.59 and heifers an average of $242.60. That’s just below the prior week’s average cash cattle trade at $243.60. Choice-grade beef cutout continues to hover around levels seen only in the Covid-era in 2020, which suggests still-solid demand for cattle and beef. However, full cutout value pricing has likely not yet arrived at the meat counters and restaurant menus, which, when realized, could prompt a dip in retail demand for beef.
Lean hog futures market remains solid… October lean hog futures Friday rose $1.00 to $96.025, hit a nine-week high and for the week gained $2.05. Friday’s technically bullish weekly high close in October lean hogs will have the chart-based speculators looking to continue to play the long side of the market early this week. A stabilizing CME cash hog index late last week is also price-friendly for futures. The latest CME lean hog index rose 5 cents to $105.97 as of Sept 3, ending the recent string of losses. Monday’s projected cash index price is down 5 cents at $105.92. Also, the fresh pork market rebounded late this week.
Today’s USDA reports—Monday
--Weekly export inspections, 10:00 a.m. CDT
--Weekly crop progress reports, 3:00 p.m. CDT
--U.S. agricultural trade data update