Good morning!
Grain futures mixed-weaker overnight… As of 6:00 a.m. CDT, December corn was down 2 cents. January soybeans were 8 1/4 cents lower. December HRW and SRW wheat futures markets were up 1/2 to 3 1/4 cents.SRW hit a three-month high and HRW a seven-week high overnight. Buying interest in the grains is limited today by keener risk aversion in the general marketplace as global stock markets sold off overnight and U.S. stock indexes are set to open with solid losses. The key outside markets early this morning see the U.S. dollar index firmer. Nymex crude oil prices are lower and trading around $60.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.08 percent.
Warmer, windy across the High Plains and Midwest… The National Weather Service said above- to well-above-average temperatures will occur across large swaths the country today. Downslope flow in the High Plains promises breezy and dry conditions. Today, portions of Wyoming, far southwest South Dakota, far northeast Colorado, and western Nebraska continue have some potential for wildfire risk due to the continued dry air mass and windy conditions. Red flag warnings are in effect for portions of western Nebraska. Record high temperatures are possible for portions of the Texas Panhandle and the Colorado Front Range today.Any precipitation for the Great Lakes and east should be modest in amounts. The wetness across the Northwest, with mountain snows farther inland across the Northern Continental Divide, has prompted winter weather advisories.
Global stock markets sell off as Wall Street execs warn equities are overvalued… Global stock markets are under significant selling pressure today, with U.S. stock indexes set to open solidly down, as Wall Street is getting nervous about high stock valuations and an artificial intelligence stock bubble. Wall Street chief executives said investors should brace for a stock market drop of more than 10% in the next 12 to 24 months, and such a correction may be a positive development, reported Bloomberg today. Corporate earnings are strong but “what’s challenging are valuations,” said Mike Gitlin, president and chief executive officer of Capital Group, during a financial summit by the Hong Kong Monetary Authority today. On whether stocks are cheap, fair or fully valued, Gitlin said most people “would say we’re somewhere between fair and full, but I don’t think a lot of people would say we’re between cheap and fair.” The same goes for credit spreads, Gitlin added. Bond traders have been extra worried about private credit deals that may not have solid financial footing. Gitlin’s views were echoed by Morgan Stanley CEO Ted Pick and Goldman Sachs Group Inc.’s David Solomon, who also see the possibility of a significant selloff in the coming period and said pullbacks are a normal feature of market cycles. In another worrisome sign, Palantir Technologies Inc. raised its annual revenue outlook to $4.4 billion and outpaced analyst estimates for third-quarter sales. The company’s revenue increased 63% to $1.18 billion in the period ended in September, with profit, excluding some items, at 21 cents a share. Yet, Palantir’s shares fell about 3% in extended trading due to concerns about the company’s lofty valuation after a record run-up, despite the company’s strong quarterly results.
U.S. government shutdown poised to be record-long… The U.S. government shutdown is poised to become the longest ever this week as the impasse between Democrats and Republicans has dragged into a new month. “Millions of people stand to lose food aid benefits, health care subsidies are set to expire and there are few real talks between the parties over how to end it,” reported the Associated Press. President Trump said in an interview that aired Sunday that he “won’t be extorted” by Democrats who are demanding negotiations to extend the expiring Affordable Care Act subsidies. Echoing congressional Republicans, the President said on CBS’ “60 Minutes” he’ll negotiate only when the government is reopened. Trump said Democrats “have lost their way” and predicted they’ll capitulate to Republicans. “I think they have to,” Trump said. “And if they don’t vote, it’s their problem.” Trump’s comments signal the shutdown could drag on for some time as federal workers, including air traffic controllers, are set to miss additional paychecks and there’s uncertainty over whether 42 million Americans who receive federal food aid will be able to access the assistance. Senate Democrats have voted 13 times against reopening the government, insisting they need Trump and Republicans to negotiate with them first.
Australia set to ship canola to China on trial basis… Australia is set to ship its first canola to China in five years, with a vessel hauling a trial cargo of the oilseed expected to depart for Qingdao in less than a week, Bloomberg reported. A bulk carrier will take on a cargo of about 60,000 tons of canola in Esperance, Western Australia, and then head for the port of Qingdao in China’s northeast. At least three trial cargoes of the oilseed have been booked by China for the fourth quarter, marking the first shipments since Australia was shut out of the China market in 2020 over phytosanitary concerns. According to the Australian agriculture department’s website, the canola trial is underway, with a view to supplying cargoes containing less than 1% of “non-seed material.” The trial follows a souring in relations between China and Canada, the oilseed’s top exporter. Prior to their dispute, almost all of the 6.39 million tons of canola imported by China in 2024 came from Canada.
Meatpacker JBS pays hefty fine to New York state… JBS SA, the world’s largest meatpacker, has agreed to pay $1.1 million to settle a lawsuit by the state of New York over allegations the company misled the public about reducing the impact of its operations on the environment. As part of the settlement, JBS agreed to revise language related to the company’s environmental marketing and produce annual reports to the New York Attorney General’s office. The $1.1 million payment will be made to Cornell University’s College of Agriculture and Life Sciences’ New York Soil Health and Resiliency Program for the purpose of “supporting climate-smart agriculture.” In a statement, JBS said the settlement “does not reflect an admission of wrongdoing.” The company’s USA unit said it “remains driven to advance sustainable agriculture. We maintain a continued focus on investing in practical solutions that strengthen the resilience of the food system,” said JBS and as reported by Bloomberg.
Malaysian palm oil futures rebound… Malaysian palm oil futures rose today, hovering above MYR 4,100 per MT after two straight sessions of losses. Prices rebounded from a 12-week low touched a day earlier, supported by a weaker ringgit and strength in rival Dalian soyoil. Rising exports in October also supported sentiment, notably after cargo surveyors reported that Malaysia’s palm oil exports grew between 4.3% and 5.2% during the month. Still, gains were capped as data showed palm oil imports by top buyer India fell to a five-month low in October, bringing total purchases in the 2024/25 marketing year to the lowest in five years, as buyers shifted to soyoil following a rally in palm oil prices. Meanwhile, Reuters projected that stocks in Malaysia likely rose 3.5% in October to 2.44 million metric tons, their highest since October 2023. In Indonesia, the world’s largest producer, official data showed palm oil exports rising 11.6%, year-on-year, to 17.58 million tons in January–September, suggesting continued strength in global supply.
Rebounding boxed beef prices support cattle futures markets… The live cattle futures markets Monday saw more corrective buying and perceived bargain hunting after the recent steep price declines. Rebounding boxed beef prices were also supportive for the cattle futures markets. Bulls are still worried about bearish pennant patterns that have formed on the daily bar charts. However, those patterns will have to see bearish downside breakouts this week or they will be negated. USDA Monday reported last week’s average cash cattle trade was $230.86 versus the week prior’s average of $237.89.
Bearish charts prompting technical selling in lean hog futures… December lean hog futures hit a 3.5-month low Monday. The market today saw more technical selling pressure amid overall bearish price charts that include a price downtrend in place for December hogs. Steadily falling cash hog prices are also bearish for futures. December hog futures still have a discount to the cash index, which may work to limit selling interest in futures. The latest CME lean hog index is down another 34 cents at $91.19. Today’s projected cash hog index is down another 21 cents at $90.98. Monday’s national direct 5-day rolling average cash hog price quote is $87.72.