Good morning!
Pre-WASDE gains… As of 6 a.m. CT, December corn was up 2 ¼ cents. January soybeans rose 5 ½ cents, with December soybean meal up $4 and December soybean oil down 19 points. December soft red winter wheat rose 1 cent, while December hard red winter wheat gained 3 ½ cents.
Grain and soy complex futures were firmer after another down day Monday that saw December corn and December soft red winter wheat hit four-month lows. Traders have been positioning ahead of the November Crop Production and WASDE reports due at 11 a.m. CT, with traders looking for a bump up in soybean production and a trim to corn. Hedge funds and other large speculators have erased huge net long positions in corn and are now short, though lingering soybean longs could lead the market vulnerable to further liquidation if the report reads bearish.
See: Managed money flips net short corn: What to watch ahead of Tuesday’s USDA data
In key outside markets, Brent crude fell below $90 a barrel for the first time since August on rising hopes for a resolution of the Iran war. The yield on the 10-year Treasury note stood at 4.897%. The ICE U.S. Dollar Index rose 0.1%, firming after a Fed policy maker said a hot CPI reading this morning would lead him to favor an outsize half-point rate hike next month (see item below). Stock-index futures pointed to a higher start.
CPI in focus… Ahead of the USDA data, the Labor Department will release the October consumer price index at 7:30 a.m. CT. Economists surveyed by the Wall Street Journal on average look for October CPI to show a 0.3% monthly rise, slowing from 0.6% in September. Core CPI, which strips out volatile food and energy costs, is seen up 0.2%. Due to last year’s government shutdown, there was no October 2025 CPI reading, which means this morning’s numbers won’t have a year-over-year comparison. A firm reading could be a negative for ag commodities if it lifts the U.S. dollar by further cementing expectations for a rate hike when Fed policy makers meet next month.
- Half-point on table… Fed Gov. Chris Waller put the prospect of a half-point rate hike, rather than a typical quarter-point move, on the table in a speech overnight. Speaking in London, Waller said the Fed should consider raising rates next month by half a percentage point if core inflation rises around 0.3% or more. Moving by a quarter-point in that case “would put our credibility at risk, a risk I am not eager to take,” he said, according to the Wall Street Journal.
Cold to blast eastern U.S…. Milder than normal temperatures across the U.S. will be followed by drastically colder air surging into the eastern half of the country by Wednesday night, the National Weather Service said. Across the Great Lakes to the Northeast, clipper low pressure systems moving across southern Canada will bring a couple rounds of scattered showers to portions of the region through Wednesday., the forecast said. By later on Wednesday to Thursday morning, a drastic change in the weather pattern will set the stage for a cold air mass to surge into the eastern half of the country. The Midwest to the Ohio and Tennessee Valleys can also expect embedded thunderstorms and gusty winds as this system moves through on Wednesday.
Ukraine-Russia talks begin… A new round of talks between Russian and Ukrainian officials got under way in Abu Dhabi Tuesday, with U.S. negotiators Steve Witkoff and Jared Kushner, President Donald Trump’s son in law, leading mediation efforts, Bloomberg reported. Anticipation of the talks served in recent weeks to evaporate much of the geopolitical risk premium seen in wheat futures tied to export bottlenecks in the Black Sea. Bloomberg noted that the diplomatic push comes with little sign of de-escalation with Russia’s full-scale invasion deep into its fifth year.
- Ukraine President Volodymyr Zelensky spoke Monday with Indian Prime Minister Narendra Modi. Modi said India was ready to mediate in establishing corridors for grain exports in the Black Sea, Zelensky said, according to Reuters. The report said Modi’s office didn’t elaborate but said the prime minister conveyed that India was ready to contribute “to all efforts aimed at peaceful resolution of the conflict.”
South America estimates unchanged… Dr. Michael Cordonnier, Pro Farmer crop consultant, left his estimate of Brazil’s soybean crop unchanged at 182 million tons with a neutral bias. THe growing season got off to a better than expected start given the presence of a strong El Nino. Predictions for above normal rainfall in southern Brazil proved accurate, causing problems for early crop development, while rainfall in central and northern areas has been somewhat better than expected, though soil moisture remains short in some areas, he said. “The estimate could go either way depending on the weather during November and December. He maintained his Argentine soybean production forecast at 54.0 MT with a neutral bias.
- Argentina may plant more corn… Argentina’s corn crop estimate was also left unchanged at 60 MT, with a neutral to higher bias. “It is still too early to tell for sure, but farmers in Argentina may end up planting more corn than originally intended,” Cordonnier wrote, noting that planting is running ahead of normal for this time of year. “In addition to being more profitable, another reason why they may plant more corn than anticipated is low numbers of corn leafhoppers.”
Corn harvest still lags… USDA’s weekly crop progress data released Monday afternoon showed the corn harvest still lags behind the historical pace as it enters the home stretch. USDA said 81% of the corn crop was harvested as of Sunday, up from 74% a week earlier but behind the 84% forecast by analysts surveyed by Bloomberg and behind the five-year average of 86% for this time of year. Iowa’s harvest was 72% complete, well behind the average of 89%, while Nebraska was 74% complete, 10 percentage points behind average. USDA pegged soybean harvest at 92% finished, up from 88% a week earlier. It was two percentage points behind the average estimate but a percentage point ahead of the five-year average.
Wheat conditions improve… Winter wheat plantings were 89% complete, just below the 90% average estimate, which is also the five-year average. USDA said 49% of the winter wheat crop was rated good or excellent, up five percentage points from the previous week and topping the average estimate of 46%. The Pro Farmer Crop Condition Index (0 to 500 scale, 500 equals perfect) for hard red winter wheat rose a substantial 11.29 points to 337.44 this week, with Kansas seeing the biggest gain. The crop condition index for SRW was 372.51,up 5.06 points from last week.
Gasoline price drops below $4 a gallon… The average national price for gasoline fell to $3.9788 on Tuesday, according to AAA, falling below the $4 threshold for the first time since July. That’s down from $4.1493 a week ago, $4.3669 a month ago and $3.0707 a year ago. The average diesel price at the pump was $6.1572 a gallon, according to AAA, down from $6.2875 a week ago, $6.2824 a month ago and $3.7389 at this time last year.
Natural gas price jumps… U.S. December natural gas futures surged more than 7% Monday to end at a four-week high of $3.218 per million BTUs. “Colder forecasts for the eastern U.S. have lifted expectations for heating demand and prompted short covering, while stronger LNG (liquefied natural gas) feedgas demand, including at Freeport LNG, has provided additional support,” wrote analysts at ING, in a note.
Cattle see short covering… Cattle futures bounced Monday after Tyson Foods announced it was partnering with rancher group Allied Beef to reopen a second shift at its Amarillo beef plant, though gains were trimmed after USDA reported sharply lower cash trade at midday. A strong rebound by stocks also provided support. December live cattle rose $2.15 to end at $216.20, near mid-range after the contract hit an 11-month low on Friday. January feeder cattle rallied $5.80 to $324.175, nearer the daily high after hitting a six-week low on Friday.
Hogs bounce… Lean hog futures finished $2.35 higher at $55.875, boosted by short covering and bargain hunting after hitting a series of contract lows last week. Tuesday’s projected CME index, however, is down $1.29 at $60.28.