Good morning!
Grain futures weaker overnight… As of 6:00 a.m. CST, March corn futures were down 2 cents, January soybeans down 10 cents, and March SRW and HRW wheat futures were down 2 1/4 to 3 1/4 cents. The grain futures markets are looking heavy late this week, with all three markets seeing the risk of a technically bearish weekly low close today. The key outside markets early this morning see the U.S. dollar index slightly up after hitting a six-week low Thursday. Nymex crude oil prices are slightly lower and are trading around $57.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.17 percent.
Snow, bitter cold to end the week in the Plains, Midwest… The National Weather Service today reported big temperature contrasts from west to east are in store for the lower 48 states going into this weekend.Much-above-average temperatures are forecast from the West coast, through the Southwest, Great Basin, Rockies and into the Southern Plains. In contrast, much colder temperatures are in store across the north-central to northeastern tier of the nation over the next few days. The coldest temperatures will be across the Northern Plains, Upper Mississippi Valley and Midwest, where arctic air will be pushing southeast for the end of the week into this weekend.Afternoon high temperatures will be 20 to 30 degrees below average today and Saturday over the Northern Plains, spreading into the upper Mississippi Valley on Saturday. A few record-low afternoon highs are possible Saturday over the Northern Plains/upper Mississippi Valley region, with more widespread record low afternoon temperatures possible Sunday across the Ohio and Tennessee valley regions. A large area of moderate to heavy snow will spread from the Northern Plains, southeastward into the Middle Mississippi Valley on Friday, associated with the aforementioned arctic air outbreak. This snow will continue east into the Midwest and central Appalachians on Saturday.
Global stock markets rally, post-Fed rate cut… Global stock indexes have hit record highs or have them in their sights after a week in which affirmation that the Federal Reserve’s interest-rate easing cycle remains intact helped clear the way for a year-end “Santa Claus” rally. Europe’s Stoxx 600 rose as much as 0.5% to a fresh peak. A measure for Asia advanced to less than 2% from its all-time high. S&P 500 futures were slightly lower after the benchmark posted a new closing milestone late this week. “Everyone is convincing themselves that there will be a Christmas rally, so it looks like there will be one, and to be honest, there’s no negative catalyst visible until the end of the year,” said Karen Georges, a fund manager at Ecofi Investments in Paris and as reported by Bloomberg. “Investors are keen to buy this year’s laggards; it’s a good time to diversify your portfolio at the moment.”
U.S. dollar index set for third straight weekly decline… The U.S. dollar index hit a six-week low Thursday and is set to post a decline for the third consecutive week. The depreciating greenback comes as the Federal Reserve cut interest rates as expected and delivered a less hawkish outlook than markets anticipated. Fed Chair Jerome Powell indicated that further rate hikes are unlikely, with Fed projections pointing to a single reduction next year. In contrast, other major economies, including Australia, Canada, and Europe, are seeing hawkish repricing, further weighing on the greenback. The U.S. dollar is poised to weaken against most major currencies this week, with the steepest losses expected versus the Euro currency.
Silver powers to record high… March Comex silver futures were closing in on $65 per ounce on Friday, setting a record high of $64.945 an ounce overnight. The latest Federal Reserve rate cut coincided with tightening physical market conditions to boost the precious metal. Strong silver-related ETF buying and strong retail demand also supported the metal, reinforcing forecasts of a market deficit next year. Industrial demand, particularly from solar, electric vehicles, and data center infrastructure, contributed further to price strength. Meanwhile, rising lease rates and borrowing costs for physical silver in London reflected genuine delivery stress rather than purely speculative positioning, said TradingEconomics.com.
Russia-Ukraine peace talks drag on; Trump says U.S. would help keep Ukraine secure… President Trump said the U.S. would be willing to contribute assistance to Ukraine as part of a security agreement to end the war with Russia. Trump expressed frustration with the pace of talks and disappointment that Ukraine President Volodymyr Zelenskiy had not more readily signed off on a peace plan crafted by the U.S. Trump’s spokeswoman described him as “extremely frustrated with both sides of this war” and said he wants action, not just talk, to get the conflict “settled,” Bloomberg reported. “He doesn’t want any more talk. He wants action,” White House Press Secretary Karoline Leavitt told reporters on Thursday.
Ukraine strikes Russian fertilizer plants, driving up fertilizer stocks… Fertilizer stocks jumped after Ukraine said drones had hit two fertilizer plants in western Russia, on concerns that geopolitical tensions will affect supply chains for key crop nutrients, Bloomberg reported. Drones hit Acron and Dorogobuzh facilities, which produce nitric acid, ammonia and other materials used to manufacture explosives, Ukraine’s Commander of the Unmanned Forces Robert Brovdi said on Facebook. While the affected plants are relatively small in context of overall fertilizer capacity, “the market priced in expectations for peace which they’re now reversing,” Bloomberg Intelligence analyst Alexis Maxwell said. Trade flows of the key crop inputs have been disrupted since Russia invaded Ukraine in 2022, sending U.S. prices for nitrogen fertilizers to a record high that year. Mosaic Co. shares Thursday gained as much as 7.8%, the most since April, putting it among the top gainers in the S&P 500 Index. Nutrien Ltd. was up as much as 4.9%, while CF Industries Holdings Inc. jumped 4.7%. The broader S&P Composite 1500 Fertilizers & Agricultural Chemicals Index gained as much as 3% Thursday.
Malaysian palm oil futures dip… Malaysian palm oil futures fell to around MYR 4,050 per MT on Friday after a muted prior session, heading for their first weekly drop in three with losses of about 2.6%. The decline tracked weakness in rival edible oils on the Dalian market, while a stronger ringgit further dampened sentiment by making exports less competitive. Traders also became cautious as cargo surveyors noted that shipments from December 1 to 10 fell 10.3% to 15% from the same period in November. Meanwhile, end-November inventories rose 13% to 2.84 million MT, the highest in 6-1/2 years, reflecting strong full-year production that is on track to exceed 20 million MT for the first time due to better labor availability, more efficient harvesting, and output from maturing plantations. Still, losses were partly capped after industry regulator data showed November production fell 5.3% to 1.94 million MT, alongside expectations of stronger seasonal demand ahead of the upcoming Lunar New Year and Ramadan.
Cattle futures power to six-week highs… February live cattle on Thursday rose $2.425 to $230.95 and hit a six-week high. January feeder cattle gained $5.025 to $343.40 and also hit a six-week high. The cattle futures market bulls are back in business. More chart-based buying from the speculators was featured Thursday. Both markets are trending higher on the daily charts. Solidly higher cash cattle trade so far this week at much better money also supported good buying interest in the futures markets. USDA at Thursday reported active cash cattle trading late this week, with steers averaging $226.31 and heifers $226.41. The average cash cattle trade for last week was $221.21. In the Northern Plains, snowfall in coming days will be significant in Montana, resulting in livestock stress, said World Weather.
Lean hog futures bulls also back in business… February lean hogs on Thursday rose $1.75 to $84.175 and hit a six-week high. Hog futures saw solid technical buying interest as the near-term chart posture for the market has turned firmly bullish. Recent gains in the cash market and the CME hog index also suggest seasonal bottoms are in place for cash and futures markets. Nearby December lean hogs have pushed above the CME lean hog futures, also a positive sign. The latest CME lean hog index is up 27 cents to $82.16. Today’s projected cash index price is up another 41 cents at $82.57. Thursday’s national direct 5-day rolling average cash hog price quote is $71.80.