Good morning!
Grains flat to lower… As of 6 a.m. CT, December corn was down 2 cents. January soybeans were up 1 1/4 cents. December soybean meal rose 60 cents and December soybean oil was 1 point lower. December soft red winter wheat was down ¼ cent, with December hard red winter wheat 1 ½ cents lower. Grain futures saw narrow trading ranges overnight with traders hunkering down ahead of the weekend as they monitor geopolitical developments and volatile action in global financial markets, with soybeans attempting to build on a tepid short covering bounce on Thursday that snapped an eight-day losing streak. Rains are set to move into parts of the Midwest after a long stretch of favorable harvest activity. Post-WASDE declines for both corn and soybeans have been met with solid demand, as evidenced by Thursday’s weekly export sales data.
In key outside markets, crude oil extended its rally, with global benchmark Brent trading above $115 a barrel to reach its highest level since early May, while U.S. benchmark WTI traded above $101 a barrel (see item below). A flight to safety into U.S. Treasuries dragged the yield on the benchmark 10-year note back below 5%, while the dollar strengthened versus major rivals. Stock-index futures pointed to a lower start after a rout for tech shares sent the S&P 500 and Nasdaq down sharply on Thursday.
Re-escalation fears lift crude… The rally in crude oil is driven by fears of a re-escalation of U.S.-Iran hostilities and threats by Tehran to widen attacks on Middle East energy infrastructure. Iran has warned publicly and via private diplomatic channels that renewed strikes by the U.S. and Israel would prompt attacks on airports, pipelines and other economic infrastructure across the Persian Gulf, the Wall Street Journal reported. The report said analysts estimate Iran has hundreds to thousands of ballistic missiles, and that U.S. and regional officials believe it has resumed production of ballistic missiles in limited numbers using stockpiled components and working in underground facilities.
Cattle on Feed due this afternoon… Placements will likely again be the most closely watched metric, along with a quarterly breakdown of the heifer-steer ratio as traders look for signs of herd rebuilding when USDA releases its monthly Cattle on Feed Report at 2 p.m. CT. A poll by Reuters found that analysts, on average, see cattle inventories as of Oct. 1 at 11.452 million head, up 0.3% from last year. Inventory is expected to remain near-steady despite placements being expected to fall 7.4% from year-ago levels at 1.871 million. Marketings are also seen falling 7% to 1.518 million head. If realized, the average analyst estimates for both placements and marketings would be record lows for the month of September. Read Pro Farmer Economist Spencer Langford’s preview of the report here.
Rains moving east… A front moving out of the Northern Intermountain Region overnight Friday will move into the Plains on Saturday and the Upper Great Lakes by Sunday, the National Weather Service said. Scattered showers and thunderstorms will develop over parts of the Northern Plains and Upper Mississippi Valley on Friday. By Saturday morning, rain with embedded thunderstorms will develop over parts of the Upper Midwest. By Sunday morning, rain will develop over parts of the Northern/Central Plains and into the Upper Great Lakes.
Top MAHA ally resigns… Calley Means, a high-profile ally of Health Secretary Robert F. Kennedy Jr. resigned from the Trump administration on Thursday. Means was a senior adviser to Kennedy who also worked in the White House to promote “Make America Healthy Again” policies. The Wall Street Journal reported that Means was frustrated by delays of some of Kennedy’s most popular food policy ideas and blamed others in the administration for allowing food companies too much sway. The report said Means refused to comment on reasons for his departure, which the Journal noted came after administration officials deferred announcements on a definition of ultraprocessed foods and a regulation emanating less added sugar and more protein in school meals. Shares of food companies, including General Mills, Kraft Heinz, Conagra Brands and Campbell’s Co. ended sharply higher following the news on Thursday.
‘Full bore ahead’ on USDA reorg… USDA Secretary Brooke Rollins told reporters on a conference call Thursday that the agency’s reorganization plans remain “full bore ahead” after a federal judge granted a stay request from a coalition of federal unions that have sued to stop the effort, Agri-Pulse reported. The judge said USDA was likely “reprogramming” funds that Congress had approved for other purposes to pay for the reorganization. The Trump administration has appealed the ruling. “We believe in it more today than we ever have,” Rollins said. The plan calls for employees to move from the Washington, D.C., area to regional hubs around the country.
Ukraine seeks to move customs checks… Ukraine is in talks with neighboring European Union member states about moving customs checks on trucks carrying grain exports from the border to inside those countries in an effort to halt Russian drone attacks on the carriers, the Financial Times reported. Long lines of trucks carrying Ukraine’s agricultural exports have been regularly hit by Russian drones on borders with EU countries in recent weeks. The report said Kyiv is in talks with Poland and Slovakia about moving the customs checks inside their territories to make the trucks safer. Ukraine has had to rely more heavily on road, river and rail routes for its farm exports after escalated fighting all but shut down its shipping route through the Black Sea.
South Africa too dry… South Africa usually begins planting of summer grains, oilseeds, cotton and other crops in October depending on the region, but early-season planting prospects are less than favorable to poor as moisture deficits are prevalent in the main production areas, World Weather Inc. said. The forecaster said precipitation may be limited through the end of October and moisture deficits will intensify. The environment will remain less-than-favorable-to-poor for planting in much of the country, though drier and warmer weather will otherwise support good winter wheat maturation and harvesting for the main production areas, World Weather said. The forecaster added that planted acreage may be lower than usual this season due to El Nino, which tends to promote drier than usual weather for parts of the summer crop region during the growing season.
Palm oil sees weekly gain… Malaysian palm oil futures extended gains, holding above MYR 4,800 a ton amid strength in rival edible oils and a tighter supply outlook tied to severe El Niño conditions and Indonesia’s upcoming B50 biodiesel mandate, according to Trading Economics. Robust exports also supported prices, with festival-related buying from India, the world’s largest palm oil importer, serving as a key demand driver, the report said.
Cash cattle trade delayed… December live cattle finished unchanged at $231.125 on Thursday, while November feeders fell $1.19 to $346.925 after both notched three-month highs in the previous session. Cash cattle trade has been slow to develop this week with feedlots awaiting this afternoon’s Cattle on Feed report (see item above).
Hogs continue to wallow… Lean-hog futures gapped lower Thursday to set another contract low before trimming losses to end with a loss of $0.175 at $65.55. Friday’s projected CME index price was down $0.67 at $72.15. The national direct five-day rolling average cash hog price quote for Thursday was $67.52.