Good morning!
Grain futures drift lower overnight… As of 6 a.m. CT, December corn was down 2 cents. November soybeans fell 4 ¼ cents, while December soybean meal dropped $3.20 and December soybean oil lost 29 points. December soft red winter wheat fell 8 ¾ cents, with December hard red winter wheat down 6 ¾ cents. Soybeans made a for-the-move low overnight. A disappointing close on Thursday saw December corn close below the 200-day moving average, leaving important support at last week’s reaction low to the October WASDE report at $4.70 ½. USDA will release weekly export sales data Friday morning, delayed a day due to Monday’s Columbus Day holiday.
In outside markets, December Nymex WTI crude oil futures were slightly lower near $96 a barrel. The ICE U.S. Dollar Index fell 0.4% to trade at its lowest since Oct. 1, while the yield on the 10-year Treasury note stood at 5.11%. Stock index futures pointed to mixed start for Wall Street, with the Nasdaq set for another decline in a turbulent week for equities.
Warsh offers no Fed rate clues… In keeping with his long-stated aversion to tipping his hand on rate decisions, Federal Reserve Chairman Kevin Warsh offered no signals on whether the central bank will deliver a rate hike when policy makers meet later this month. Speaking Thursday night at an International Monetary Fund event in Thailand, Warsh offered no remarks on monetary policy or the U.S. economic outlook, but reiterated the Fed will deliver on its inflation target. Fed funds futures traders pared back bets the Fed will deliver a quarter-point hike on Oct. 28, pricing in a 15% probability of a tightening, down from around 33% earlier this week after a hot September consumer price index reading that, along with a jump in the September producer price index, indicated soaring energy prices are beginning to lift prices in core sectors of the economy. The CPI data triggered a spike in Treasury yields and the dollar, with a closely watched dollar index hitting an 18-month high but then retreating as near-term rate hike expectations faded. Economists and traders do expect the Fed to eventually deliver further tightening in response to stubborn inflation.
Heavy rains continue in southern Plains… The National Weather Service on Friday said heavy to excessive rainfall will continue through tonight from the Texas Big Bend region into southern Oklahoma. Gulf moisture streaming northward ahead of the boundary will support showers and thunderstorms across the Southern Plains into the Ohio Valley/Mid-Atlantic, Upper Midwest, Great Lakes and Northeast. Across the West, a cold front will move into the Pacific Northwest early Saturday morning bringing light showers across the area,the NWS said, while scattered showers develop across portions of the Southwest. In the wake of the front, Canadian high pressure will build southeastward across the Plains, Midwest and Eastern U.S., ushering in a noticeably cooler and drier air mass.
Record ARC and PLC payments… U.S. farmers are expected to receive record Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) payments totaling between $13.2 and $13.8 billion for the 2025 crop year by late October. Estimated per-acre payouts average $51 for corn, $29 for soybeans, $47 for wheat, and up to $344 for long-grain rice, according to a farmdoc daily paper put together by University of Illinois economists working with colleagues at the University of Minnesota and Ohio State University. While a record, actual payouts may fall short of earlier budget projections due to rising commodity prices, mandatory sequestration cuts, and farm payment limits.
U.S.-Mexico trade talks stall… Momentum toward a U.S.-Mexico trade deal has stalled due to opposition from Commerce Secretary Howard Lutnick, the Wall Street Journal reported, citing people familiar with the matter. News reports had described the U.S. and Mexico as zeroing in on a deal that could cut tariffs on steel, aluminum and automobiles in exchange for a series of concessions from Mexico. The Journal said progress has slowed significantly, with Lutnick objecting to significant reductions in the 25% tariff on Mexican autos and 50% levies on aluminum and steel, as well as to reduced tariffs on “derivative products” such as finished steel and aluminum products. Officials from both sides have denied any impasse, but the report described Lutnick’s position as a significant obstacle to a deal after months of talks led by U.S. Trade Representative Jamieson Greer. Mexico is the top export destination for U.S corn and wheat exports and the second-largest buyer of soybeans after China.
China protein supply ‘exposed’... A study found that China faces growing risks to its protein security due to its heavy reliance on imported animal feed, the South China Morning Post reported Friday. The report by Full Circle Biotechnology rated China’ s protein supply as “exposed,” ranking it 21st among 43 regions. The study noted that while China produces nearly half the world’s pork, limited land and water force it to import a third of its protein, mainly soybeans from Brazil and the U.S., while fertilizer supply disruptions and climate-related impacts on fishmeal have heightened vulnerabilities.
- Reminder: Chinese agricultural authorities have regularly prioritized protein self-sufficiency as an important pillar of national food security.
Stench sparks sterile-fly plant protest… Residents in a town in Mexico’s southern Chiapas state took to the streets Thursday to demand the removal of a sterile-fly plant central to the U.S.-Mexican fight against the New World Screwworm, blaming the facility for a rotten smell, Reuters reported. Residents in Metapa de Dominguez compared the odor to rotting meat and spoiled food, describing it as “pungent in your nose and mouth” and causing nausea, the report said. Protesters complained that the smell, once concentrated around the plant, could now be detected farther away, particularly when winds carried it across the town. USDA invested toward $21 million toward the $51 million facility. Mexico’s agriculture ministry didn’t respond to a request for comment, Reuters said.
Tractor sales tank… September was another tough month for U.S. tractor and combine sales. The Association of Equipment Manufacturers this week said total two-wheel drive tractor sales totaled 14,791, down 16.4% from the same month last year, the association said. Four-wheel drive sales of 233 units were down 20.2%, while self-propelled combine sales at 369 were down 10.9%. For the year to date, two-wheel drive tractor sales are down 12.5%, four-wheel drive tractors are down 23.4% and combines are down 9.4%.
Canada crop quality concerns… Canada’s farmers struggled to harvest this year’s crops due to an unseasonably wet September, and farmers and crop quality assessors are reporting damage to pulse crops and spring wheat, Reuters reported. The report said farmers were weeks behind the usual harvest pace in many Prairie provinces from the beginning of September through early October, normally the driest time of the growing season. For example, by September 21, Saskatchewan’s harvest was 41% done, compared to the five year average of 82%.
Palm oil rallies… Malaysian palm oil futures jumped more than 3% to trade above MYR 4,750 a ton, erasing earlier losses to hit a three-week high, according to Trading Economics. Palm was lifted by a firm one for edible oils on China’s Dalian exchange and Chicago markets, while concerns about supply in top producer Indonesia also proved support. The report noted the Indonesian Palm Oil Association projected output to fall to 51.7 million tons from 53.7 million this year.
Live cattle end at 9-week high… December live cattle rose $2.125 to $227.25, posting a nine-week high close on Thursday. November feeder cattle rose $3.50 to $341.95. USDA on Thursday reported still no cash cattle so far this week. The agency on Monday said cash cattle trading last week averaged $220.14 up 34 cents from the week-prior average of $219.80. The noon report Thursday showed losses in boxed beef prices.
Hogs see modest short covering… December lean hog futures rose $0.50 to $66.575 on Thursday, finding support on tepid short covering after hitting a contract low in early trade. The cash hog market and CME cash index prices continue to trend lower. Friday’s projected CME index price is down $0.66 at $75.09. The national direct five-day rolling average cash hog price quote Thursday was $70.89. The USDA noon pork report Thursday showed cutout value was down $0.72 at $78.73, led by declines in ribs.