Good morning!
Grains edge lower overnight… As of 6 a.m. CT, December corn was up 1/2 cent in two-sided trade. November soybeans fell 2 ¾ cents, while December soybean meal rose $4.10 and December soybean oil declined 56 points. December soft red winter wheat was 3/4 cent lower, with December hard red winter wheat down 1 cent. Volatility is on the rise across global financial markets, leaving grains and the soy complex to drift lower. A hot U.S. CPI reading Wednesday and fears of an artificial-intelligence bubble are seen weighing on global investor appetite for risk (see item below).
In key outside markets, the ICE U.S. Dollar Index was down 0.4%, while the 10-year U.S. Treasury yield pulled back to 5.09% after topping 5.30% in Wednesday’s session. Front-month Nymex WTI crude oil futures were up less than 0.1% at $95.16 a barrel. Stock-index futures pointed to further losses for the tech-heavy Nasdaq and S&P 500 after both suffered their worst day since late July on Wednesday.
PPI and Warsh in focus amid dollar volatility… A surging U.S. dollar, which took the ICE U.S. Dollar Index to an 18-month high, and the sharp jump in Treasury yields undercut gains for soybeans and weighed on commodities after a hotter-than-expected September consumer price index reading on Wednesday. The commodity weakness was part of a broader selloff across financial markets which, by the end of the day, had sparked a flight to safety back into bonds, pulling yields back down and softening the dollar. The focus Thursday morning will be the September producer price index, which will offer market participants a glimpse into price pressures building in the wholesale pipeline. PPI is due at 7:30 a.m. CT, but the main event will likely occur late tonight when Federal Reserve Chairman Kevin Warsh speaks at an International Monetary Fund event in Thailand. Warsh is speaking just ahead of the start of the communication blackout period ahead of the Fed’s Oct. 27-28 policy meeting.
Ukraine renews Russia refinery attacks… Ukrainian President Volodymyr Zelensky ended a three-day pause on attacks on Russian oil refineries in an escalating confrontation with U.S. President Donald Trump over restrictions on U.S. intelligence sharing, Bloomberg reported. The report said that hours after Zelensky announced the move, normal service on Starshield internet terminals used by Ukraine’s military appeared to resume. Moscow had continued attacking Ukrainian energy infrastructure and civilian targets over the last few days, despite Trump’s Sunday declaration that Russia and Ukraine had agreed to a truce on strikes on energy targets. The moves come after Trump last week announced a controversial deal to ease sanctions on Russian oil and diesel exports in a bid to ease soaring fuel costs ahead of next month’s midterm elections, though analysts have questioned whether the amounts will have a significant impact.
- U.S. weighs easing ‘shadow fleet’ sanctions…The Trump administration is considering easing sanctions on so-called shadow fleet vessels transporting oil and petroleum products from countries including Russia, Iran and Venezuela, in an effort to bring down record-high global freight rates, Reuters reported, citing a U.S. official.
NOPA crush expected to show September drop… Members of the National Oilseed Processors Association are estimated to have crushed 203.737 million bushels of soybeans last month, according to a Reuters survey of economists, which would mark a one-year low. Reuters said the expectations for a drop are due to scheduled processing plant downtime and as some Midwest plants ran short of crushing supplies due to weather-related harvest delays. If realized, the estimate would be down 0.8% from August but up 3% from September 2025. Soyoil stocks held by NOPA members were projected to fall to 1.116 billion pounds, the survey found, which would be down 7.1% from the 1.201 billion pounds held at the end of August.
Heavy rains for southern Plains… Heavy rain and widely scattered severe storms are expected over portions of the central and southern Plains into the Ohio Valley, the National Weather Service said early Thursday.. Unseasonable warmth will continue for a few more days across the Midwest, Southeast, and Mid-Atlantic where several daily record highs could fall. The forecast said that as the surface low over the southern High Plains progresses northeastward toward the Great Lakes, moisture will continue to stream northward from the Gulf, which will support showers and thunderstorms along the boundary. Strong low-level moisture transport ahead of the advancing cold front will support repeated round of showers and thunderstorms, with locally high rainfall rates.
UN agency says Hormuz disruptions affecting harvests… The head of a United Nations rural development agency worries that the disruption of shipping through the Strait of Hormuz is starting to become visible in agricultural harvests, posing a threatening to lower farm yields and push up food prices, Reuters reported. Hormuz-related disruptions to fertilizer shipments and higher fuel and transport costs, compounded by El Niño and disruptions to Black Sea wheat supplies, are adding costs throughout the food supply chain, Alvario Lario, president of the International Fund for Agricultural Development, told Reuters. “The pass-through from the initial locking down of the Strait of Hormuz…is now starting to be seen,” he said.
Tracking Brazil’s election… A new poll showed right-wing candidate Flavio Bolsonaro holding a slim lead over President Lula Inacio da Silva less than two weeks before Brazil’s Oct. 25 presidential runoff election, Bloomberg reported Wednesday. The poll, conducted for O Globo newspaper, showed Bolsonaro receiving 51% of votes to Lula’s 49%, the report said, noting the lead is within the survey’s margin of error of plus or minus two percentage points. The Brazilian real surged after Bolsonaro outperformed expectations in the first round of voting earlier this month. A stronger real can be a boon to U.S. soybean prices. While Brazilian soybeans for export are priced in U.S. dollars, a stronger currency means fewer reais in the pockets of Brazilian farmers, which can cause them to delay selling.
Inflation to boost Social Security benefits… The Social Security Administration on Wednesday said benefits for retirees will rise by 3.6% in 2027, reflecting higher inflation. The cost-of-living adjustment, or COLA, is the highest since 2023 and follows a 2026 increase of 2.8%, the Wall Street Journal reported. The annual COLA is calculated based on average inflation for July, August and September. The September CPI reading showed a year-over-year rise of 3.7% (see top item). The Social Security Administration also uses a wage formula to adjust how much high-income workers pay into the system through payroll taxes. For 2027, the income cap on the program’s payroll tax will rise 4.2% to $192,300, the Journal said.
Palm oil futures retreat… Malaysian palm oil futures pulled back after recent gains, slipping below MYR 4,700 a ton as edible oil weakened on China’s Dalian exchange and as crude oil prices traded lower, reducing palm oil’s appeal as a biodiesel feedstock, according to Trading Economics. Sentiment was also weighed down by renewed concerns over record-high inventories, which climbed to 3.51 million tonnes in September amid peak seasonal production, according to the Malaysian Palm Oil Board, the report said.
Cattle see more profit-taking pressure… December live cattle fell $1.25 to close at $225.125, while November feeder cattle lost $2.575 to $338.45. Profit-taking has led to a corrective, but not unhealthy, price pullback for cattle this week. USDA had yet to report cash trade as of Wednesday. Boxed beef prices remained firm in Wednesday trade, with Choice grade up $0.43 at $375.58 and Select grade up $5.34 at $359.01.
Hogs hit another contract low.... December lean hog futures fell $1.95 Wednesday to close at $66.075 after hitting a contract low. Technical selling pressure continues to push down hogs, while cash fundamentals continue to trend lower. Thursday’s projected CME lean hog index is down $0.19 at $75.75.