Good morning!
Grain futures firmer, hit new highs overnight… At 6:00 a.m. CDT, December corn was up 6 1/4 cents and hit a contract and three-year high. November soybeans were 7 3/4 cents higher and hit a contract and 2.5-year high. December soybean meal was up $0.40. December bean oil was 138 points higher. December SRW and HRW wheat were 4 to 5 cents up and both hit new contract highs and three-year highs overnight. An uncommon convergence of bullish fundamental elements, as well as bullish technicals, are driving the rip-roaring bull runs in the grains. Presently, the grain market bears are unwilling to stand in front of a steaming locomotive. However, veteran grain traders are keeping in the back of their minds an old adage that asks: When is a market the most very bullish? The answer is: At the very top in price. The key outside markets today see the U.S. dollar index slightly up. October Nymex WTI crude oil prices are slightly lower and trading around $82.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.68%.
Showers/thunderstorms in Midwest, Plains heading into weekend… The National Weather Service today said showers and thunderstorms will develop over the Great Basin and into the Northern Plains late this afternoon into late evening and on Saturday. Monsoonal moisture will produce showers and thunderstorms, with moderate to heavy rain over parts of the Southwest from late today into late Saturday evening.Meantime, showers and thunderstorms will occur over parts of the Northern Plains/upper Mississippi Valley today and the Upper Mississippi Valley into the upper Great Lakes on Saturday and Sunday.
Black Sea shipping disruptions “nothing comparable” in history of grain market… Black Sea consulting firm SovEcon further cut its estimate of Russian wheat exports in August by 300,000 metric tons to 1.9 million MT. That compares with 4.5 MMT a year ago and an average of 5.0 MMT. More than 95% of Russia’s combined Black Sea and Sea of Azov grain export capacity is currently shut down, the firm noted, alongside damage to Ukraine’s Black Sea ports. “Nothing comparable has happened in the history of the modern grain market: neither in 2010, when Russia imposed its grain export ban, nor in the first half of 2022, after the war began,” wrote SovEcon’s Andrey Sizov on X. “Until recently, the market had been catastrophically underpricing this story.” Meanwhile, Ukraine Friday said it struck the oil refinery in Yaroslavl, one of Russia’s largest fuel-producing plants, in the latest in a flurry of attacks that have sparked a new wave of gasoline shortages across the nation. As a result of the overnight strike, a fire broke out at the site of the Yanos refinery, located about 175 miles northeast of Moscow, according to Ukraine’s General Staff said on Telegram. The extent of the damage is being assessed.
Adverse weather degrading major China crops… High temperatures and excessive rain have battered China’s key corn, soybean and cotton-growing regions since mid-July, Reuters reported. The weather has threatened crop quality and yield losses, potentially boosting imports of feed grains and cotton, including from the U.S. The report, citing traders and analysts, noted that if weather damage reduces output or quality, Beijing could boost imports of corn, sorghum or cotton.
Trump administration considering plan to add 500 million gallons to 2027 biofuel blending quotas…. The plan is in an effort to offset the hit to demand that would come from higher-than-expected exemptions to quotas that are expected to be announced soon by the Environmental Protection Agency, reports Jarrett Renshaw of Reuters. Farm and biofuel groups have been lobbying furiously to head off a sharp increase in exemptions beyond the roughly 900 million gallons previously penciled in by EPA. News reports have put total exemptions as high as 1.8 billion gallons – a level that biofuel advocates say would threaten to gut what had been expected to be a major ramp-up in demand after EPA earlier set blending requirements. Renshaw, citing people familiar with the matter, said the supplemental quotas would equal roughly 70% of the gallons that exceed EPA’s initial estimates – roughly equal to the percentage EPA had committed to reallocation to larger refiners in its initial proposal.
Fed Chair Warsh on deck in Jackson Hole… Federal Reserve Chairman Kevin Warsh’s speech at the annual Kansas City Fed central banker symposium in Jackson Hole, Wyoming, is scheduled for 9 a.m. central time. “It is shaping up as a crucial moment for markets as doubts about his commitment to taming inflation have helped push up long-term yields. A divided policy committee and the Treasury’s bond market intervention are further complicating the backdrop,” said a Bloomberg report. “What investors want to see is the framework that the Fed is using to think about the economy, to allow markets to better assess incoming data,” said Hugh Gimber, global markets strategist at JPMorgan Asset Management. “That’s the piece that’s been missing at the moment.”
Iran opens door just a little on diplomacy… Iran’s top diplomat said resuming diplomacy with the U.S. “isn’t impossible” after “creative discussions” with Qatar. Foreign Minister Abbas Araghchi said progress “hinges on U.S. understanding of one simple fact: pressure doesn’t work” and called on Washington to build trust and uphold its commitments. The U.S. remains hawkish in its public comments, with President Trump signaling he will not lift a blockade of Iranian ports just to restart talks.
Lutnick blames Carney, Canada for collapse of trade talks… U.S. Commerce Secretary Howard Lutnick accused Canada of scuttling trade talks by adding last-minute demands, saying Prime Minister Mark Carney had political incentives to kill an emerging deal. The two countries were at odds over tariff relief for medium and heavy-duty trucks, with Canada pressing for the same reduction as passenger vehicles and the U.S. resisting the request. Lutnick said Canada consistently raised the issue of medium and heavy-duty trucks over the course of weeks of negotiations, but he claimed the specific issue was raised at the last minute, saying “these were things they put in in order to make it end,” said a Bloomberg report.
Malaysian palm oil futures rebound… Malaysian palm oil futures hovered near MYR 4,850 per MT Friday, rebounding from recent declines as firmer rival edible oils on Dalian and Chicago exchanges lifted sentiment. Elevated crude oil prices and mounting El Niño risks, which stoked concerns over dryness and weaker output across Southeast Asia, added support. Indonesia’s planned full rollout of its B50 mandate on October 1 is also expected to bolster domestic consumption and trim exportable supplies. However, futures were headed for their first weekly loss after three straight gains, down about 3.3% so far. Broader weakness reflected softer demand and ample supply, with cargo surveyors noting palm oil exports for August 1–25 fell between 11.4%–20% from July. Meanwhile, inventories hit a five-month high in July, intensifying supply pressure. Demand from India may face further headwinds as refiners turn to cheaper soyoil, with imports in August projected to be strong, underscoring shifting preferences in the world’s largest buyer.
Cattle futures see short-covering bounce… October live cattle on Thursday rose $2.15 to $212.925. November feeder cattle rose $3.975 to $311.475. Cattle futures saw decent short-covering buying and corrective rebounds after both markets hit eight-month lows on Wednesday. Key for the bulls will be to show better follow-through buying today that would begin to suggest market bottoms are finally in place. Cash cattle trading taking place this week at significantly lower money than last week will make that task today more difficult.
Lean hog futures market pausing… October lean hogs on Thursday fell $0.275 to $80.625. The lean hog futures market paused again as bulls are working to stop the bleeding. Technical charts are still overall bearish. However, this week’s price action has at least seen the price downtrend on the daily bar chart stall out. The cash hog market continues to trend down. The latest CME lean hog index down 23 cents to $92.42. Today’s projected CME index price is down another 28 cents at $92.14. The national direct five-day rolling average cash hog price quote for Thursday was $91.57.