Good morning!
Grain futures firmer overnight… As of 6:00 a.m. CST, March corn futures were up 2 cents. January soybeans were up 2 1/2 cents. March SRW and HRW wheat futures were up 4 1/4 to 5 1/4 cents. Corn and wheat markets were supported in part by the weekend news of Russia’s stepped-up attacks on Ukraine’s grain facilities. (See item below.) Soybeans are seeing some tepid short covering but are being constrained by the weak soybean meal market that hit a seven-week low overnight. The key outside markets see the U.S. dollar index slightly lower early today. Nymex crude oil futures prices are up and trading around $57.27 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.16 percent.
Above-normal temps, no big storms for Midwest this holiday week… The National Weather Service today reports that in the Midwest, temperatures will be well above normal this week, including some temperatures possibly reaching close to 60 degrees on Christmas Day. No major winter storms are in the forecast this Christmas holiday week. Meantime, upper disorganized upper-level energy moving over the Upper Midwest will trigger light snow over the upper Mississippi Valley/Great Lakes early Monday morning that will move into the lower Great Lakes by Monday evening. On Tuesday, snow will develop over parts of the Northeast. Along the rain/snow line in Pennsylvania and the central Appalachians, areas of rain/freezing rain will develop over the region Monday night into Tuesday. Moisture flowing northward from the Gulf will overrun the boundary over the central Gulf Coast area, producing rain over the region through Monday Afternoon. Overnight Monday, rain will develop over the Ohio Valley and expand into the Mid-Atlantic and Tennessee Valley by Tuesday morning. However, by Tuesday evening, the rain will retreat to the Tennessee Valley. An atmospheric river will bring heavy rainfall to lower elevations of California this week, and heavy snow to the Sierra Nevada mountains. Flash flooding, some of which may be locally considerable, will be a concern on the western foothills of the Sierra Nevada mountains through Tuesday. Landslides, rockfalls and mudslides are possible in the Southern California mountains. In the Midwest, temperatures will be well above normal this week, including some temperatures possibly reaching close to 60 degrees on Christmas Day.
Geopolitical tensions ratcheting up; gold and silver hit record highs on safe-haven demand… February gold futures overnight hit a record high of $4,453.00 an ounce, while March silver futures notched an all-time high of $69.525 an ounce. The two precious metals rallied on safe-haven demand on the weekend news that the U.S. is pursuing a third oil tanker near Venezuela, according to a U.S. official, as President Trump intensifies an oil blockade on Nicolás Maduro’s government. The tanker being pursued is flying under a false flag and under a judicial seizure order, and is believed to be the Bella 1 tanker, a Panamanian-flagged vessel sanctioned by the U.S., according to a Bloomberg report. The attempted interdiction follows the U.S. military boarding of the Centuries supertanker early Saturday and the Skipper on Dec. 10. The blockade appears to be putting pressure on Venezuela’s oil storage and could lead to a production collapse and widespread civilian unrest in Venezuela. Crude oil futures also rallied on the U.S.-Venezuela tensions. Meantime, a senior Russian general was killed after a bomb exploded in his car in Moscow, according to investigators who pointed suspicion for the assassination at Ukraine. Lieutenant General Fanil Sarvarov, who was in charge of the operational training department in the Russian General Staff, died from injuries sustained when the device planted under his car detonated early Monday, the Investigative Committee said in a telegram statement and as reported by Bloomberg. It opened a murder investigation and said the involvement of Ukrainian special services in the killing was one potential theory being examined. Ukraine hasn’t commented.
Russia steps up attacks on Ukraine grain facilities in Black Sea ports… Russia has intensified its attacks at Ukraine’s Odesa ports in the Black Sea, including Pivdennyi, the country’s largest, reports Bloomberg. A shipping terminal belonging to oilseed firm Allseeds was attacked over the weekend, and the facility was damaged, according to a spokesperson for Vice Prime Minister Oleksiy Kuleba. The company confirmed that its terminal came under bombardment on Dec. 20 and at least one person was killed. “The strike caused extensive damage, including significant fires on site, the destruction of thousands of tons of stored sunflower oil, and damage to critical infrastructure,” Allseeds said on its website, as reported by Bloomberg. Russia again delivered a strike at Pivdennyi port overnight, Kuleba said. Thirty containers with flour and vegetable oil caught fire after the attack. Meanwhile, Russia said a drone attack damaged infrastructure and vessels at the Black Sea port of Taman, which handles products including grains, fertilizers and oil. The assault struck two tankers and two piers at the port’s Volna settlement, local authorities said on Telegram. They added that one connecting pipeline at the terminal and two storage tanks were also damaged. “Ukraine and Russia are major exporters of grain and sunflower oil, and the recent pickup in attacks on infrastructure risks slowing the pace of shipments,” said Bloomberg.
Federal Reserve Bank of Cleveland president says FOMC should pause on rate cuts due to inflation concerns… Federal Reserve Bank of Cleveland President Beth Hammack says U.S. monetary policy is in a good place to pause and assess the effects of 75 basis points of rate cuts in the economy during the first quarter. “Where we are today is my base case that we can stay here for some period of time until we get clearer evidence that either inflation is coming back down to target or the employment side is weakening more materially,” Hammack said in an interview for the Wall Street Journal’s Take On the Week podcast conducted Thursday and aired Sunday, and as reported by Bloomberg. The Fed’s latest interest rate cut on Dec. 10 faced three dissents, the most since 2019. Officials are divided about the appropriate path for rates, with some policymakers more concerned about a cooling labor market and others saying the Fed should prioritize reining in above-target inflation. “We took 75 basis points off of the policy rate, which should help support that labor side of our mandate, but we do need to be mindful,” said Hammack, who will be a voting member for the Federal Open Market Committee in 2026. “I’m very focused on making sure that we can get inflation back to target. That is one of our primary objectives and it’s important that we complete the job.” Hammack said U.S. inflation has been stuck near 3% for much of the past year and a half and input costs for businesses are still rising, which could lead to renewed price increases. That reinforces the need for caution, she said.
U.S., Ukraine Europe hold “productive, constructive” peace-deal meetings… U.S. special envoy Steve Witkoff said Trump administration officials held “productive and constructive” meetings with Ukrainian and European counterparts in Florida over the weekend to end Russia’s war, Bloomberg reported. Topics discussed included further developing the existing 20-point plan, a U.S. security guarantee framework and the economic development plan for Ukraine, according to Witkoff. Ukrainian President Volodymyr Zelenskiy cast doubt on the Kremlin’s commitment, saying “the real signals coming from Russia remain only negative” with assaults and war crimes continuing.
NEC’s Hassett: Supreme Court ruling against U.S. tariffs would create “major administration problem”… A Supreme Court ruling that scraps U.S. trade tariffs — and refunds the import fees collected — would create a major “administrative problem,” the President Trump’s top economic adviser said Sunday. “We really expect the Supreme Court is going to find with us,” Kevin Hassett, director of the National Economic Council, told CBS’s Face the Nation and as reported by Bloomberg. Even if the court didn’t find in the Trump administration’s favor, Hassett argued it would be “pretty unlikely that they’re going to call for widespread refunds because it would be an administrative problem to get those refunds out there.” The Supreme Court is weighing a legal challenge to tariffs Trump imposed on dozens of nations under the 1977 International Emergency Economic Powers Act. Administration officials have drawn up options for reimposing import taxes in case of an adverse ruling, while publicly maintaining that a court defeat is unlikely.
China slaps new duties on EU dairy imports… China has levied initial duties on some dairy imports from the European Union following an anti-subsidy probe, reports Bloomberg. The duties of up to 43% will be imposed on products including some fresh and processed cheeses and cream. French dairy firm Fromarsac is facing levies of 30%, while some companies under Dutch cheesemaker FrieslandCampina have been hit with 43% levies, said Bloomberg. China’s proposed measures could worsen trade tensions with Europe, where the EU has imposed tariffs as high as 45% on electric vehicles from China.
USDA cattle-on-feed report mostly near market expectations; placements less than expected… USDA on Friday afternoon released its December cattle-on-feed report. The agency reported Cattle and calves on feed for the slaughter market in the U.S. for feedlots with capacity of 1,000 or more head totaled 11.7 million head on December 1. The inventory was 2 percent below December 1, 2024. Placements in feedlots during November totaled 1.60 million head, 11 percent below 2024. Net placements were 1.54 million head. Placements were the lowest for November since the series began in 1996. During November, placements of cattle and calves weighing less than 600 pounds were 435,000 head, 600-699 pounds were 375,000 head, 700-799 pounds were 320,000 head, 800-899 pounds were 255,000 head, 900-999 pounds were 130,000 head, and 1,000 pounds and greater were 80,000 head. Marketings of fed cattle during November totaled 1.52 million head, 12 percent below 2024. Marketings were the second lowest for November since the series began in 1996. Other disappearance totaled 53,000 head during November, 4 percent below 2024, said USDA.
Cattle futures bulls keep their foot on the gas… February live cattle futures on Friday rose $2.40 to $230.80 and hit a seven-week high. January feeder cattle futures gained $5.325 to $345.60 and also hit a seven-week high. The cattle futures markets bulls are flexing their muscles after producing new for-the-move highs and technically bullish weekly high closes on Friday. Near-steady cash cattle prices in trade last this week and improved boxed beef values should keep selling interest in cattle futures limited in the near term. More active cash cattle trading late last week saw USDA reporting steers and heifers fetched an average price of $227.89. That is just slightly down from the prior week’s average cash cattle trade reported by USDA at $228.19.
Lean hog futures traders await quarterly H&P report Tuesday… February lean hog futures on Friday rose 37 1/2 cents to $84.50 and hit a seven-week high. The bullish near-term chart posture for lean hog futures and recently rebounding cash hog market set the futures market up for some more speculator buying interest this week. The latest CME lean hog index is up 1 cent to $83.88. Today’s projected cash index price is down 15 cents to $83.73. The national direct five-day rolling average cash price Friday was $70.17. Hog traders are awaiting the quarterly USDA hogs and pigs report Tuesday afternoon, which is expected to show a decline in inventories and kept for breeding numbers.