Good morning!
Grain futures rally overnight… At 6:00 a.m. CT, December corn was up 5 1/4 cents. November soybeans were 6 cents higher. December soybean meal was up $2.10. December bean oil was 35 points lower. December SRW wheat was up 7 1/2 cents. December HRW was up 9 cents. The grain markets rallied overnight as the bulls were encouraged by reports of fresh China purchases of U.S. soybeans and by positive comments from U.S. and Chinese officials ahead of this week’s summit between Presidents Trump and Xi. Wheat markets got further support from the Russia-Ukraine war still running hot, which is disrupting grain shipments out of the Black Sea region. On tap today is the weekly USDA export inspections and weekly crop progress reports. The key outside markets today see the U.S. dollar index slightly firmer. October Nymex WTI crude oil prices are sharply lower and trading around $97.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.95%.
China buys more U.S. soybeans ahead of Xi visit to U.S. … China bought more U.S. soybeans just days ahead of a key leaders’ summit, a sign of further progress toward Beijing’s pledge to boost purchases of American farm goods, Bloomberg reported overnight. “State-owned firms booked at least four cargoes — or about 260,000 tons — of U.S. soybeans late last week, said traders with knowledge of the deals. The supplies are mainly for loading in December and January from the Pacific Northwest and the U.S. Gulf, they said, asking not to be named as they weren’t authorized to talk to the media.” Earlier this month, China passed the halfway mark of a pledge to buy at least 25 million tons of U.S. soybeans annually through 2028, part of a broader trade truce struck by the two countries’ during a summit in South Korea last October. Beijing has also promised to buy at least $17 billion of U.S. farm products annually on top of the soybean commitment, although significant purchases of other major crops, including wheat and corn, have yet to materialize.
“China’s Selective Crop Buying Tests U.S. Truce Before Summit,”… That’s a Bloomberg headline overnight. “China is over halfway to meeting its pledge to buy 25 million tons of U.S. soybeans this year, but progress on a separate commitment to spend billions of dollars more on American crops has largely stalled. The mixed signals ahead of this week’s presidential summit in Washington underscore the fragility of a trade truce both sides have worked carefully to preserve. Agriculture has proven to be an area where the U.S. and China have found common ground, offering tangible incentives to help build a more stable relationship that’s usually defined by economic and geopolitical rivalry,” said the report. “Hitting the annual target for soybeans, at least, seems doable. Since presidents Trump and Xi Jinping last met in May, sales of the new crop harvested in the fall have picked up dramatically. But the second pledge to buy at least another $17 billion of U.S. farm products at this point looks challenging and may depend on Beijing offering relief on tariffs if it’s to be met,” said the report. The two nations have discussed cutting tariffs on goods including American energy and agricultural products ahead of the summit, a move that traders say could open the door to stepped up purchases from the U.S.
U.S., China begin trade talks in New York ahead of Trump-Xi Summit later this week… U.S. and Chinese officials have begun talks in New York to lay the groundwork for a high-profile summit between Presidents Donald Trump and Xi Jinping. The negotiators are expected to discuss issues spanning trade and investment, artificial intelligence and the Iran war. A trade truce that saw both sides lower tariffs and export restrictions is set to expire in November and is high on the agenda for the talks. The negotiators are led by U.S. Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng. Bessent said discussions on Sunday had been “very successful,” while Li Chenggang, the top Chinese trade negotiator, said they had been conducted in a good atmosphere. An announcement of new U.S. tariffs over allegations of trading partners’ excess manufacturing capacity has been delayed until after the meeting, according to people familiar with the matter and as reported by Bloomberg. “The U.S. and China have been working to reduce levies on American energy and agricultural products, Bloomberg reported earlier, part of a broader initiative to ease barriers on $30 billion worth of products from each side under the Board of Trade mechanism launched earlier this year,” said the report.
Some more rain in upper Midwest early-week, but drier, cooler weather coming… The National Weather Service today said the upper Midwest, Ohio Valley/mid-Atlantic and southern Plains into the Southeast will see periods of showers and thunderstorms today. A gradual transition drier weather and cooler temperatures is expected across the north-central and eastern U.S. behind an advancing frontal system, with highs in the 60s. The Southeast and southern Plains will remain warmer and humid with highs in the 80s and 90s.
Ukraine unleashes major drone attack on Russia… A Moscow oil refinery was hit during drone attacks that were part of the largest overnight Ukrainian barrage this year. Russia’s Defense Ministry said it downed 1,110 Ukrainian drones across 19 regions of Russia as well as in Crimea, Bloomberg reported. The refinery strike damaged a facility at the site, with the Ukrainian General Staff saying the AVT-6 primary crude oil distillation unit and other units were hit, and large fires were recorded at the facility. Oil producer Gazprom Neft PJSC owns the refinery, located about 16 miles from the Kremlin. It has a processing capacity of about 245,000 barrels a day and is one of the key fuel suppliers for the capital region. Ukrainian President Volodymyr Zelenskyy said that a Pelican ballistic missile was involved in the attacks, the first publicly confirmed combat use of the system. Its manufacturer Fire Point puts the missile’s range at only 200 kilometers on its website, though, and it was unclear from Zelenskyy’s post what part it played and where. The strikes on the Moscow area, including on the refinery and a logistics center, had “very significant impact,” Zelenskyy said on X. The refinery strike was the latest indication that neither Ukraine nor Russia has any intent to de-escalate attacks on each other.
Oil, gas shipments through Strait of Hormuz at 6-month high: U.S. Central Command… Oil and liquefied natural gas shipments through the Strait of Hormuz in the past two weeks reached the highest level in six months, signaling that U.S. naval protection and mine clearance efforts are “paying off,” a regional US commander said. “Clearly, momentum is building,” Admiral Brad Cooper, head of U.S. Central Command, said in a video message Saturday, Bloomberg reported. The strait’s primary transit lanes are clear of mines and Persian Gulf allies have shipped more than 1 billion barrels of crude through it “in the last couple months,” he said. Meantime, Saudi Arabian authorities issued two early-morning air raid alerts for Riyadh on Saturday, the first in the capital since the height of the U.S.-Iran war in March and April. An airstrike hit jet fuel facilities at King Khalid International Airport in Riyadh, according to the Wall Street Journal, which cited three officials with knowledge of the incident. The newspaper said that black smoke could be seen at the airport.
Federal Reserve official: Inflation reaching all corners of U.S. economy… Federal Reserve Bank of Minneapolis President Neel Kashkari said inflation remains too high and that pressures have broadened beyond the oil-price shock of the Iran war. “The inflation that the American people are feeling every day is much beyond just oil prices — it’s in all aspects of the economy,” Kashkari said in an interview on Fox News’ Sunday Morning Futures, according to Bloomberg. Fed officials have grown increasingly concerned that inflation isn’t just contained to the categories impacted by the conflicts in the Middle East or tariffs. Kashkari said there’s evidence of inflation in the service sector, as well. He said it’s the Fed’s job to cool inflation to target and that the U.S. central bank has the tools to do so. Kashkari said the US economy has been very resilient despite geopolitical conflicts and trade issues, and the labor market remains strong. “My hope is — as some of those conflicts go to the background — that the growth can really take over and hopefully bring inflation down,” Kashkari said. “Hopefully disinflation can take over, which will make the Fed’s job a lot easier,” he said.
Record low August cattle placements: USDA’s monthly Cattle on Feed Report released after Friday’s close showed a 1% rise from a year ago in the number of cattle on feed, while placements during August slumped 9% to the lowest reading for the month on record going back to 1996. August marketings were down 3% from a year ago. Read: Cattle on Feed inventory up just slightly from year-ago levels
Malaysian palm oil futures firmer… Malaysian palm oil futures edged higher Monday, hovering near MYR 4,900 per MT after recent weakness, supported by firmer soyoil on China’s Dalian market and expectations of tighter supplies. Indonesia’s B50 biodiesel mandate is set to divert more palm oil to domestic use, while El Niño risks could curb output in both Indonesia and Malaysia. Demand prospects also improved as palm oil imports by top consumer India rose 7% from July to 782,761 MT in August, the highest since February, with refiners replenishing stocks ahead of the festival season. Separately, Malaysia raised its October crude palm oil reference price but kept the export duty at 10%. However, a stronger ringgit tempered gains, along with weaker crude oil prices amid renewed efforts to ease Middle East tensions. Market focus now turns to a potential import tariff cut in India, with an official announcement expected soon that could sway demand for Malaysian palm oil.
Cattle futures bulls fade as technicals weaken… October live cattle futures on Friday rose $0.275 to $215.925, and the week were down $3.75. November feeder cattle futures lost $0.65 to $318.00 and for the week down $10.175. The cattle futures markets bears were in command last week, including a technically bearish weekly low close in November feeders on Friday. The near-term technical postures for both markets have deteriorated the past few weeks, which has the speculative bulls mostly standing on the sidelines. However, the cattle bulls did get some good news late Friday afternoon. USDA’s monthly cattle-on-feed report. The report did favor the bullish camp of cattle futures traders. However, it can be argued the report contained no major surprises. USDA at midday Friday reported more active cash cattle trading late last week, with steers averaging $222.17 and heifers $222.32. The agency reported average cash cattle trading the week prior was $222.82.
Lean hog futures prices continue to slide… October lean hog futures on Friday fell $0.80 to $78.10, hit a 15-month low and for the week were down $3.425. The hog futures market saw another dreadful week, including Friday’s technically bearish weekly low close. Recent heavy profit-taking and weak long liquidation from the shorter-term speculative traders has the bulls running for cover. The sell offs in the cattle futures markets last week are also bearish for hog futures. The latest CME lean hog index is down 79 cents to $85.02. Today’s projected CME index price is down $1.00 at $84.02. The national direct five-day rolling average cash hog price quote for Friday was $84.14. Wholesale pork values have dropped to multi-year lows. The CME cash hog index has also slid to a seven-month low. Hog slaughter has outpaced year-ago levels and average hog weights have edged higher, leaving the market with ample pork supplies.