Good morning!
Grains mixed overnight… As of 6 a.m. CT, December corn was 1 ¼ cents lower. November soybeans were up ¼ cent, while December soybean meal rose $1.10 and December soybean oil fell 15 points. December soft red winter wheat gained 2 ¼ cents, while December hard red winter wheat gained 3 ½ cents. Grains saw narrow trading ranges overnight. Favorable harvest weather should allow rapid progress in the week ahead. Corn, soybeans and wheat futures saw technically bearish weekly closes on Friday. USDA will deliver weekly export inspections data Monday morning, with weekly crop progress data due in the afternoon.
Key outside markets show the ICE U.S. Dollar Index up marginally, not far off the 18- month high scored last week. Nymex December WTI crude oil was down 1.1% at $97.98 a barrel after seeing its biggest weekly gain since July. The yield on the 10-year Treasury note hovered near 5.09%. U.S. stock-index futures pointed to a higher start ahead of a crucial week that will see the release of earnings from major tech companies.
Putin proposes summit… Russian President Vladimir Putin proposed a summit with President Donald Trump and Chinese leader Xi Jinping in an attempt to negotiate an end to the war with Ukraine that would favor Moscow, the Wall Street Journal reported. The summit would exclude Ukrainian President Volodymyr Zelensky. The report said Putin floated the idea in an Oct. 9 phone call with Trump that also produced a deal for the U.S. to buy Russian diesel and facilitate its sale on the global market, the report said. A senior U.S. official told the Journal that Trump hadn’t agreed to a summit but could be receptive to the idea.
Russia waivers draw backlash… Trump on Friday waived new sanctions on Russia that were due to go into effect under the Graham Act he signed in September, further easing pressure on Moscow and drawing bipartisan objections. The Wall Street Journal reported the diesel deal and sanctions waivers are creating headaches for Republican candidates ahead of next month’s midterm elections. “I don’t think we can give Putin an inch,” said Mike Rogers, the Republican Senate candidate in Michigan. Iowa GOP Senate candidate Ashley Hinson said in a debate last week that Trump should consider alternative measures to lower energy prices at home. “We need to lower gas prices in this country. We need to lower diesel prices, but I don’t think we need to be making a deal with Russia to do it.” Bloomberg reported that House Speaker Mike Johnson, in a rare sign of disagreement with Trump, said Sunday he asked for consultations with the White House, calling Putin someone who “cannot be trusted.” Trump said the waivers were “in the national interests of the United States.”
Dry weather ahead… World Weather Inc. said late Sunday that U.S. crop weather is expected to be dry in the Delta, lower eastern Midwest and southeastern states for the next 10 days. Hard red winter wheat areas will get some rain at the end of the week and into the weekend, but bigger rain is expected next week that will also affect the western and northern Midwest. The forecaster noted rain is still needed in great quantities in the U.S. Pacific Northwest, west-central High Plains and “definitely from the Delta into the Tennessee River Basin.” In South America, the forecaster said rain in center west and northeastern Brazil was reduced somewhat from Friday’s forecast for the week but rain and scattered thunderstorms are still anticipated over the coming 10 days. Temperatures in Argentina will be cooler than usual the next couple of weeks, with timely rain expected late this week and through the coming weekend.
Brazil presidential race tightens… A new poll published Monday showed right-wing candidate Flavio Bolsonaro and President Luiz Inacio Lula da Silva in a virtual tie less than a week ahead of an Oct. 25 runoff election. A survey by BTG Pactual/Nexus shows Bolsonaro would take 50.3% of the vote to Lula’s 49.7%, Bloomberg reported. Bolsonaro held a 51.6%-48.4% advantage over the incumbent in a poll last week. The survey has a margin of error of plus or minus 2 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.
Fund liquidation continues… Hedge funds and other large speculative traders continued to shed long positions in the wake of the Oct. 9 USDA WASDE and Crop Production reports, Commitments of Traders data from the Commodity Futures Trading Commission showed on Friday. Money managers reduced net long positions in corn futures and options by another 86,482 contracts as of Oct. 13, the report said, taking their net long to 230,877 contracts as of Tuesday. December corn touched limit-down on Oct. 9 following the USDA data and ended the day with a loss of more than 20 cents. Speculators trimmed their net long position in soybean futures and options by 14,169 contracts to a net long of 237,491 contracts. Managed money, meanwhile, boosted a net short position in Chicago soft red winter wheat by 3,495 contracts to 33,038 contracts, while trimming a net long position in Kansas City hard red winter wheat by 6,649 contracts to 17,391 contracts. Traders pay particular attention to large speculative traders because they can drive significant market momentum, while extreme positions can signal a market is vulnerable to a reversal or correction.
China’s economic growth accelerates… Government data showed China’s economy expanded at an accelerated pace, rising 4.5% in the third quarter from a year earlier, as robust foreign demand for the country’s technological goods largely offset drags from a deepening property slump and sluggish consumer demand, CNBC reported. Third-quarter growth beat Reuters-polled economists’ expectation of a 4.4% expansion, and was also higher than the three-year low of 4.3% in the second quarter. The report shows an economy still leaning on factories and overseas buyers while households and private investors hold back, CNBC reported, with growth through the first nine months averaging 4.6%, broadly in line with Beijing’s official target range of 4.5% to 5%.
Palm oil hovers near 3-week high… Malaysian palm oil futures held above MYR 4,750 a ton, hovering near a three-week high amid a firm tone for edible oils on China’s Dalian exchange and robust export demand, according to Trading Economics. Cargo surveyors saw a monthly rise of 43.2% to 58.3% in Malaysian palm oil shipments during the first half of October, with festival-driven buying from India, the world’s largest palm oil importer, offering further support, the report said, noting that Indonesia raised its palm oil reference price by 3.44% to $1,042.15 per ton.
Live cattle hit 9-week high… December live cattle futures rose $1.10 to end Friday at $228.35, scoring a nine-week high and posting a weekly gain of $1.30. November feeder cattle futures lost $0.05 to $341.90, after hitting a three-month high early on and ending the week down a nickel.The live cattle futures market saw technical buying to end the trading week, including a technically bullish weekly high close that sets the market up for some follow-through buying early next week. Firmer cash cattle trade late last week also supported buying interest.
Another tough week for hogs… December lean hog futures rose $0.35 Friday to close at $66.925, leaving a weekly loss of 90 cents after hitting another round of contract lows last week. Friday saw lukewarm short covering, while technicals and cash fundamentals remain solidly bearish. Monday’s projected CME index price is down another 90 cents at $74.19. The national direct five-day rolling average cash hog price quote for Friday was $70.60.