Good morning!
Grain futures mixed overnight… At 6:00 a.m. CT, December corn was up 3/4 cent. November soybeans were 11 3/4 cents lower. December soybean meal was down $5.50. December bean oil was 38 points lower. December SRW wheat was up 1/2 cent. December HRW was up 1 3/4 cents. Grain market bulls are still seeking some fresh, price-positive news to restart their price uptrends, but that news has been absent. The key outside markets today see the U.S. dollar index firmer. October Nymex WTI crude oil prices are lower and trading around $100.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.93%.
Still more rain, thunderstorms in Northern Plains, upper Midwest… The National Weather Service today said there will be active weather across the northern Rockies into the Great Lakes into the weekend, with showers and thunderstorms. Heavy rainfall and flash flooding are possible across the Rockies/Plains eastward into the upper Mississippi Valley and Midwest. On Saturday, the system continues to progress eastward into the Great Lakes. This will shift the heavy rainfall/flash flooding potential into portions of the Midwest, Ohio Valley, and lower Great Lakes through Saturday. Gradually the system moves towards the Northeast/Mid-Atlantic by late Saturday/early Sunday. In contrast to an active northern-tier states, ridging over the southern Plains and Southeast will maintain hot and humid conditions across much of the south-central U.S. Temperatures will remain well above seasonal averages.
U.S. reopening its largest border crossing for Mexican cattle shipments… The U.S. is reopening its biggest port for Mexican live cattle shipments, “marking a significant step in the Trump administration’s efforts to ease the pressures of a domestic cattle shortage,” said a Bloomberg report. The port in Santa Teresa, New Mexico, is the second to reopen, after the U.S. in late 2024 stalled livestock shipments from Mexico in order to prevent the spread of the deadly New World screwworm. It’s far larger than the Arizona plant that resumed operations last month. Nearly 500,000 cattle were shipped through the Santa Teresa port in 2024, amounting to about 40% of the U.S.’s total imports from Mexico, according to USDA. The port is scheduled to reopen on Sept. 24, and agency staff are already preparing on site, USDA Secretary Brooke Rollins said in a Thursday press conference.
Bank of Japan joins Fed, Bank of England in raising rates this week… The Bank of Japan today raised its key short-term rate by 25bps to 1.25% in a 7-2 vote at its September meeting, taking borrowing costs to their highest level since April 1995. The split decision highlighted growing divisions over the pace of policy normalization as the BOJ responds to persistent inflation, including higher oil prices. The hike came just three months after the previous increase, the shortest interval between hikes since 1990, and followed increased pressure from Washington, including calls from U.S. Treasury Secretary Scott Bessent for higher rates. Earlier this week the Federal Reserve and Bank of England also raise their main interest rates.
China’s yuan currency climbs ahead of Trump-Xi summit… The Chinese yuan on Friday climbed to its strongest level in more than four years as China’s central bank guided the currency higher ahead of a meeting between Chinese leader Xi Jinping and President Trump. A stronger yuan could help ease some friction between the world’s two largest economies, with Western officials arguing that an undervalued yuan gives Chinese exports a competitive advantage and contributes to the country’s record trade surplus. The yuan is now heading for a seventh straight quarterly gain, making it Asia’s best-performing currency this year, supported by China’s surging exports and robust conversion flows. Meantime, “expectations are high that the summit may result in an extension of the bilateral trade truce that will expire in November, after the two nations have started talks over slashing tariffs on certain goods, including on American energy and agricultural shipments, as well as lower duties on Chinese inputs for manufacturers,” Bloomberg reported. “With representatives from state-owned food trading firm Cofco likely to join President Xi’s delegation, investors will be watching for fresh Chinese orders for U.S. agricultural products such as soybeans, analysts say.” News reports overnight said Trump is going to hold off on any new tariff announcements until after his summit with Xi.
Trump to allow Iranian officials at U.N. meeting in New York City… The Trump administration will allow the core members of an Iranian delegation to travel to the United Nations in New York for the General Assembly next week, the State Department said, even as the U.S. and Iran remain at war in the Middle East. Bloomberg reported that officials from Tehran will be permitted to enter the U.S. for the annual high-level week consistent with host country obligations, a State Department spokesman said in an emailed statement on Thursday. The delegation will face travel restrictions within the U.S. and won’t be permitted to buy luxury and other goods, in accordance with U.S. policy, the spokesman said, adding that the delegation is smaller than last year.
El Niño producing drier Indian monsoon season… India is on course for its driest monsoon in 17 years as a strengthening El Niño curbs rainfall, threatening crop yields and raising food-price risks, said a Bloomberg report. Cumulative rainfall during the June to September monsoon season is 15% below the long-term average so far, according to the India Meteorological Department. If the deficit persists, it would be the weakest monsoon since 2009, when precipitation was 18% below normal. The weather office had forecast a 10% shortfall for this season back in May. “Adequate monsoon rains are crucial for the hundreds of millions of Indian farmers who depend on the seasonal precipitation to irrigate fields in the country, which is among the world’s biggest producers of rice, sugar and cotton. The season accounts for most of India’s annual rainfall,” said the report. The prolonged shortfall could hurt both the current harvest and the next crop cycle.
“Bond King” warns that a U.S. recession could cause global debt crisis… DoubleLine Capital chief executive Jeffrey Gundlach has warned that the next U.S. economic downturn could trigger a debt crisis that sends long-term Treasury yields sharply higher — defying decades of conventional wisdom that bonds will always serve as safe haven during times of economic strife. “Such a scenario could push the Federal Reserve and the Treasury into unconventional policies, such as the central bank buying long-dated bonds in a repeat of Operation Twist, in which the Federal Reserve suppressed long-end rates while keeping short-end rates elevated, or even a debt restructuring,” said a Bloomberg report. “If there’s a recession, there’s going to be incredible attention paid to the fiscal situation,” Gundlach, often referred to as the “Bond King,” said at an event in New York. “You would have the budget deficit go easily to 12% of GDP. That would create $3 trillion of interest expense probably per year, and you just can’t do it.” Gundlach cited the breakdown of closely watched market correlations, including the ratio of gold and copper to Treasury yields, since 2020 as evidence of a regime change where the secular direction for interest rates is higher. The U.S. dollar, meanwhile, doesn’t hold the same inverse relationship to U.S. stocks, he said. “We’re in backward land and in the next recession long-term rates are going to go up and they’ll go up because of the debt crisis that it’s going to usher in,” he said.
Malaysian palm oil futures weaker… Malaysian palm oil futures on Friday hovered below MYR 4,910 per MT, reversing recent gains as weakness in rival edible oils on Dalian and Chicago markets weighed on sentiment. Prices also pulled back from a 21-month high on profit-taking, while sluggish exports added pressure, with cargo surveyors estimating September 1–15 palm oil shipments fell between 17.8% and 25.6% from August. Crude oil also eased as extra cargoes tempered supply concerns, reducing palm’s biodiesel appeal. Even so, futures were still on track for a weekly gain of about 1.9%, supported by expectations of tighter supplies ahead. Indonesia’s B50 mandate is set to divert more palm oil to domestic use, while El Niño risks could curb output in both Indonesia and Malaysia. In India, imports rose 7% in August to 782,761 MT, the highest since February, as refiners replenished stocks ahead of the festival season. Separately, Malaysia raised its October crude palm oil reference price but kept the export duty unchanged at 10%.
Cattle futures bulls losing steam… October live cattle on Thursday fell $2.80 to $215.65. November feeders lost $4.45 to $318.65. The live and feeder cattle futures markets saw heavy profit-taking and weak long liquidation as the bulls are fading badly down the stretch this week. Lower boxed beef prices at noon also encouraged the sellers. USDA at midday Thursday reported cattle trading turned more active, with steers averaging $222.17 and heifers averaging $223.00. The agency said cash cattle traded last week at higher money, averaging $222.82. Cattle traders are awaiting this afternoon’s monthly USDA cattle-on-feed report.
Lean hog futures bulls struggle to stabilize prices… October lean hog futures on Thursday rose $0.225 to $78.90 and hit another 15-month low early on. The lean hog futures market saw tepid short covering following the recent steep price downdraft. Bulls are still on shaky technical ground. The near-term chart posture is firmly bearish. A weakening cash hog market is also negative for lean hog futures. The latest CME lean hog index is down 79 cents to $85.81. Today’s projected CME index price is down another 79 cents at $85.02. The national direct five-day rolling average cash hog price quote for Thursday was $84.24.