Good morning!
Grain futures mixed-weaker overnight… As of 6:00 a.m. CST, December corn was down 1 1/4 cents. January soybeans were 7 1/2 cents lower. December HRW and SRW wheat futures markets were up 1/2 to 1 3/4 cents. Corn and soybeans are seeing modest, routine corrective price pullbacks at mid-week, amid price uptrends in place on the daily bar charts. Winter wheat bulls continue to work on restarting their price uptrends. Grain traders will get to examine the CFTC’s commitment of traders report this afternoon (See item below). The key outside markets early this morning see the U.S. dollar index slightly higher. Nymex crude oil prices are lower and trading around $59.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.13 percent.
Cloudy, rainy and patchy fog over the central United States… The National Weather Service today reports low pressure and the associated front over the Southwest will move eastward to the central/southern Plains by Thursday, then northeastward to southeastern Canada by Friday. The system will produce heavy rain and thunderstorms over parts of the Southwest and rain/higher-elevation snow over parts of the central/southern Rockies overnight Wednesday into Thursday. The Midwest will see scattered light rain, drizzle and patchy fog today, with seasonally cool temperatures. The system will produce rain with embedded thunderstorms over parts of the southern Rockies/southern High Plains on Wednesday into Thursday. On Thursday, heavy rain and thunderstorms will develop over the southern Plains and spread into the middle/lower Mississippi Valley. Also on Thursday, rain will move into the Ohio Valley, expanding into the central Appalachian by Thursday evening and the Mid-Atlantic/Northeast overnight Thursday into Friday.
Jittery stock market awaits Nvidia earnings today… Goldman Sachs President John Waldron said stock indexes are primed for possible further declines as investors await the quarterly earnings report from technology leader Nvidia Corp later today. “It strikes me the market could pull back further from here,” Waldron said in an interview on the sidelines of the Bloomberg New Economy Forum in Singapore on Wednesday. “I do think the technicals are kind of more biased for more protection, and more downside.” The S&P 500 is down more than 3% this month, on course for its worst month since March, while volatility has surged. A sell-off in the world’s largest technology companies has reignited a debate on AI, and whether it is generating enough revenue or profit to justify the massive spending on infrastructure. “You’re seeing in the markets right now a pullback, which I think is healthy — markets have run quite a bit this year,” he said on Bloomberg Television. “Markets are heavily focused on this AI dynamic: are we going to get the returns on capital invested that the market expects, and is that priced in? That’s a big debate.” Wall Street’s so-called fear gauge, the Cboe Volatility Index, topped 24 — above the key 20 level that causes concern for traders — and reached its highest in a month.
Gold, silver rally on safe-haven demand ahead of U.S. economic data… Gold and silver prices were posting solid gains early Wednesday, extending gains from the previous session, as investors looked ahead to U.S. economic releases. Safe-haven demand was featured in the two precious metals, amid keener uncertainty ahead of the U.S. data points. Key focal points include the FOMC meeting minutes later today, followed by Thursday’s jobs report from the Labor Department, both of which could provide more clarity on the U.S. interest rate outlook. U.S. agencies have started rolling out economic data delayed by the federal government shutdown. Traders and investors worry that upcoming economic data could limit the Fed’s ability to ease further amid policymakers’ skepticism. Concerns over lofty tech stock valuations have weighed on risk sentiment, enhancing gold and silver’s safe-haven appeal amid the recent stock market sell-off.
CFTC COT data out today… The Commodity Futures Trading Commission will resume publishing its Commitments of Traders (COT) reports today and released a schedule for the publication of reports that were interrupted during the lapse in federal government appropriations. The reports will be published in chronological order beginning today at 2:30 p.m. CST. The report will include data from the first missed report, which would have published Oct. 3. To reduce the COT report backlog the CFTC will increase publication frequency, allowing for the backlog to be cleared by the report scheduled for Jan. 23. The schedule is consistent with prior post-government-shutdown publishing.
U.S. dairy herd on the rise… The U.S. milk cow herd is the biggest it has been in at least a quarter century, a positive sign as the meat industry suffers through tight supplies and consumers face record beef prices. The U.S. averaged 9.54 million milk cows in the third quarter, the most in data going back to 1998, according to USDA. That figure, which is about 200,000 more than in the year-earlier quarter, is also the steepest jump on record, Bloomberg reported. The boost in the milking herd shows U.S. dairy farmers are sending fewer cows to slaughter, opting instead to keep the animals for longer to breed beef-on-dairy calves destined to become meat in another year and a half. Those animals have become a profitable income stream amid an ongoing beef shortage. “This big jump in dairy cow numbers is largely due to the beef-on-dairy situation,” said Abbi Prins, a dairy and animal protein industry analyst at agricultural lender CoBank ACB and as reported by Bloomberg. “It makes more financial sense — the dairy producer is going to have more revenue coming from the beef-on-dairy calf rather than sending the female cow into her second career as a beef animal.” Tight cattle supplies in the U.S. have driven slaughter-weight animal prices to an all-time high this year, and availability is expected to remain limited. The shift with milk cows won’t be enough to turn around the cattle shortage issue, as dairy cows make up a small share of the broader U.S. herd. However, the significant increase could still help the U.S. calf crop see its first increase since 2018, helping to ease the tight supply situation.
Malaysian palm oil futures gain… Malaysian palm oil futures traded above MYR 4,200 per MT on Wednesday, rising for a fifth straight session amid stronger rival oils on the Dalian and Chicago exchanges. Prices continued to rebound from last week’s four-month low, lifted by data from Statistics Malaysia showing palm oil exports jumped 23.8% year-on-year in October. Expectations for firmer prices also grew as stricter land-seizure policies and plans to implement B50 biodiesel mandate in top producer Indonesia raised supply concerns, with analysts warning that tighter regulation and stronger domestic demand could curb exports ahead. Gains, however, were capped after the Malaysian Palm Oil Board set a lower crude palm oil reference price for December. In India, the world’s largest consumer, October palm oil imports fell to a 5-month low as buyers shifted to soybean oil, pushing 2024/25 imports down 16% to a 5-year low of 7.56 million MT. EU imports also declined, down 18% to 1.08 million MT so far in the 2025/26 season.
Cattle futures markets pause Tuesday… December live cattle on Tuesday fell $1.25 to $220.025. January feeder cattle lost 22 1/2 cents to $326.05. The live and feeder cattle futures markets paused after posting decent gains Monday. The bulls still have some work to do to climb out of their present holes. Keener risk aversion in the general marketplace so far this week limited speculator buying interest in the cattle futures today. Weakening cash cattle prices are also bearish for futures. USDA today reported very light cash cattle trading so far this week, with steers and heifers averaging $221.00. The agency Monday reported last week’s average cash cattle trading price was $225.06, down $3.64 from the week prior.
More chart-based selling in lean hog futures… December lean hogs on Tuesday fell 67 1/2 cents to $77.90 and hit a six-month-low. Lean hog futures today saw more technical selling pressure amid the near-term price downtrend that is firmly in place. Steadily falling cash hog prices and declining pork cutout values are also prompting selling pressure in lean hog futures, despite the futures’ discounts to the cash market. The latest CME lean hog index is down another 94 cents at $87.00. Today’s projected cash hog index is down 33 cents at $86.67. Tuesday’s national direct 5-day rolling average cash hog price quote is $77.31.