Good morning!
Grain futures firmer overnight… At 6:00 a.m. CT, December corn was up 3/4 cent. November soybeans were 10 1/4 cents higher. December soybean meal was up $1.60 and hit a 2.5-year high. December bean oil was 46 points higher. December SRW and HRW wheat were both 2 1/2 cents higher. The surging meal market is leading soybeans higher. Corn and winter wheat futures markets are pausing at mid-week, due in part to anticipation of the general marketplace’s reaction, and more specifically the bond market, to this afternoon’s FOMC decision. (See item below.) The Malaysian palm oil futures market was closed today for a holiday. The key outside markets today see the U.S. dollar index near steady. October Nymex WTI crude oil prices are lower and trading around $103.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 5.00%.
Heavy rains and thunderstorms continue in parts of the Midwest… The National Weather Service today said a slow-moving front will remain the focus for thunderstorms and heavy rainfall across the north-central Plains and Missouri Valley as it begins to gradually lift northward over the next few days. In the near-term, heavy rainfall and flash flooding are anticipated over northeast Kansas and northwest Missouri this morning. This afternoon, the front will lift northward and begin to shift the threat of scattered heavy rainfall towards the Northern Plains, upper Midwest, and Ohio Valley through Friday. Meantime, the Southwest is equally busy with heavy rainfall as an upper-level trough funnels monsoonal moisture into the Four Corners region. Cooler air from Canada is beginning to dip into the northern-tier states, bringing cooler-than-normal temperatures. However, the persistent heat dome remains strong across the South, resulting in a pronounced north-south temperature contrast. High temperatures in the low 70s and upper 60s can be expected north of the slow-moving front in the central Plains and Midwest, compared to upper 90s and triple-digit highs ahead of the front across the southern Plains and mid/lower Mississippi Valley.
Fed’s monetary policy meeting ends today; rate hike expected… The Federal Reserve this afternoon is expected to raise the target range for the federal funds rate by 25 basis points to 3.75%-4.00%, marking the first rate hike since 2023, as inflation remains well above target and the energy shock stemming from the war with Iran continues to weigh on the outlook. U.S. headline inflation held at 3.4% year-on-year in August, while core inflation was at 2.4%. Meanwhile, diesel prices have risen to $6 a gallon, adding further pressure to the inflation outlook as an end to the U.S.-Iran conflict appears increasingly distant. Fed Chairman Kevin Warsh will also hold a press conference this afternoon. Financial market watchers are very curious to see how Warsh’s comments impact the bond markets, which have been jittery lately.
Crude oil prices back down a bit… Nymex crude oil futures fell to around $104 a barrel today, retreating after two consecutive sessions of gains as signs of rising U.S. inventories weighed on the market. The American Petroleum Institute reported a 7.1 million-barrel increase in U.S. crude stockpiles last week, alongside higher gasoline and distillate inventories, with official government data due later today. Supply concerns nevertheless remain elevated. Saudi Arabia’s East-West pipeline remains offline, although U.S. Energy Secretary Chris Wright said the outage should last only a matter of days. Iran-backed Houthi militants are advancing toward the Bab el-Mandeb Strait while intensifying attacks on Saudi targets and regional shipping routes. The disruption has reportedly prompted Saudi Aramco to delay some deliveries to European customers, increasing competition for alternative supplies. Libya also experienced a supply halt. TradingEconomic.com
Saudi Arabia to push more oil through Strait of Hormuz… Saudi Arabia is ramping up prompt sales of crude from outside the Strait of Hormuz following the shutdown of the kingdom’s East-West pipeline, which halted cross-country flows to its Red Sea coast. “Saudi Aramco has sold about 20 million barrels to Asian refiners this week that can be picked up this month and next from just outside Hormuz, according to traders familiar with the matter, who asked not to be named,” Bloomberg reported. The buyers included Chinese state-owned and independent processors, and other importers in East Asia, they said. “The global oil market is focused on the fallout from the halt of the pipeline, which was the primary link that helped Saudi Arabia to circumvent the U.S.-Iran war-induced turmoil in Hormuz. The conduit was shut last week after attacks, and there’s been no official word on when operations will resume. The rising spot sales via the Persian Gulf suggest Saudi Arabia is now seeking to pivot back toward its traditional route through Hurmuz even as risks to shipping persist.
U.S.-China officials to talk trade, pre-summit… Prospects for an extension to the U.S.-China trade truce are solidifying as the two sides discuss slashing tariffs on goods including American energy and agricultural products ahead of the leaders’ summit next week, Bloomberg reports. “Treasury Secretary Scott Bessent said Tuesday he’ll meet this weekend with his Chinese counterpart, He Lifeng, ahead of the summit between President Trump and Xi Jinping set for Sept. 24 in Washington. Earlier, Bloomberg News reported the U.S. and China are discussing lowering tariffs on certain goods. Next week’s meetings are also likely to result in an agreement to cut duties on Chinese inputs for manufacturers, according to people familiar with the matter,” said the report. “An extension of the one-year trade truce would remove one potential stumbling block for a world economy grappling with wars in Iran and Ukraine, elevated oil prices and rekindling inflation concerns that are pushing up global borrowing costs. Still, expectations for the summit remain tempered by China’s relations with Iran and Russia as well as competition over leading-edge technologies such as artificial intelligence,” said the report.
European Union chief floats Canada becoming associate member of EU… European Commission President Ursula von der Leyen has proposed Canada becoming the first associate member of the European Union. She offered the invitation during her state-of-the- union address in Strasbourg, France, today, with Canadian Prime Minister Mark Carney in attendance, Bloomberg reported. “In this new world, we must urgently re-imagine our partnerships and build global coalitions for our resilience and democracies,” von der Leyen said. “I would like to work with you on opening the door for Canada being the first associate member of the European Union.” Bloomberg said, “By creating a tailor-made title just for Canada, the EU is sending a powerful signal as a trading bloc that it can expand beyond its borders and reinvent itself in the aftermath of Brexit, when it lost an economic powerhouse. What this means in practice is another matter, with negotiations likely to take years.”
Cattle futures markets trending higher… October live cattle on Tuesday fell $1.55 to $220.70 and hit a four-week high early on. November feeder cattle lost $3.875 to $328.90 and hit a five-week high early on. The live and feeder cattle futures markets saw routine profit-taking pressure from the shorter-term specs and corrective action following recent good prices gains. Solidly higher cash trade last week did limit selling in futures. USDA at midday Tuesday reported no cash cattle trading so far this week. The agency said cash cattle traded last week at higher money, averaging $222.82, up $3.76 from the week prior’s cash trade average of $219.06. The noon report today showed mixed boxed beef prices, with Choice grade up $1.15 at $376.46 and Select grade down $0.19 at $354.36. Movement at midday was 56 loads. The Choice-Select spread is presently plus $22.10.
Lean hog futures at a 15-month low… October lean hogs on Tuesday fell $0.525 to $79.075 and hit a 15-month low. The hog futures market saw more technical selling pressure and weak long liquidation. The near-term chart posture has quickly changed from price-friendly to firmly bearish. A weakening cash hog market is also bearish for lean hog futures. The latest CME lean hog index is down 73 cents to $87.21. The national direct five-day rolling average cash hog price quote for Tuesday was $85.80.