Good morning!
Grains extend drop overnight… As of 6 a.m. CT, December corn was down 2 1/4 cents. November soybeans fell 3 1/4 cents, while December soybean meal fell $1.20 and December soybean oil was off 4 points. December soft red winter wheat fell 4 cents, while December hard red winter wheat declined 4 3/4 cents. Soybean, corn and wheat futures extended declines overnight after ending Tuesday’s session at multiweek lows. Harvest pressure amid favorable weather over much of the Midwest (see item below) remains a weight, while soybeans have struggled despite a steady drumbeat of buying by China. Technical conditions are growing increasingly oversold.
In key outside markets, crude oil was pushing back to the upside after a whipsaw session on Tuesday. Nymex December WTI was up more than 2% to trade at $99.92 a barrel. The ICE U.S. Dollar Index was little changed near 101.73. The yield on the 10-year U.S. Treasury note was up slightly at 5.127%. Stock index futures pointed to a flat start for the S&P 500, with the tech-heavy Nasdaq set for a rise after SpaceX earnings as inventors await results from Meta and Tesla.
Weather signals swift harvest finish… A wet start to harvest season slowed activity from eastern Nebraska to Iowa into Michigan, but drier weather has allowed corn and soybean harvest to ramp up, while soft red winter wheat planting has proceeded near the usual pace. Rain during the next 10 days will be minimal over much of the region, allowing fieldwork to advance well around some mostly light precipitation Sunday into next Tuesday, according to World Weather Inc. Soil moisture remains favorable in most wheat areas, the forecaster noted, with exceptions from southeastern Missouri into portions of west-central Indiana and into central Kentucky.
Dollar vulnerable to oil weakness… A surge by the U.S. dollar earlier this month contributed to pressure on grain futures, with the ICE U.S. Dollar Index, which tracks the unit against a basket of six major rivals, hitting an 18-month high. The dollar has pulled back somewhat as credit-related worries around the AI sector have dented expectations for near-term Federal Reserve rate hikes which could leave the dollar vulnerable to a decline in oil prices, particularly if Middle East tensions ease, argued ING foreign-exchange strategist Francesco Pesole in a Wednesday note. “With the supply picture improving, elevated oil prices are relying increasingly on geopolitical risk,” he wrote. “FX markets may therefore start to price in a sharp decline in crude if signs of genuine progress emerge.”
More ports open to Mexican cattle imports… USDA on Wednesday said in an X post that it plans to resume cattle imports from Mexico at ports in Columbus, New Mexico, on Oct. 26 if conditions for safe trade are in place, and Nogales, Arizona, on Nov. 30, if conditions for safe trade are in place. Horse imports at Santa Teresa, New Mexico, are planned to resume on Oct. 26, USDA said. Livestock imports resumed in Douglas, Arizona, in August and in Santa Teresa, New Mexico, last month. USDA announced a phase-in reopening of the border earlier this year after halting imports last year in an effort to keep out the New World Screwworm parasite.
Bolsonaro and Brazil’s farm lobby… Brazil’s powerful farm lobby is expected to gain even more influence if challenger Flavio Bolsonaro defeats President Luiz Inacio Lula da Silva in Sunday’s presidential election runoff, Bloomberg reported. Polls show the race has tightened to a statistical tie, but Bolsonaro has remained the betting favorite. The report noted that he has promised to let the Frete Parlamentar da Agropecuária, known as the farm caucus and made up of lawmakers dedicated to the industry, to choose his agriculture minister. That would give the group a bigger say in government decisions, with farmers seeking to counter rural debt with subsidized credit and bring down double-digit interest rates they say are stifling business, the report said. It noted that environmental law is also on the agenda, with industry-backed lawmakers largely in favor of loosening regulations.
Iowa lawmakers sound alarm on Mexico… Iowa’s congressional delegation is asking the Trump administration to consider Iowa’s pork producers when conducting trade talks with Mexico, Agri-Pulse reported. Mexico launched a trade investigation into the U.S. pork industry after the U.S. ended an agreement last year that suspended antidumping duties on imports of fresh Mexican tomatoes. “The looming threat of retaliation from our number one export market creates a chilling effect on the pork industry that already faces headwinds domestically due to state regulations like California’s Proposition 12,” the delegation, led by Republican Sen. Charles Grassley, wrote.
Trump’s Canada tariffs challenged… Food importer Gellert Global Group on Tuesday sued to stop the Trump administration’s latest tariffs on imports from Canada, arguing that the duties represent another attempt to claim presidential tariff power that has been rejected in court, Reuters reported. The Trump administration imposed 50% tariffs on a wide range of Canadian imports over the summer in response to what it called Canada’s discriminatory treatment of US-made cars, alcohol and dairy goods.
Profit-taking weighs on palm oil… Malaysian palm oil futures edged lower toward MYR 4,800 a ton as traders took profits after prices neared a four-year high, according to TradingEconomics. Sentiment was damped by record inventories of 3.51 million tons in September, the report said, while seasonal production was expected to remain elevated in October after six consecutive monthly increases. Filed in the U.S. Court of International Trade, the lawsuit argues that invoking Section 338 of the 1930 Tariff Act exceeds presidential authority and bypasses Congress, the report said, noting that the lawsuit marks the fourth major legal challenge against Trump administration tariff policies following breakdowns in US-Canada trade negotiations.
Cattle hit 3-month highs… December live cattle ended $2.15 higher Tuesday at $230.175, while November feeders rose $2.375 to $346.30, with both hitting three-month highs. Live and feeder cattle futures saw technical buying, with solidly higher cash cattle trade providing support. USDA on Monday said last week’s cash cattle trade averaged $224.19, up $4.05 from the previous week. Boxed beef prices were firm in Tuesday’s trade.
Hogs see short covering… December lean hog futures rose $0.800 to end at $67.15, buoyed by short covering to trade not far above last week’s contract low. The technical setup remains bearish with a downtrend in place on the daily bar chart. Fundamentally, the cash market remains under pressure. Wednesday’s projected CME index is down $0.38 at $73.02.