Good morning!
Grain futures steady-weaker overnight… At 6:00 a.m. CT, December corn was down 3/4 cent. November soybeans were steady. December soybean meal was $2.30 lower. December bean oil was 30 points higher. December SRW wheat was down 5 1/4 cents and scored a five-week low. December HRW was down 10 cents and hit a new six-week low. The grain market bulls are struggling. Corn and soybean futures have just seen technically bearish downside price “breakouts” from their trading ranges, while winter wheat futures are trapped in price downtrends. Trading in the grain futures may be more subdued today and early Wednesday, ahead of Wednesday’s midday USDA quarterly grain stocks and annual small grains summary reports. The key outside markets today see the U.S. dollar index firmer and hitting a three-month high. November Nymex WTI crude oil prices are weaker and trading around $92.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 5.23%.
“Demand Boost for U.S. Crops Still Unclear After China Tariff Cuts” … That’s an overnight headline from Bloomberg. “Crop traders are trying to determine if China’s tariff cuts on U.S. agricultural products will lead to a demand pickup for major grains. Soybeans were excluded from the tariff reductions, and China is set to reduce duties on U.S. wheat, corn and sorghum as part of a plan to lower tariffs on about $30 billion of imports,” said the report. The American Soybean Association expressed disappointment that U.S. soybeans weren’t included in the tariff cuts and is counting on China’s previous pledges to buy at least 25 million tons of U.S. soybeans annually through 2028. “China’s decision to keep the 10% tariff on U.S. soybeans reflects its desire to maintain flexibility in managing imported soybean supplies,” said Liu Haowen, an analyst at Wuchan Zhongda Futures Co. State-owned firms Cofco and Sinograin have been making steady progress on buying U.S. soybeans, helping Beijing meet more than half of the target for this year. Sinograin has also been selling beans from reserves, a move seen as making space for incoming American shipments. On the $17-billion pledge, China still has a significant amount of buying to do with just over three months to go, Wuchan Zhongda’s Liu said and as reported by Bloomberg.
Flood watches for parts of western Corn Belt… The National Weather Service today said tropical moisture associated with Hurricane Polo will stream northward. Considerable flash flooding is possible across portions of New Mexico and western Texas today and over the southern Plains and the central Rockies/central High Plains Wednesday. Locally, considerable flash flooding impacts are also possible elsewhere across the broader Southwest and southern Plains. Flooding is possible across eastern Nebraska into western Iowa today into Wednesday. Flooding may also be possible starting Wednesday across central Texas and southern Oklahoma. The threat continues into Thursday for the southern Plains. Also, a wave of low pressure over parts of the Northern Plains today will produce showers and thunderstorms with heavy rain over other parts of the Midwest. There is a slight risk (level 2/4) of excessive rainfall over parts of the central Plains/middle Mississippi Valley today into Wednesday morning.
Weekly USDA crop progress updates… U.S. corn and soybean crop conditions held steady the past week but harvest lagged the expected pace as a result of heavy rains in the western Corn Belt. USDA said 57% of the corn crop was rated “good” or “excellent” as of Sunday, unchanged from the previous week and matching analyst expectations. The Pro Farmer Crop Condition Index (0 to 500 scale, 500 equals perfect) saw a 0.88-point increase. Corn harvest was pegged at 18% complete, a percentage point below the average estimate and in line with the five-year average. Corn harvest in Iowa was just 5% complete, lagging the five-year average of 10%. USDA said 58% of soybeans were rated good to excellent, unchanged from the previous week and matching expectations. The Pro Farmer CCI for soybeans edged up 0.56 point to 355.25.Read more about the latest Pro Farmer CCI readings. The soybean harvest was 17% complete, behind the average estimate of 19% but in line with the five-year average. Iowa was well behind its usual pace at just 3% complete versus a five-year average of 17% at this time of year. USDA said 27% of the U.S. winter wheat crop was planted as of Sunday, up from 17% the previous week and just a percentage point behind the average guess. Plantings continue to lag the five-year average at 34%.
Pro Farmer crop consultant leaves his U.S. corn, soybean yield forecasts unchanged… Our longtime crop consultant, Dr. Michael Cordonnier, left his 2026 U.S. corn yield unchanged this week at 177.0 bu/ac with a neutral bias. He said the corn harvested acreage could decline 300,000-500,000 acres due to more corn being harvested for silage than originally anticipated. “The forecast is calling for wet weather this week, especially in the western Corn Belt.September is going to end with record rainfall amounts in many locations, which is not good for crop drydown and early harvesting.Continued wet weather in October could result in ear molds and sprouts as well as crown and/or stalk rots. The most damage is expected to be in the western Corn Belt,” he said. Cordonnier left his 2026 U.S. soybean yield unchanged this week at 51.5 bu/ac, with a neutral bias. “The longer the wet weather persists, the greater the possibility of fungal diseases impacting mature soybeans.The more wet to dry cycles before harvest, the higher the potential yield declines due to reductions in seed weight/quality and split pods leading to more soybeans on the ground,” he said.
Dyed-diesel alternative to export ban?... The White House is considering taking regulatory steps that would allow wider sales of red-dyed diesel in an effort to bring down prices, Reuters reported, citing people familiar with the discussions. The report described the proposal as a leading alternative to a diesel export ban, which President Donald Trump has spoken favorably about but has faced significant pushback from the oil industry and others. The proposal would expand the circumstances under which red-dyed diesel, which is generally reserved for off-road uses such as farming and is exempt from most federal fuel taxes, could be sold for broader use, the report said. Under current federal rules, the tax on highway diesel is 24.4 cents per gallon, while dyed diesel is exempt from that tax but remains subject to a 0.1-cent-per-gallon charge that funds the federal Leaking Underground Storage Tank Trust Fund, the Reuters report said. Bloomberg reported Texas is allowing wider use of dyed diesel. Governor Greg Abbott issued a disaster proclamation on Monday with a range of measures, including a provision that farmers and truckers can now use dyed diesel on Texas roads, according to a statement on his office’s website. Fuel, crop, and timber loads can also move at a higher weight.
Crude oil prices remain elevated on stalled U.S.-Iran talks, strong demand… Brent crude oil prices rose for a second day as a lack of progress in U.S.-Iran talks and signs of strong demand outweighed a resumption of flows through a key pipeline from top exporter Saudi Arabia. Iranian officials have privately expressed pessimism about reaching a deal to end hostilities with Washington and reopen the Strait of Hormuz before U.S. midterm elections in November. Brent crude traded above $107 a barrel overnight after ticking higher in the previous session, while Nymex West Texas Intermediate was around $92 as of this writing. Saudi Arabia has restored about half the flows through its cross-country East-West pipeline, a crucial route bypassing the strait, after drone strikes halted operations earlier this month. Flows through the link to the Red Sea have reached at least 3.5 million barrels a day, reports said.
Russia’s military spending set to increase by 27% as war escalates… Bloomberg reports Russia has raised its military spending target for next year by more than a quarter, reversing earlier plans to stop increasing outlays as the war in Ukraine intensifies. “The government’s new draft budget sets military spending at 17.1 trillion rubles in 2027, 27% above the previous target, according to a person familiar with the plans. The additional spending will push next year’s budget deficit to 2.2% of gross domestic product, compared with an earlier target of 1.2%, and the government plans to cover the gap through another increase in the tax burden on households and businesses,” said the report. ”The surge in planned war spending underscores how the conflict has been escalating recently with no end in sight. Ukraine has increased its missile and drone strikes deep within Russian territory. The attacks have targeted oil refineries, logistics and warehouses, and have forced Moscow to bolster expensive air defenses. Russia has also increased its airstrikes against Ukraine’s energy infrastructure and urban centers, which appears to coincide with an increase in outlays for drone and missile production,” said Bloomberg.
Malaysian palm oil futures hit two-month low… Malaysian palm oil futures extended recent declines, hovering below MYR 4,670 per MT and touching an eight-week low, as weaker edible oils on the Dalian market and sluggish export demand weighed on sentiment. Cargo surveyors noted palm oil shipments fell 15.1%–24.3% in the first 25 days of September from the same period in August. Meanwhile, expectations of seasonally higher production raised concerns that end-month stocks could exceed 3 million MT. Industry estimates pointed to a sharp rise in output, with production up 20.84% in the first 25 days of September from August. In Indonesia, palm oil exports fell 9.87% year-on-year to 3.19 million MT in July, according to a palm oil association, adding to concerns over regional demand. Still, losses were capped by firmer crude oil prices amid persistent uncertainty over U.S.-Iran talks, supporting demand for palm oil as a biodiesel feedstock. Traders now await China’s September PMI data for clues on activity and commodity demand.
Cattle futures see downside price corrections… December live cattle on Monday fell $1.35 to $220.80. November feeder cattle lost $2.70 to $329.275 after hitting a two-month high early on. The live and feeder cattle futures markets saw some corrective selling pressure after last week’s overall gains. Modestly weaker prices for cash cattle trading last week also pressured cattle futures Monday. USDA reported cash cattle trading last week averaged $220.67, down $1.20 from last week’s cash trade average of $221.87. Technically bullish head-and-shoulders bottom reversal patterns appear to be forming on the daily charts for December live cattle and November feeders.
Lean hog futures see more chart-based selling from the specs… December lean hogs on Monday lost $0.625 to $68.40. The lean hog futures market saw modest technical selling. The near-term chart posture in hog futures remains bearish amid a still-weakening cash hog market. The latest CME lean hog index is down $0.44 at $81.76. Today’s projected CME index price is down another 55 cents at $81.21. The national direct five-day rolling average cash hog price quote for Monday was $79.72.