Good morning!
Grain futures prices weaker overnight… As of 6:00 a.m. CDT, December corn was down 1/4 cent and hit a six-week low, November soybeans down 4 1/2 cents and hit a two-week low, and December HRW and SRW wheat futures markets were 3 1/2 cents lower and hit contract and five-year lows. News that China has levied more duties on U.S. shipping (see below) has grain markets under pressure. Technical charts have also turned more bearish, which is emboldening the speculative, chart-based traders to play the short sides in grains. At the same time the commercials continue to hedge corn and beans coming from the fields into their elevators. The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are down and trading around $57.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.01 percent.
Scattered showers and thunderstorms in the Midwest today and Wednesday… The National Weather Service today reports showers and thunderstorms will develop over much of the Midwest today and Wednesday. Parts of the Great Basin, central Rockies, central Plains, and southern High Plains will also see rain, with higher-elevation snow developing over the northern Intermountain Region. Rain will expand over parts of the Northern Plains and upper Mississippi Valley by Tuesday evening. Furthermore, overnight Tuesday rain will extend into the Great Lakes, ending by Wednesday morning. On Wednesday, rain with embedded thunderstorms will develop over parts of the Great Basin, the Northern Intermountain Region, the northern/central Rockies, the northern/central Plains, and the southern High Plains.
China slaps new duties on U.S. shipping… China on Tuesday sanctioned the U.S. units of a South Korean shipping giant and threatened further retaliatory measures on the industry, the latest in a series of tit-for-tat moves as the U.S. and China ratchet up their trade war. Bloomberg reports the sanctions, targeting five U.S. units of Hanwha Ocean Co., helped fuel a slump in global stock markets today “as traders dialed back hopes for an easing of tensions between the world’s largest economies,” said the report. Shipping is just one point of contention in the China-U.S. relationship that has kept global investors on edge in recent days. Beijing has tightened export controls on rare earths among other measures, while the U.S. has expanded curbs on China’s access to chips and threatened the country with additional 100% tariffs. U.S. Treasury Secretary Bessent has accused Beijing of pointing “a bazooka at the supply chains and the industrial base of the entire free world,” and has rallied U.S. allies to unite with Washington in opposing the China policy. Chinese officials have a chance to ease tensions this week. Vice Finance Minister Liao Min, a key member of Beijing’s trade negotiating team, is attending an annual meeting of global finance ministers in Washington D.C., where he’s already met with members of Bessent’s team, according to a person with knowledge of the matter, Bloomberg reported.
Brazil’s soybean acreage may be larger than expected… The 2025/26 soybean acreage in Brazil may increase more than what was originally expected, said Pro Farmer crop consultant Michael Cordonnier in his latest weekly report.Conab will issue its first official crop estimates for the 2025/26 growing season today. In its preliminary estimate, Conab forecast Brazil’s soybean acreage would increase 3.6% to 49.08 million hectares (121.2 million acres). “Soybean acreage is being supported by a strong domestic demand for soybeans due to the biodiesel blend in Brazil going from B14 to B15 with soybean oil being the main raw ingredient. Soybean producers in Brazil are also cautiously optimistic, given the trade war between the United States and China. After the trade war during the first Trump administration, China turned to Brazil for its soybean needs and they never looked back. The current trade war is even more proof that China views the United States as a hostile trading partner and that they will be sourcing most, if not all, their soybeans from South America,” said Cordonnier. “As of this writing, China has not purchased any new-crop soybeans from the United States, when normally they would have booked 10-15 million tons by now.China will probably purchase some U.S. soybeans as part of the trade negotiations, but Brazilian farmers are betting that the Chinese demand for Brazilian soybeans will remain strong and continue to support soybean prices in Brazil.”
Fed Chair Powell speaks today… As the U.S. government shutdown is in its 14th day and amid the dearth of U.S. economic data, Federal Reserve Chairman Jerome Powell’s speech in Philadelphia today at the National Association for Business Economics (NABE) annual meeting will be monitored extra closely. He is scheduled to deliver a keynote speech on the U.S. economic outlook and monetary policy. The Fed is widely expected to deliver another quarter-point rate cut later this month, following a similar move in September, with another reduction anticipated in December.
More signs of a global crude oil glut… As Nymex crude oil futures today dropped to a 4.5-month low of $57.68 a barrel, the International Energy Agency said a record oversupply of crude oil will be bigger than previously estimated and the excess is already starting to build up on ocean-going tankers. World oil supply will exceed demand by almost 4 million barrels a day next year, an unprecedented overhang in annual terms, according to the IEA’s latest monthly report. The IEA lowered consumption growth estimates slightly for this year and boosted non-OPEC supply estimates for this year and next, as the OPEC-plus alliance continues to revive output. While crude oil inventories have swelled at a brisk clip of 1.9 million barrels a day this year, the impact on prices has been mitigated by China absorbing most of that supply, according to the IEA report. That’s beginning to change as a surge in Middle East exports pushes the volume of oil on the water to the highest level in years, the IEA said.
U.S. tractor sales pick up a bit… A slight rise in U.S. tractor sales is raising hopes the farm-machinery sector may be starting to turn around after years of tough conditions. Bloomberg reported that sales of U.S. tractors rose 4.1% in September, the first increase in 13 months, according to data from the Association of Equipment Manufacturers, a trade group representing companies in agriculture, forestry, construction, utility and mining. Tractor sales improved despite low crop prices leaving growers with less to spend on new equipment. “After challenging months of continued sales declines in the US market, this modest increase is certainly encouraging,” Curt Blades, senior vice president at AEM, said in a Monday release. “Although there are some uncertainties and volatility in the marketplace, we are optimistic this positive trend will continue, particularly as the harvest season progresses.”
EV unwind: GM takes a huge charge… General Motors Co. said it will incur a $1.6 billion charge related to shifting electric-vehicle production plans, underscoring the toll on U.S. carmakers from declining demand and flagging federal support for plug-in vehicles. The charges include a non-cash impairment and other charges of $1.2 billion as a result of adjustments to EV capacity, GM said today in a regulatory filing. The remaining charges, which primarily are related to contract cancellation fees and commercial settlements associated with EV investments, will have a cash impact, the company said.
Malaysian palm oil futures down again… Malaysian palm oil futures dropped below MYR 4,500 per MT, down for a third session in a row as a stronger ringgit weighed on sentiment. Meantime, Kuala Lumpur expects crude palm oil prices next year to range between MYR 3,900 and MYR 4,100, citing higher global supply and stronger output from rival oils. Industry data showed end-September stocks rose 7.2% from August to 2.36 million MT, the highest in almost two years. In India, the world’s largest palm oil buyer, October demand is projected to fall below 600,000 MT after a 16% fall in September. Losses were offset by signs of firm exports, with Malaysian shipments up between 9.9% to 19.4% in October 1-10, according to cargo surveyors. Data from the Malaysia Palm Oil Board signaled production fell slightly in September, the first monthly drop in three months.
Contract high in December live cattle futures; feeder futures hit another record peak… December live cattle on Monday rose $2.225 to $244.75 and hit a contract high. November feeder cattle rose 82 1/2 cents to $376.725 and hit another contract/record high. Overall solid supply and demand fundamentals and bullish technical charts continue to fuel price gains in the cattle futures markets. Historically tight supplies of cattle in U.S. feedlots and a solid rebound in cash cattle and boxed beef prices recently continue to drive upside price action in cattle futures markets. USDA Monday reported cash cattle trade last week averaged $234.07, up $3.31 from the prior week average of $230.76.
December lean hogs see corrective bounce but bulls still in trouble… The lean hog futures market on Monday saw an upside price correction led by short covering from the shorter-term traders. Contract highs in live cattle futures and record highs in feeder futures Monday also aided the hog futures bulls. However, the near-term chart posture for the lean hog futures market continues firmly bearish, which will likely limit the upside in hog futures in the near term. The latest CME lean hog index is down 65 cents at $99.43. Today’s projected cash hog index is down another 86 cents at $98.57. Monday’s national direct 5-day rolling average cash hog price quote is $97.31.