Good morning!
Grain prices modestly weaker overnight… As of 6:00 a.m. CDT, December corn was down 1 1/2 cents, November soybeans were 3 cents lower and December HRW and SRW wheat futures markets were 1/2 to 3/4 cent lower. Today is the last trading day of the month and of the quarter, which makes it an extra important trading day from a technical perspective. And today also comes a major USDA report on grain stocks. Meantime, the U.S. government may shut down at midnight. It could well be a more active trading day not only in the grains but across many markets. The key outside markets today see the U.S. dollar index slightly weaker. Nymex crude oil prices are lower and trading around $63.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.13 percent.
Today’s USDA quarterly grain stocks report may offer surprises… History shows the agency can make surprising and markets-moving adjustments to its grain stocks forecasts. A Reuters survey of grain analysts shows the average estimate for September 1 U.S. corn stocks, at 1.337 billion bushels, which would be a four-year low and down 24% from a year earlier. However, the analysts’ collective estimate is above the 1.325 billion bushels USDA projected for 2024/25 corn ending stocks in its September 12 monthly supply and demand report. Today’s report is expected to show U.S. soybean stocks of 323 million bushels, according to the Reuters survey. That would be down 5.6% from the prior year and below the 330 million bushels USDA projected for 2024/25 soybean ending stocks in its September 12 report. For U.S. wheat stocks, the survey shows the average estimate of 2.043 billion bushels would be up 2.6% from 1.992 billion bushels a year ago and would represent the largest September 1 wheat stocks figure since 2020. USDA’s final estimate for the 2024-25 U.S. wheat crop production is set for release, too.
Weekly USDA crop progress reports details… The agency on Monday afternoon reported the U.S. corn crop at 66% “good” to “excellent” and 10% “poor” to “very poor,” unchanged from last week. Harvest was estimated to have advanced seven percentage points from last week to 18%, one point behind the five-year average. The U.S. soybean crop improved a point from last week to 62% “good” to “excellent,” while the “poor” to “very poor” rating eased a point to 11%. Soybean harvest was estimated to be 19% complete, up 10 percentage points from last week, but behind the five-year average of 20%. The U.S. winter wheat crop was estimated to 34% planted as of September 28, up 14 points on the week but still behind the five-year average of 36%. Emergence was estimated at 13%. USDA rated the U.S. cotton crop as 47% “good” to “excellent,” unchanged from last week, while the “poor” to “very poor” rating declined a point to 17%. Harvest was estimated to be 16% complete, up four percentage points on the week and in line with the five-year average.
Pro Farmer crop consultant: Early corn yields disappointing… Pro Farmer crop consultant Michael Cordonnier said in his weekly report that early U.S. corn yields “are generally disappointing, which could be an indication that southern rust has caused more problems than originally anticipated.” The disease moved into the Midwest in July when hot and humid conditions were favorable for rust development. “The disease probably caught a lot of people by surprise and even farmers who sprayed for the disease are reporting disappointing yields.” Cordonnier’s U.S. corn yield was left unchanged this week at 182.0 bu/ac, with a neutral to lower bias. “I was leaning toward lowering the corn yield this week but decided to wait for more corn yields to be reported.” Cordonnier also left his U.S. soybean yield unchanged this week at 52.0 bu/ac, with a neutral to lower bias. “For the soybean crop, the drier conditions in the eastern and southern locations are a concern, especially now with warmer temperatures. These conditions should force the soybeans to mature quickly and could result in smaller and lighter seeds than originally anticipated.”
U.S. government on verge of shutting down… The federal government is careening toward a shutdown at midnight, with Democrats and Republicans apparently not close to agreeing on a plan to fund federal operations and both sides blaming each other for the stalemate. Bloomberg said that “with just hours to go until a midnight deadline, the impasse over spending threatens to paralyze many U.S. government operations for only the 14th time in modern history, causing the suspension of services for Americans and paychecks for federal workers. Political fallout could be widespread for both President Donald Trump and Democrats ahead of next year’s critical midterm elections. Although last-minute spending deals have averted several other threatened shutdowns in recent years, the stakes are especially high now, with the White House threatening to fire employees rather than furlough them, and Democratic leaders under intense pressure from progressives in the party to stand up to Trump.”
U.S. levies tariffs on lumber imports… The U.S. on Monday ordered 10% tariffs on imports of softwood timber and lumber, as well as 25% levies on kitchen cabinets, vanities and upholstered wood products, marking the Trump administration’s latest bid to use import taxes to shore up domestic manufacturing. The tariffs are set to apply from Oct. 14, with some increases targeted to take effect Jan. 1, according to a proclamation signed Monday. They follow a Commerce Department investigation into imports of lumber, timber and derivative projects that was launched in March. President Trump said the planned actions will strengthen supply chains, bolster industrial resilience, create high-quality jobs and increase domestic capacity utilization for wood products.
India’s strong monsoon season boosts crop prospects… India has seen its strongest monsoon in five years, lifting prospects for crops such as rice and pulses and raising hopes that food prices may ease further, according to a Bloomberg report. Rainfall from June to September, which irrigates about half of the country’s farmland and is important for the next planting season was 8% higher than the long-term average and the best rainy season since 2020, according to data compiled by the India Meteorological Department. The stronger agricultural output could also prompt the Indian government to ease its restrictions on exports of wheat and sugar.
China pork prices continue to slump… China’s pork prices are at fresh lows due to excess supply and sluggish consumption, with wholesale pork prices on track to reach their lowest level in 18 months, according to a Bloomberg report. The upcoming Golden Week holiday is expected to bring little relief to the sector, as wholesalers and retailers have yet to undertake large-scale stockpiling of pork. China has been pushing its top hog producers to cut capacity due to oversupplies and to bolster domestic pork prices, which are an important component of the consumer price index in China. It appears recent Chinese government efforts to curb pork production have yet to produce significant results.
China manufacturing PMI hits six-month high… The RatingDog China Manufacturing purchasing managers index (PMI) rose to 51.2 in September from August’s 50.5, surpassing forecasts of 50.3 and marking the highest reading since March. A reading above 50.0 suggests expansion in the sector. New orders growth hit a seven-month high and exports returned to expansion. Separately, official China figures showed factory activity shrank the least in six months, supported by hopes of fresh government support measures ahead of the October plenum.
Malaysian palm oil futures slip… Malaysian palm oil futures on Tuesday fell for a third straight session, slipping below MYR 4,400 per MT amid weakness in rival oils on Dalian ahead of China’s October holiday. Chicago soyoil also declined overnight, tracking crude oil losses and supply concerns, while traders awaited September export estimates. For the month, palm prices are down about 0.75%, heading for their first monthly drop in four, as output is expected to peak in October on favorable weather. External risks persist, including a potential U.S. government shutdown and mixed signals from China’s PMI—manufacturing improved, but services slowed. Still, contracts are poised to end the quarter notably higher after two straight drops, lifted by expectations that Malaysian palm oil stocks may fall to 1.7 million MT by year-end.
Cattle futures traders tentative early this week… The live and feeder cattle markets were in a pause mode Monday. The cattle and fresh beef market fundamentals have deteriorated a bit the past couple weeks. The U.S. government is on the verge of a shutdown Wednesday, with the Trump administration warning of mass firings in federal agencies if a shutdown occurs. That’s also likely keeping the cattle futures bulls tentative early this week. USDA Monday reported that cash cattle trading last week averaged $232.65. The prior week’s cash cattle trading average price was $237.51.
Lean hog futures bulls remain strong… The lean hog futures market on Monday saw profit-taking pressure following recent good gains that saw December hogs hit a contract high last Friday. The speculators are still a bit leery about playing the short side of a market that is still strongly bullish, technically. Futures’ discounts to the cash hog index are also limiting selling interest in futures. The latest CME lean hog index is down 23 cents at $104.83. Today’s projected cash hog index is down 5 cents at $104.78. Monday’s national direct 5-day rolling average cash hog price quote was $104.56.
USDA reports today--Tuesday
-- Livestock and Meat Domestic Data
-- Small Grains Summary
-- Grain Stocks
-- Agricultural Prices