Good morning!
Grain futures mixed overnight… As of 6:00 a.m. CST, March corn was up 1/4 cent, March soybeans down 3 3/4 cents and March SRW and HRW wheat futures were each up 6 cents. The corn market is pausing this week but prices remain in an uptrend on the daily bar chart. Soybeans and bean oil futures pulled back overnight following reports that the U.S.-India trade deal language was re-written, causing some confusion. (See item below.) Winter wheat futures overnight saw some short covering and perceived value buying as the bulls work to revive price uptrends on the daily charts. The key outside markets today see the U.S. dollar index lower, with crude oil prices up and trading around $64.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.1 percent.
Above-average temps persist in central of U.S. … The National Weather Service today reported above-average conditions will continue for much of the country, particularly for the central U.S. as well as across the southern part, where temperatures are running as much as 15-20 degrees above mid-February averages. Much of the Northeast/Great Lakes will trend colder, following a frontal passage after a brief warm-up to start the week. Meanwhile, cold post-frontal flow will lead to lake-enhanced snows downwind of Lakes Erie and Ontario as well as the central Appalachians and the ranges of central New England. Elsewhere, scattered light showers are forecast ahead of a cold front passing through the Carolinas southwest through the Gulf Coast today. The greatest chance of some more moderate rainfall will focus along the Atlantic coast. The rest of the country will be mostly dry.
It’s jobs-Wednesday… That moniker is usually jobs-Friday, but the recent U.S. government shutdown pushed back the Labor Department’s monthly January U.S. employment situation report to today. The jobs report, in addition to the normal monthly payrolls and unemployment numbers, will include an annual revision to the jobs numbers. The so-called benchmark update is expected to reveal a notable markdown to payrolls growth in the year through March 2025. Economists expect today’s key non-farm payrolls number to rise by 55,000 in January. The U.S. unemployment rate is seen holding steady at 4.4%, near a four-year high. The consumer price index for January comes out Friday morning. Analysts look for CPI to come in up 0.3%, month-on-month and up 2.5%, year-on-year.
Trump administration revises language on U.S.-India trade agreement… The White House has revised its fact sheet on the U.S.-India trade agreement to adjust language around agricultural goods, adding to confusion about the deal already raised by India farmer groups, Bloomberg reported. In a revised statement, the U.S. removed a reference to pulses — a staple food in India that includes lentils and chickpeas — and changed some phrasing around India’s offer to buy more U.S. goods. An earlier version on Monday released by the White House said India would “eliminate or reduce tariffs” on a wide range of U.S. food and agricultural products, including certain pulses. India is the world’s largest consumer of pulses, accounting for more than a quarter of global demand, according to the United Nations. Farmer groups in the country — a major voting bloc — had already raised concerns about a lack of clarity on the deal and concessions offered to U.S. farmers. Soybean and bean oil futures saw selling pressure in the overnight trade.
FAA halts all flights into and from El Paso, Texas… The Federal Aviation Administration late Tuesday halted all flights to and from El Paso International Airport for 10 days, citing unspecified “special security reasons,” The New York Times reported. In a move that appeared to surprise local officials and airlines, the restriction went into effect at 11:30 p.m. local time on Tuesday and will remain until Feb. 20 for the airspace over El Paso and the neighboring community Santa Teresa, New Mexico, the F.A.A. notices said. They did not detail the security reasons that prompted them. The airport issued a travel advisory on social media saying that all flights to and from the airport had been grounded, including commercial, cargo and general aviation. It told travelers to contact their airlines for the latest status of their flights. The FAA did not immediately respond to a request for comment, said the Times. The airport in El Paso, the 23rd-most populous city in the nation according to the 2020 census, serves a vast swath of west Texas and eastern New Mexico.
Chinese still squeezing the silver market… Despite silver prices becoming less volatile after an epic bout of turbulence, supplies in China are still being pinched as investment and industrial demand drain stockpiles, Bloomberg said in a report. “Domestic producers and traders are struggling to fill a backlog of orders, pushing up near-term prices and leaving the market heavily in backwardation. The front-month contract on the Shanghai Futures Exchange has surged to a record premium, indicating the market’s overwhelming preference for prompt deliveries of the metal,” said the report. “Such a large backwardation is driven by an inventory crisis and the depletion of deliverable material,” said Zhang Ting, senior analyst at Sichuan Tianfu Bank Co. “Institutions still have incentives to continue squeezing the market for profit.” Meanwhile, short sellers on the Shanghai Gold Exchange, who bet that silver prices would fall, have been paying long-holders deferral fees since late December to avoid having to make deliveries, highlighting a scarcity of metal to close positions, said Bloomberg.
China’s inflation rate below expectations… China’s annual inflation rate eased sharply to 0.2% in January, month-on-month, marking the lowest level since October and coming in below market expectations of a 0.4% rise. Food prices declined for the first time in three months, while non-food inflation also moderated. Meanwhile, producer prices declined 1.4%, year-on-year, the mildest drop in 18 months.
Malaysian palm oil futures rebound… Malaysian palm oil futures rose to above MYR 4,120 per MT on Wednesday, snapping a four-session slide and recovering from a near three-week low notched in the prior session. The upturn was driven by bargain hunting, a weaker ringgit, and firmer soyoil prices on the Chicago market. Meanwhile, palm oil purchases by top buyer India surged 51%, month-on-month, in January to a four-month high, reversing December’s sharp drop as refiners rebuilt inventories. Monthly data from the Malaysian Palm Oil Board showed exports climbed 11.4%, month-on-month, likely lifted by restocking ahead of Ramadan in mid-February and Eid-ul-Fitr in March. Meanwhile, inventories fell 7.7% as production fell 13.8%, tightening supply. However, gains were capped by expectations of softer demand from China this year, where buyers are increasingly turning to relatively cheaper soybean and canola oils. A sharp slowdown in China’s January inflation also signaled subdued domestic demand, adding to caution over the export outlook.
Cattle futures bulls may be exhausted… April live cattle on Tuesday fell 77 1/2 cents to $237.425. March feeders lost $2.675 to $364.775. The cattle futures markets saw some profit-taking pressure. The charts are suggesting the cattle futures bulls may be getting tired after the rallies from the November lows. Price uptrends on the daily bar charts may be rolling over. USDA Tuesday reported no active cash cattle trading yet this week. Cash trading last week averaged $241.31, up $1.87 from prior week’s average cash cattle trade at $239.44.
Lean hog futures see more profit taking… April lean hog futures on Tuesday fell $1.225 to $95.50. Hogs saw more profit-taking pressure from the shorter-term traders, as well as some fresh short-selling from the technical traders. While the charts remain bullish, overall, recent price action suggests the bulls are exhausted. The latest CME lean hog index is down 11 cents at $86.46. Today’s projected cash index price is down 15 cents at $86.32. The national direct five-day rolling average cash hog price quote Tuesday was $64.27.