Good morning!
Grain futures steady-mixed overnight… As of 6:00 a.m. CDT, December corn was down 1/2 cent. January soybeans were 4 3/4 cents higher. December HRW and SRW wheat futures markets were down 1 1/2 to 3 cents. The grain market bulls faded Thursday amid a risk-off day in the general marketplace that saw a stock market sell-off and most of the raw commodity futures markets in the red. Grain markets bulls need to step up today and at least stabilize prices, as they don’t want to see technically bearish weekly low closes today. U.S. stock indexes were lower overnight and solid selling pressure in the stock indexes today would likely squelch the grain market bulls amid keener risk aversion. The key outside markets early this morning see the U.S. dollar index slightly down. Nymex crude oil prices are higher and trading around $60.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.1 percent.
Arctic air to sweep down over much of U.S. this weekend… The National Weather Service today said a cold front today will focus scattered to isolated thunderstorm activity over parts of the Tennessee and Ohio Valleys, where a slight risk of severe weather will be in effect. The Arctic front should bring another shot of rain and storms to the East Coast while producing a snow/mix combo over the Midwest Saturday into Sunday. A wave of low pressure will spread mixed precip across the Northwest today followed by parts of the Northern/Central Plains and the Great Lakes/Midwest on Saturday and Sunday. Behind this system, strong winds and a frigid continental airmass will spill out over the Great Plains and Mississippi Valley from Central-Southern Canada beginning Saturday. Texas will see above-average temperatures across the state through Saturday. Temperatures will drop over Texas on Sunday after the Arctic front sweeps through.
China sees surprise decline in exports in October… China’s exports unexpectedly contracted in October as global demand failed to offset the deepening slump in shipments to the U.S., “dealing a blow to an economy already slowing amid sluggish consumer spending and investment at home,” said a Bloomberg report. China’s exports fell for the first time in eight months, dropping 1.1% from a year earlier, according to official data released Friday. Shipments to all nations except the U.S. rose 3.1%, not enough to compensate for the more than 25% decline to the U.S. Chinese exports have been resilient until now, as other destinations made up for drops in shipments across the Pacific Ocean. Sales abroad had grown every month since February, when activity slowed because of the Lunar New Year holiday. However, October marked a break in the trend of growth driven by the pursuit of new markets among Chinese companies. A range of trade indicators started to cool off from the record numbers seen in earlier months, with Shanghai port processing the fewest containers since April. The decline in overall exports in October came as a surprise to almost all forecasters, with the median estimate of those polled by Bloomberg at 2.9%. “October’s surprise drop in exports suggests that China’s external resilience is starting to falter under high tariffs and global trade uncertainty. This highlights the need for Beijing to keep supporting domestic demand and prevent weak spending from dragging on growth,” said Bloomberg. Meantime, China’s raw materials imports broadly weakened in October due to the challenging economic backdrop for demand. Of the major commodities, only crude oil imports showed outright strength. Soybean imports declined to a six-month low of 9.48 million tons, although purchases were still above last year’s level. The trade agreement with the U.S. should now see Brazilian cargoes replaced with American beans as the northern hemisphere harvest comes online, said Bloomberg.
Day 34 of federal government shutdown sees U.S. flights scaled back… The Federal Aviation Administration ‘s order to scale back U.S. flights nationwide because of the record-long, 34-day-and-counting government shutdown is set to take effect this morning. The 40 airports selected by the FAA span more than two dozen states and include hubs such as Atlanta, Dallas, Denver, Los Angeles and Charlotte, North Carolina, according to the order. In some metropolitan areas, including New York, Houston, Chicago and Washington, multiple airports will be impacted, while the ripple effects could reach smaller airports as well. Airlines scrambled to adjust their schedules and began canceling flights Thursday in anticipation of the FAA’s official order, while travelers with plans for the weekend and beyond waited nervously to learn if their flights would take off as scheduled. More than 810 flights have been called off nationwide, according to FlightAware. Delta Air Lines said it would scratch roughly 170 flights Friday, and American Airlines planned to cut 220 a day through Monday, according to the Associated Press.
World food price index dips… The U.N.’s FAO Food Price Index fell 1.6% to 126.4 points in October, marking a second consecutive monthly decline and the lowest level since January. Prices of cereals dropped 1.3% to the lowest level since September 2020, amid ample global supplies, favorable production prospects in the southern hemisphere and steady progress of winter wheat planting across the north. Dairy costs were down 3.4%, with prices declining for butter (-6.5%), whole milk powder (-6%), skim milk powder (-4%) and cheese (-1.5%). Meat fell 2% as sharp drops in pig and poultry and a fall in ovine meat were partially offset by higher bovine meat quotations. Also, sugar prices tumbled 5.3% to the lowest level since December 2020, mainly driven by expectations of ample global sugar supplies from Brazil, Thailand and India. Conversely, prices increased 0.9% for vegetable oils, reaching the highest since July 2022, reflecting rising prices for palm, rapeseed, soy and sunflower oils. The FAO Food Price Index is a monthly measure of changes in the international prices of a basket of widely traded food commodities, published by the Food and Agriculture Organization of the United Nations.
U.S. judge orders Trump administration to fully fund SNAP program… A U.S. judge on Thursday ordered the Trump administration to fully cover the cost of food-aid benefits for more than 42 million eligible Americans this month, rejecting an administration plan to only partially fund the program. The U.S. Department of Agriculture must tap alternative reserve funds to send states the $8.5 billion to $9 billion needed this month for the Supplemental Nutrition Assistance Program (SNAP). The judge said the administration must make all of the funds available to states by today, finding that officials had failed to comply with his earlier order and that people will go hungry if the funds are not made available.
Malaysian palm oil futures hit four-month low… Malaysian palm oil futures Friday fell near 1% to below MYR 4,120 per MT, erasing the prior session’s gains and hitting their lowest in four months amid a stronger ringgit and weakness in rival oils on the Dalian and Chicago exchanges. The commodity is on track for a fourth straight weekly decline, down about 2.3% so far. Traders remain cautious over expectations of rising output in the coming weeks. In top buyer India, sentiment was further rattled by forecasts of increased rapeseed oil supply after record planting this year. Meanwhile, Reuters projected Malaysia’s palm oil inventories rose 3.5% in October to 2.44 million MT, the highest since October 2023, ahead of official data from the Palm Oil Board due Monday. Weaker October trade figures from China, a key importer, also weighed on demand outlook, with exports falling and import growth slowing sharply. Still, losses were partly offset by stronger export estimates, with cargo surveyors noting shipments up 4.3%–5.2%.
The bleeding continues in cattle futures markets… December live cattle on Thursday fell $1.75 to $218.775 and hit a 3.5-month low. January feeder cattle lost $4.375 to $315.60 and hit a three-month low. The live and feeder cattle futures markets saw follow-through selling pressure after closing locked-limit-down Wednesday. A keen risk-off day in the general marketplace Thursday that saw a sell-off in the stock indexes and most commodity futures markets in the red also kept the cattle futures buyers on the sidelines. Price action this week has seen bearish downside “breakouts” from pennant patterns that formed on the daily bar charts for live and feeder cattle futures. Measuring implications from these bearish chart patterns suggest still more downside price potential in both markets in the near term. USDA Thursday reported active cash cattle trading activity at an average of $228.97. Last week’s USDA average cash cattle trade was $230.86 versus the week prior’s average of $237.89.
Lean hog futures prices continue to trend lower… December lean hogs on Thursday fell $1.625 to $78.975 and hit a nearly four-month low. The December lean hog futures contract Thursday saw a bearish “outside day” down on the daily bar chart, which suggests more selling pressure today. The cash hog market remains in a downtrend, which is also prompting the speculative traders to play the short side in hog futures. A “risk-off” day in the general marketplace Thursday and lower cattle futures prices kept the hog futures bulls on the sidelines. The latest CME lean hog index is down another 4 cents at $90.86. Today’s projected cash hog index is down 26 cents at $90.60. Thursday’s national direct 5-day rolling average cash hog price quote was $84.69.