Good morning!
Election results awaited… As of 6 a.m. CT, December corn was down 1 ½ cents. January soybeans rose 3 cents, with December soybean meal down $0.50 and December soybean oil off 4 points. December soft red winter wheat was unchanged, while December hard red winter wheat lost 1 ½ cents.
Results from the midterm elections will roll in Tuesday night. Control of Congress, particularly the Senate, will be determined to a large degree by the outcome of farm state races, including those in Iowa, Kansas and Texas. Democrats are seen as likely to flip control of the House while the Senate remains too close to call. The outcome will have near-term implications for the path forward for a farm bill and leadership of House and Senate agriculture committees. Election uncertainty may keep traders on the sidelines across markets. Note that for the stock market, midterm election years tend to underperform due to uncertainty around policy changes, but tend to see relief rallies once the results are known regardless of the winner due to reduced uncertainty. That can, broadly speaking, be a positive for overall risk appetite in markets. A divided government, with Congress controlled in part by the opposite party of the White House has historically produced the strongest post-election S&P 500 returns.
Check out this week’s Pro Farmer newsletter for a look at what’s at stake for agriculture.
In key outside markets, Nymex WTI crude oil futures were up 2.1% at $98.50 a barrel, taking back some of the plunge Monday sparked by optimism over U.S-Iran diplomatic efforts (see item below). The ICE U.S. Dollar Index was up 0.1%. The yield on the 10-year Treasury rate stood at 4.933%. U.S. stock-index futures pointed to a mostly lower start.
U.S. attacks Iran’s Qeshm Island… The U.S. attacked Iran’s Qeshm Island on Monday, the Wall Street Journal reported, citing U.S. officials, the latest in a series of limited strikes conducted against the country in recent weeks. Some officials described the assaults as defensive, aimed at preventing Iran from having the freedom to attack vessels in the Strait of Hormuz. Oil futures plunged Monday after President Donald Trump played down prospects for a re-escalation of fighting after the midterms with renewed diplomatic efforts under way. Oil took back some of those declines early Tuesday.
NATO faces Black Sea escalation… Wheat traders have largely taken out a war premium tied to Black Sea bottlenecks resulting from fighting between Ukraine and Russia, but a Reuters report noted that unabating attacks show how the escalating maritime war between Russia and Ukraine is expanding into a major challenge for NATO in the Black Sea that has left littoral member states such as Romania and Bulgaria exposed. Military analysts said they had little doubt that Russia was behind the attacks on ships near Romania and Bulgaria. The report said a naval drone seen on video of the last strike resembled a Russian variant, according to shipping security firm Ambrey. “I think it’s undeniably an escalation,” Sidharth Kaushal, a senior fellow at the London-based RUSI think-tank, told Reuters. The report noted that Russia denies targeting Ukraine’s neighbours with drones and says that European governments are the ones escalating the war in Ukraine by supplying military aid.
Rains moving eastward… Severe thunderstorms with the potential for strong, damaging winds and a few tornadoes are expected through tonight across the central and southern Plains, the National Weather Service said. Heavy rainfall may accompany these thunderstorms. A well defined low pressure area over the central U.S. continues to advance eastward this morning, the forecast said. Ahead of the trailing cold front, showers and thunderstorms capable of scattered heavy rainfall and some severe weather will spread eastward into the middle and lower Mississippi Valley, while a steady rain falls over the Northern Plains and upper Midwest today.
Harvest wrapping up… USDA’s crop progress update on Monday afternoon showed soybean harvest is all but complete across much of the U.S. growing area, while corn harvest continued to play catch-up. Corn harvest was 74% complete as of Sunday, up from 60% a week earlier and ahead of the 72% average estimate in a Bloomberg survey. The five-year average for this time of year is 77%. The soybean harvest was 94% complete, up from 79% a week earlier and well ahead of the 87% estimate and the five-year average of 84%.
Wheat conditions disappoint… Winter wheat planting was 83% finished, up from 76% but behind the 83% average guess and one percentage point off the long-term average of 84%, USDA data showed. In its first condition ratings for the crop, USDA said 44% was rated good or excellent, well below the 50% average estimate. Pro Farmer’s Crop Condition Index (0 to 500 scale, 500 equals perfect) for soft red winter wheat 367.45, noticeably higher than the 326.15 seen in hard red winter wheat. That suggests that longer-term drought effects in the southern Plains could be causing concern for production potentials, despite emergence tracking near-normal thus far in the season. See: CCI ratings show disparity between SRW and HRW conditions
China soyoil inventories jump… China’s soybean oil inventories surged to a record, with elevated crushing rates boosting supplies while consumption remained sluggish, Bloomberg reported. China has been scooping up the oilseed from both Brazil and the U.S. to feed its massive livestock herd, while also fulfilling Beijing’s pledge to buy American shipments under a trade truce, the report said. Commercial soybean oil stocks in the nation as of Friday rose to nearly 1.5 million tons, up 4.3% from a year ago, hitting the highest for the time of year since at least 2024, the report said, citing data from China-based consultancy Mysteel.
South America crop estimates unchanged… Pro Farmer crop consultant Dr. Michael Cordonnier left his estimates for corn and soybean crops in Brazil and Argentina unchanged Monday. With 53% of soybeans planted, he sees Brazil’s soybean crop at 182 million metric tons with a neutral bias. He noted that weekend rains favored Mato Grosso, Goiás, Minas Gerais, southwestern São Paulo, Paraná, and Santa Catarina. The heaviest rain occurred in southern Goias, northern Minas Gerais, and Santa Catarina. Dryness is still lingering in far northern growing areas, Cordonnier said, and it is still too dry in parts of northern Mato Grosso, northern Goias, Tocantins, Bahia, and northeastern Brazil. Rain will become more widespread during the 6-10 day period. Brazil’s first corn crop is 63% planted, and Cordonnier sees total corn production at 140.0 MMT with a neutral bias.
- Argentina’s soybeans are 2.3% planted. Cordonnier pegs the crop at 54.0 MMT, with a neutral bias. In the core production area, 5 to 8% of the soybeans have been planted. Soil moisture is optimum in most areas except for excess moisture in Entre Rios, he said. Soil temperatures are cooler than normal in Cordoba and Buenos Aires, Cordonnier observed, with soybean planting to conclude sometime in January. Argentina’s corn crop is 47% planted, with Cordonnier estimating the crop at 60 MMT. He noted that farmers have opted to plant more corn than the historical average at this point in the season, which may lead to more acres than originally anticipated.
Palm oil remains under pressure… Malaysian palm oil futures extended their decline Tuesday, remaining below MYR 4,700 per ton on weakness in Dalian-traded edible oils, Trading Economics reported. Abundant inventories added pressure, with stocks hitting a record high in September and expected to exceed 3 million tons by year-end amid peak seasonal production, the report said. It also noted that Indonesia, the top producer, lowered its November crude palm oil reference price by 6.1% to $978.90 per ton, cutting combined export duty and levy by around 20% to $246.36 per ton.
Live cattle see follow-through selling… December live cattle fell $1.25 to $219.70 on Monday. January feeder cattle rose $0.90 to $332.675. Both hit nearly four-week lows. Solidly lower cash cattle trade was a negative. USDA on Monday reported cash cattle trading last week averaged $223.65, which is down $3.41 from the week prior average of $227.06. On the positive side, boxed beef prices were firm to begin the week.
Hogs set another contract low… Lean hog futures extended their slide Monday, with December falling $0.70 to $58.175, setting yet another contract low. Cash hog prices and the CME cash index continued to trend lower, with Tuesday’s projected CME index down $0.82 at $65.75. The USDA noon pork report on Monday showed cutout value was up $2.36 at $72.46, led by gains in loins and picnics.