Good morning!
Grains mostly higher… As of 6 a.m. CT, December corn was up ¾ cent. November soybeans rose 1 ¾ cents, December soybean meal was $1.40 lower and December soybean oil was up 27 points. December soft red winter wheat fell ¾ cent, while December hard red winter wheat declined 2 ¾ cents. Corn, wheat and soybeans remain significantly oversold, which could provide fuel for a bounce on a positive catalyst. A steady drumbeat of soybean demand from China has failed to provide support, overshadowed by continued harvest progress across much of the Midwest and largely favorable weather so far in South America.
In key outside markets, oil futures were rallying back to the upside, with Brent futures trading near $112 a barrel and U.S. benchmark WTI crude futures up 2.1% at $99.24 a barrel on renewed fears of a re-escalation of fighting between the U.S. and Iran (see item below). The ICE U.S. Dollar Index was down 0.1%, while the yield on the 10-year U.S. Treasury note fell more than 6 basis points to 5.065%. U.S. stock-index futures pointed to a sharply lower start for the Nasdaq and S&P 500 in response to the jump in oil prices and jitters over the AI trade.
Iran, Israel reportedly plan new Iran strikes… The U.S. and Israel have developed detailed plans for renewed strikes against Iran following next month’s midterm U.S. elections, the New York Times reported. Meanwhile, strikes on Saudi Arabia by Iran-backed Houthies continued, with three people killed in two attacks on an Aramco oil field and an airport in Saudi Arabia’s Eastern Province, Bloomberg reported. In the meantime, the U.S. State Department issued an ordered departure for non-emergency government employees and family members in Saudi Arabia. Iran’s foreign minister Abbas Araghchi wrote in a Financial Times guest column Wednesday that there was little reason to expect progress, dampening hopes for a near-term solution, said Jim Reid, macro strategist at Deutsche Bank, leading traders to price in “a longer period of high oil prices extending well into 2027.”
Bloomberg Opinion columnist Javier Blas notes that fragmentation in the oil market is making crude simultaneously cheap and expensive depending on location and grade. The U.S. is a potential winner, he writes, while regions like Europe pay more for nearby barrels to save on transportation costs. He writes:
“The effect is clear from looking at what a barrel costs where. North Sea crude delivered in Rotterdam? That’s $125, give or take. US shale oil in the Gulf of Mexico? That’s about $100. Canadian crude in the US Midwest? Around $70. And Omani crude shipped to southern China? That’s closer to $150.”
Warm in the Plains… Temperatures will be below average in the West thanks to the unsettled weather, the National Weather Service said. An amplifying upper-level ridge will promote above average to well above average temps with some record minimums possible over parts of the Northern/Central Plains and Upper Midwest. Surface high pressure over the East will support clear skies as well as average to below average temperatures through this weekend. Freeze and frost are possible for many areas given the clear skies overnight.
China snaps up Aussie canola… Oilseed buyers in China have snapped up around 1 million metric tons of Australian canola in recent deals, a sign of improved relations between Beijing and Canberra as well as lower tariffs and stronger processing margins, Reuters reported. The cargoes, for arrival in early 2027, were bought at around $695 to $705 per tone, including cost and freight to China, the report said.
El Niño fears drive big Philippines rate hike... Fears of the potentially inflationary impact of the El Niño weather phenomenon on food prices saw the Philippines surprise the market Thursday with a bigger-than-expected rate hike, boosting key benchmarks by 50 basis points versus the 25 basis points expected by economists. The Philippines central bank has delivered four straight hikes as it reacts to surging energy prices. Central bank chief Eli Remolona said El Niño was the inflation risk that most worried policy makers in the year ahead, according to Dow Jones Newswires. Fears the weather pattern could spark an acceleration of food inflation were previously flagged by Remolona, Bloomberg noted.
Palm oil ticks higher… Malaysian palm oil futures edged higher, hovering above MYR 4,750 per ton after recent losses, with support from robust exports and stronger demand prospects, TradingEconomics reported. Cargo surveyors reported a 58.5% to 78.4% surge in shipments between Oct. 1 and 20 versus the same period in September, with festival-related demand from key importer India further boosting sentiment. The report noted Malaysia is considering a temporary waiver or reduction of its 10% crude palm oil export tax.
Breaking the cattle data blackout… USDA is overhauling regional cash fed cattle reporting as a persistent data blackout spreads across major feeding states, reports Angie Stump Denton and Michelle Rook. Beginning with the afternoon market reports on Monday, USDA’s Agricultural Marketing Service (AMS) will begin publishing an aggregated cash cattle regional report that combines data from Colorado, Texas, New Mexico, Oklahoma and Kansas. The goal is to restore price transparency to the Southern Plains and Western feeding belts, where shrinking negotiated cash trade had caused published USDA market reports to go completely dark under federal confidentiality restrictions, but analysts warn structural price-discovery challenges persist. Read the full story here.
MCOOL and the farm bill… Mandatory country-of-origin labeling (MCOOL) for beef faces a tough path into the final farm bill, Agri-Pulse reports. While the Senate Agriculture Committee adopted an amendment from Senate Majority Leader John Thune, R-S.D., in its version of the farm bill, the House excluded it. The “four corners” – the heads of the House and Senate ag committees – must resolve MCOOL alongside partisan SNAP funding differences. Proponents argue labeling protects domestic ranchers, but opponents warn of higher consumer costs and the potential for renewed trade disputes with Canada and Mexico if the policy violates WTO rules.
France reports human Shamonda virus case… French health authorities said they had detected the Shamonda virus usually affecting livestock in a human for the first time in a patient who later died, adding that they saw no risk to the general population at this stage, Reuters reported.affecting livestock in a human for the first time in a patient who later died, while adding that they saw no risk to the general population at this stage. Shamonda virus is an insect-borne Orthobunyavirus primarily affecting livestock, particularly cattle, and transmitted by biting midges, the report said. Reuters noted the virus was first identified in Nigeria in the mid-1960s, and has since been detected sporadically in animals in Africa and Japan. It has been spreading among several European countries this year.
Cattle at 3-month highs… December live cattle rose $0.95 to end at $231.125 Wednesday, while November feeders gained $2.525 to $348.825, with both hitting three-month highs. A positive technical backdrop and last week’s firm cash trade have encouraged bulls ahead of Friday afternoon’s USDA monthly Cattle on Feed and Cold Storage reports.
Hogs see another contract low… December lean-hog futures dropped $1.425 to close at $65.725 after hitting another contract low. Bears continue to press the downside in futures as cash fundamentals continue to deteriorate. Thursday’s projected CME index price is down $0.20 at $72.82, while Wednesday’s national direct five-day rolling average cash hog price was $67.88. Wednesday’s noon pork report showed cutout value down $1.42 at $77.11, led by weakness in picnics.