Good morning!
Grain futures mostly firmer… At 6:00 a.m. CT, December corn was up 1 cent. November soybeans were 7 1/4 cents higher. December soybean meal was up $4.20 and hit a more-than-two-year high for the contract. December bean oil was 3 points lower. December SRW wheat was up 1 1/4 cents. December HRW was down 1/4 cent. The soybean meal futures market was the standout performer overnight as short-bought domestic processors are scrambling for needs amid soybean fields in the western Corn Belt that are too wet to harvest — and more rain is on the way. On tap today is the weekly USDA export sales report and the quarterly USDA hogs and pigs report. The key outside markets today see the U.S. dollar index modestly up and hitting a nearly two-month high overnight. November Nymex WTI crude oil prices are higher and trading around $93.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 5.11%.
U.S.-China trade truce extended by two months… U.S. Treasury Secretary Scott Bessent told Fox News that he and Chinese Vice Premier He Lifeng agreed to extend the trade truce reached in South Korea last fall for two months, to Jan. 10. “I don’t know whether a bigger deal can be done. I don’t know whether we will just roll the current deal,” Bessent said, according to Bloomberg. There’s also much attention on whether China will signal a commitment to what the White House has said is a pledge to buy $17 billion in non-soybean agricultural goods on a pro-rated basis this calendar year, on top of its purported pledge to buy 25 million metric tons of soybeans in 2026, 2027 and 2028. China has been a regular U.S. soybean buyer over the past several weeks, booking more than half of its alleged commitment. Beijing has never publicly affirmed the size of any purchase commitments.
More rain coming to the Plains, Midwest… The National Weather Service today said tropical moisture continues to move northeastward towards the central Plains. The associated plume of moisture will gradually shift east. A broad marginal risk for heavy rain covers much of the Four Corners into central Plains as the trough will also support isolated to scattered storms. By Friday, an axis of broad moisture and instability will extend into the Midwest, leading to high rainfall rates and flash flooding concerns from portions of the Southwest, south/central Plains, and Midwest. Across the northern Plains into the Upper Midwest, expect scattered showers and thunderstorms through early Saturday morning as instability and moisture continues to move eastward. Meantime, a Nor’easter storm is set to hit the east coast Friday and Saturday.
The Trump administration’s U.S. diesel export ban debate… An internal Trump administration battle over whether to ban U.S. diesel exports appeared to play out in media reports Wednesday. Energy Secretary Chris Wright reiterated his opposition to the prospect of a ban in remarks Wednesday morning, saying it would be a “blunt tool” that wouldn’t work in terms of lowering U.S. prices. That’s an argument that’s been voiced by numerous energy analysts, who contend a ban, while aiming to lower record domestic diesel prices, would potentially do more harm than good. But a Politico report said the administration was preparing a 90-day export ban, despite splits within the administration. The report said that in addition to Wright, Treasury Secretary Scott Bessent and Interior Secretary Doug Burgum have argued against an export ban. However, Reuters later reported that a White House official described the Politico report as not accurate. Then Wright, who was attending a series of events on the sidelines of the United Nations General Assembly, told the Wall Street Journal that the administration wouldn’t stop all exports of diesel but would implement restrictions as part of a voluntary plan. Wright offered few details. Diesel futures fell in response to speculation over potential export curbs, with front-month Nymex diesel down 3.4% at $4.7764 a gallon. AAA pegged the current national average for road diesel at $6.5217 a gallon, near the recently set record high. Said Morgan Stanley in a report: A diesel export ban could have the counterintuitive effect of an increase in gasoline prices if U.S. refiners cut runs. The refiners would be faced with the necessity of cutting their runs, resulting in lower gasoline output and higher prices.
Trump administration denies it’s mulling reducing beef imports… A small group of White House officials is exploring whether to cut back President Trump’s decision to increase foreign beef imports,according to a Politico report. “The proposal to reduce the amount of imports is being discussed within the Domestic Policy Council headed by Vince Haley, a longtime Trump speechwriter and former campaign official, and a few other officials at the White House, according to two people with direct knowledge of the conversations, who were granted anonymity to share private details. Trump officials are unsure if anything will come of the talks. The two people said the Office of the U.S. Trade Representative disagrees with cutting back the imports, since it aims to lower high consumer beef prices in the short term and since USTR helped implement the move.” The White House and USTR, in statements after the Politico story was published, denied there was any official action on the table. “There’s no pending policy change to ‘disagree’ with,” a USTR official said. Meantime, White House spokesperson Kush Desai said, “The White House is not considering such action. As the President directed in his executive order, the USDA and USTR continue to monitor beef imports to ensure that savings are being passed onto consumers.”
New York Fed governor leans hawkish in London speech… Federal Reserve Bank of New York President John Williams said there is still a lot of work to do on inflation given high energy prices and demand driven by investment in artificial intelligence. In a speech in London today, Williams said the U.S. economy has shown “remarkable resilience despite significant shocks” and the labor market is “solid.” However, he pointed to lingering inflation risks from the ongoing U.S.-Iran war and “pretty strong demand from AI,” said a Bloomberg report. “That’s the job: we still have a lot of work to do,” Williams said. “Inflation’s been above target for five years.” U.S. inflation held above target at 3.4% in August with a key measure excluding food and energy rising by more than expected compared with the previous month.
“U.S. 30-Year Yield Hits Highest Since 2004 as Bond Selloff Deepens” … That’s an overnight Bloomberg headline. “Yields on the U.S. government’s longest-dated bonds climbed to the highest level in more than two decades, the latest milestone notched in an extended bond selloff driven by inflation and fiscal concerns. “The rate on 30-year Treasuries rose as much as four basis points on Thursday to 5.44%, the highest since 2004, after Brent crude oil prices jumped. It follows a surge this week that left yields across maturities around the highest levels since 2007. ‘People are running out of superlatives for the yield on the 30-year bond,’ said Ed Al-Hussainy, a portfolio manager at Columbia Threadneedle. ‘Investors are saying, look, if we’re going to lock up our money for 30 years, we need much higher compensation,’” said the Bloomberg report. “Pressure on long-dated bonds has mounted as better U.S. economic growth, elevated energy prices as well as inflation and heavier government borrowing prompt investors to demand more compensation for locking up money for decades.”
Crude oil prices rebound… Brent crude rose above $105 a barrel and Nymex WTI futures were around $94 early today, extending good gains seen Wednesday. Heightened Middle East tensions clouded prospects for a diplomatic resolution to the U.S.-Iran war. Military adviser to Iran’s Supreme Leader Yahya Rahim Safavi warned that the conflict could expand from the Persian Gulf, Strait of Hormuz and Red Sea to the Indian Ocean if the U.S. or Israel launches another attack. His remarks weakened optimism surrounding U.S.-Iran discussions on the sidelines of the UN General Assembly. Iranian President Masoud Pezeshkian said Tehran was prepared to resume talks on ending the conflict but would not respond to threats. He also said Iran would restrict freedom of navigation through the Strait of Hormuz while U.S. sanctions and a blockade remain in place.
Malaysian palm oil futures rally… Malaysian palm oil futures on Thursday strengthened, hovering near MYR 4,790 per MT after recent declines. Prices were boosted by a weaker ringgit, firmer edible oils on the Dalian market and India’s decision to cut basic import duties on crude and refined vegetable oils ahead of the September–November festive season, in an effort to curb domestic food inflation. Supply concerns also lent support, as top supplier Indonesia is expected to face a shorter-than-usual wet season from November, potentially affecting crops. However, the upside was tempered by expectations of higher Malaysian inventories, with a brokerage forecasting end-stocks to reach around 3 million MT, or slightly higher, by September-end, driven by a double-digit rise in production, particularly in Sabah. Exports also stayed sluggish, with cargo surveyors noting shipments fell between 12.8%–24.7% mom during September 1–20. In the energy market, softer crude prices amid improving Gulf supply also weighed on sentiment.
Cattle futures bulls looking stronger… October live cattle on Wednesday rose $2.15 to $220.925. November feeder cattle gained $6.30 to $329.50. The live and feeder cattle futures markets rallied following Tuesday’s corrective pullbacks. Both markets still see their prices within last week’s trading ranges. However, the bulls showed resilience on Wednesday, to suggest they are confident to continue to press their campaign on the upside. USDA at midday Wednesday reported very light cash trading this week, averaging $222.00. The agency on Monday said cash cattle trading last week averaged $221.87, down 95 cents from $222.82 the week prior.
Lean hog futures see more tepid short covering… October lean hogs on Wednesday rose $0.60 to $79.875. The hog futures market saw more short covering following the recent steep price downdraft that saw prices hit a 15-month low last week. The near-term chart posture remains bearish. A still-weakening cash hog market also is bearish for lean hog futures. The latest CME lean hog index is down $0.50 at $82.92. Today’s projected CME index price is down another 45 cents at $82.47. The national direct five-day rolling average cash hog price quote for Wednesday was $79.98. Hog trades are awaiting today’s quarterly hogs and pigs report, which is expected to show a smaller U.S. hog inventory.