Good morning!
Grain futures mixed overnight… As of 6:00 a.m. CST, March corn was down 1 cent. March soybeans were 4 3/4 cents higher, while March SRW and HRW wheat futures were up 1 1/4 to 2 1/4 cents and hit multi-week highs. Friday’s rallies and technically bullish weekly high closes in most of the grains (which are early chart clues those markets have put in near-term bottoms) give the bulls momentum heading into trading this week. The key outside markets today see the U.S. dollar index solidly down and hit a four-month low, which is also helping out the grain market bulls. Nymex crude oil futures prices are near steady and trading around $61.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.207 percent.
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Remnants of mammoth winter storm linger over much of southern, eastern U.S.… The National Weather Service reports high pressure over the central Plains will create snow over parts of the central/southern High Plains through early today. Moreover, weak onshore flow will develop light rain over parts of the Northwest Coast overnight Monday that will become heavier late Tuesday as the next front comes onshore. Low pressure just south of New England will move eastward over the Atlantic Ocean today. The storm will produce heavy snow over the Northeast and patches of rain/freezing rain over parts of the Mid-Atlantic. Snow will also develop along the Appalachians today. Rain will develop along the southeast coast as the front moves offshore. A front over west-central Canada today will move southeastward to the Great Lakes by Tuesday. The system will produce lake-enhanced snow over the region from this evening into Tuesday. Meantime, U.S. travelers are bracing for extended disruptions to start the working week as airlines try to get their schedules back on track following an intense winter storm that saw the most flight cancellations since Covid. Around 3,500 flights were canceled on Monday as of 1:30 a.m. New York time, according to FlightAware. That’s down from the roughly 11,600 cancellations on Sunday, which bore the brunt of disruptions as the worst storm in years coated vast stretches of the U.S. South and Mid-Atlantic in ice and effectively shut down some of the country’s busiest aviation hubs.
U.S. wheat crop may have seen some winterkill… World Weather Inc. this morning said in a special report that “bitter cold conditions over multiple days without significant snow on the ground may have left U.S. wheat vulnerable to damage from Montana to Nebraska and across the lower Midwest. Damage assessments will not be possible prior to spring and even then it will be difficult to know the impact because of the potential for some crops to recover. This week’s weather will slowly improve in the Plains, while the Midwest (now snow covered) remains cold.”
Trump coming to Iowa Tuesday, may face year-round E15 questions… President Trump is scheduled to give a speech in Clive, Iowa, around midday Tuesday. He may face tough questions on the administration’s position on the use of E15 ethanol gasoline on a year-round basis. Farm leaders and ethanol supporters were livid late last week after last-minute wrangling saw House lawmakers drop language from funding legislation that would have provided authorization for year-round E15 use. As a compromise, House GOP leadership agreed to appoint a working group, giving it a goal of coming up with standalone legislation next month. E15 sales currently face limits during summer months due to air quality regulations.
U.S.-Canada relations continue to erode… President Trump on Saturday warned Canada of 100% tariffs in a social media post, saying that if Carney “thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken.” Canada has agreed to lower tariffs on 49,000 Chinese electric vehicles to 6%, removing a 100% surtax, as part of a deal aimed at rebuilding ties with Beijing. U.S. Treasury Secretary Scott Bessent on Sunday warned that Canada could face 100% tariffs from the U.S. if the country enters into a free-trade agreement with China and allows itself to become a place where artificially cheap goods can enter the US supply chain. The moves by the U.S. followed a speech by Canadian President Mark Carney during the World Economic Forum in Davos last week, when he spoke about the need for middle powers to band together to counter aggressive coercion by the world’s superpowers. The Canadian leader didn’t mention any countries by name, but his comments were widely interpreted as aimed at the U.S.
Trump and key administration officials have denounced that bilateral agreement and warned of potential consequences, portending a difficult renegotiation for the US-Mexico-Canada free trade agreement this summer, reported Bloomberg. Canada’s minister in charge of U.S. trade, Dominic LeBlanc, said Saturday that Ottawa isn’t pursuing a free trade agreement with China and that the agreements between Carney and Xi aimed to resolve tariff disputes.
Fed, many global central banks, meet this week; traders expect no change in U.S. rates… The Federal Reserve’s Open Market Committee (FOMC) and as many as 17 other central banks that meet this week are expected to mostly keep their interest rates unchanged amid global economic uncertainty, and despite pressure on the Fed from President Trump to lower rates. “Central banks in Africa may unveil a wave of easing, while those in other regions, such as Brazil, Canada, and Sweden, are likely to retain current settings. The week ahead will see the release of key economic data, including inflation reports from Australia, Japan, and Brazil, as well as GDP data from the euro region and other countries,” said a Bloomberg report. “We think most FOMC participants can cite data to support holding rates steady at the meeting. That degree of unity would be seen as a vote of support for Powell, who has come under fierce attack from the White House. The most interesting figures to watch are Governors Christopher Waller and Michelle Bowman: If they vote with the majority to hold steady, they’ll be signaling to Trump that they side with Powell — including on Fed independence. We expect Waller to vote with the majority, but Bowman to dissent,” said Bloomberg Economics.
Gold pushes above $5,000, silver above $110 amid safe-haven demand… Gold prices overnight pushed above $5,000-an-ounce, with February Comex futures hitting an all-time high of $5,107.90. Silver also hit a record high, with March Comex futures reaching $110.065 an ounce. Bloomberg said the “breakneck rally fueled by U.S. President Donald Trump’s reshaping of international relations and investor flight from sovereign bonds and currencies” is pushing safe-haven demand for precious metals. “Gold’s dramatic gains drives home bullion’s historic role as a gauge of fear in markets, with investors looking to navigate uncertainty and the haven appeal of gold rarely being more attractive.”
U.S. dollar index sinks on forex intervention talk… The U.S. dollar index (a basket of major currencies weighted against the greenback) fell to a four-month low overnight amid the prospect of the U.S. joining Japan in foreign-exchange intervention. The dollar weakened against most major currencies and the Japanese yen rallied as investors debated how any joint intervention to support Japan might further worsen sentiment toward the greenback. A potential currency pact between the U.S. and Japan has reignited discussion on coordinated currency intervention to guide the dollar lower against key trading partners, which could help American exporters compete with rivals. The discussion on a potential currency pact reignited Friday when traders reported that the Federal Reserve Bank of New York had contacted financial institutions to ask about the yen’s exchange rate. Wall Street saw those inquiries as potentially laying the ground for Japan to intervene with help from the U.S., Bloomberg reported.
Russia, Ukraine, U.S. see constructive peace talks… U.S. officials on Saturday said discussions were constructive during the first trilateral meeting between the U.S., Ukraine and Russia since Russia’s invasion of Ukraine. The parties agreed to meet again in a week to continue negotiations. U.S. officials said discussions over security protocols are very advanced, adding there has not been a final framework agreed to on the fate of the Zaporizhzhia nuclear power plant, but said the sharing of the power produced by the plant will be a critical part of any agreement reached. The group of diplomats met Saturday in Abu Dhabi, where the U.S. delegation was led by envoys Steve Witkoff and Jared Kushner. Both envoys met separately with Ukrainian President Volodymyr Zelenskiy and Russian President Vladimir Putin in recent days.
Big short squeeze pushing up natural gas futures prices even more… Futures prices for natural gas jumped 70% in the U.S. over a week of trading as forecasts for bitter cold grew worse, after many speculative traders had been betting prices would fall. Now those futures traders are feeling the brutality of a big “short squeeze,” or the forced buying back of previously sold, or short, positions. “The price spike is the most abrupt weekly increase on record in the U.S. and illustrates the country’s integration into the global gas market, with America’s emergence as the leading gas exporter making price volatility at home an international story. The surge in prices may squeeze smaller buyers in Asia, with liquefied natural gas tankers likely sailing to Europe instead, while countries like China and Japan may be less affected due to their strong inventories and alternative fuel choices,” said a Bloomberg report. Months of mild weather lulled U.S. and European gas traders into believing winter would bring more of the same — not the brutal freeze gripping much of America. “Their bad bet is now reverberating around the world,” said Bloomberg. “Nor is it certain that the worst of the run-up is over. Temperatures in gas-producing parts of the U.S. could drop low enough in coming days to freeze pipelines — potentially choking off supplies just as demand for the fuel soars. “Everyone’s in panic mode right now,” said Paul Phillips, senior strategist for Uplift Energy Strategy, a Denver, Colorado-based gas trading firm. “This was a case of markets overextending in terms of positioning,” said Udayan Bhattacharya, chief trader at Global Risk Management and as reported by Bloomberg. Combine those positions with some bad weather and political tension, he said, and “you get a violent, short covering situation like we saw the last few days.”
Malaysian palm oil futures see mild gains… Malaysian palm oil futures rose modestly on Monday, hovering around MYR 4,190 per MT after briefly touching MYR 4,147 in the previous session. The rebound was supported by stronger edible oil prices on the Dalian and Chicago markets, while sentiment improved after Intertek Testing Services reported Malaysian palm oil exports rose 9.97% in January 1–25 from the previous month. Expectations of stronger demand ahead of the Lunar New Year and Ramadan in February also supported prices, alongside tighter supply, with January output projected to fall 15%–17% due to seasonal factors. In top supplier Indonesia, officials said palm oil exports to India could exceed 5 million MT in 2025, up from 4.8 million in 2024, following India’s tariff cuts. Gains, however, were capped by a firmer ringgit, renewed U.S. tariff threats toward Canada, and Indonesia’s cancellation of the B50 biodiesel plan. The Malaysian Palm Oil Council expects prices to remain in the MYR 4,000–4,300 range in February.
Live cattle futures markets finish last week strong; COF data leans price-friendly… February live cattle on Friday rose $2.525 to $234.90 and for the week were up $2.75. March feeders gained 90 cents to $360.175 and for the week rose $3.725. Friday’s technically bullish weekly high closes in February live cattle and March feeders set the table for some follow-through chart-based buying early this week. It appears cattle traders were expecting Friday afternoon’s monthly USDA cattle-on-feed report to lean price-friendly, which it did. The agency reported cattle and calves on feed in feedlots with capacity of 1,000 or more head totaled 11.5 million head on January 1. The inventory was 3 percent below January 1, 2025. The inventory included 7.02 million steers and steer calves, down 3 percent from the previous year. This group accounted for 61 percent of the total inventory. Heifers and heifer calves accounted for 4.44 million head, down 3 percent from 2025. Placements in feedlots during December totaled 1.55 million head, 5 percent below 2024. Net placements were 1.50 million head. During December, placements of cattle and calves weighing less than 600 pounds were 365,000 head, 600-699 pounds were 360,000 head, 700-799 pounds were 355,000 head, 800-899 pounds were 274,000 head, 900-999 pounds were 115,000 head, and 1,000 pounds and greater were 85,000 head. Marketings of fed cattle during December totaled 1.77 million head, 2 percent above 2024. Other disappearance totaled 58,000 head during December, 2 percent below 2024. Still-very-quiet cash cattle trading late last week saw USDA Friday reporting steers averaging $231.93 and heifers averaging $232.23. Those numbers compare to the prior week’s average cash cattle trade reported by USDA at $232.50.
Lean hog futures bulls remain in technical control… February lean hogs on Friday fell 12 1/2 cents to $88.35 and for the week were up 7 1/2 cents. The hog futures market paused Friday, with some mild profit taking featured from the shorter-term futures traders, after prices earlier last week hit a 3.5-month high. Firmly bullish technicals and increases in the cash hog and CME lean hog index prices recently limited selling interest. Hog futures’ premium to the CME lean hog index remains a positive element for the futures market, suggesting hog traders expect the cash market to continue to improve. The latest CME lean hog index is up 67 cents to $83.07. Today’s projected cash index price is up another 55 cents to $83.62. The national direct five-day rolling average cash hog price quote Friday was $60.71.