Good morning!
Price pressure on grain futures overnight… As of 6:00 a.m. CDT, December corn was down 5 1/4 cents after hitting a four-month high in early overnight trading. January soybeans were 17 3/4 cents lower. December HRW and SRW wheat futures markets were down around 9 to 10 cents. The grain markets early today are exhibiting a classic “buy the rumor, sell the fact” reaction to the overnight news the U.S. and China have reached a trade truce. (See item below.) Profit taking from the shorter-term futures traders is featured, along with some weak long liquidation. The key outside markets today see the U.S. dollar index slightly up. Nymex crude oil prices are weaker and trading around $60.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.07 percent.
Light and spotty showers in Midwest today… The National Weather Service today said some light and spotty showers are expected for portions of the Plains and Upper Midwest as a weak clipper-like system passes by. Some lake-effect showers are possible along the Great Lakes with northwesterly flow in place following the passage of the eastern U.S. system. Moisture returns ahead of a developing frontal boundary along the western Gulf Coast and may start to bring some thunderstorm chances for the region by Saturday morning. Freeze warnings are in effect from north Texas into Kansas, with dense fog advisories from western Iowa into northeast Minnesota.
U.S., China agree to one-year trade truce… Presidents Trump and Xi Jinping agreed to extend a tariff truce, roll back export controls and reduce other trade barriers in a landmark 90-minute summit meeting in South Korea today. Beijing will resume purchases of what Trump called “tremendous amounts” of U.S. soybeans, as well as sorghum and other U.S. farm products. China will start buying immediately, Trump said. The U.S. will cut by half fentanyl-related tariffs on Chinese goods. The U.S. will also extend a pause on some reciprocal tariffs on China for an additional year. The agreement includes China pausing sweeping controls on rare-earth magnets in exchange for the U.S. rolling back an expansion of restrictions on Chinese companies. Also, the two countries will work together on issues such as trade, energy and artificial intelligence. Today’s Trump-Xi meeting potentially stabilizes relations between the world’s two biggest economies after months of turmoil. After the summit, Trump said, “I guess, on the scale from zero to 10, with 10 being the best, I would say the meeting was at a 12,” he told reporters on Air Force One, which he boarded immediately after the meeting with Xi in Busan, South Korea. “You know, just the whole relationship is very, very important. I think it was very good,” said Trump and as reported by Bloomberg.
Fed cuts interest rates but Powell leans hawkish… The Federal Open Market Committee on Wednesday lowered the target range for the federal funds rate by 0.25%, as widely expected by the marketplace, with dissents in both directions. However, Federal Reserve Chair Jerome Powell warned that investors need to rein in expectations for a December U.S. interest rate cut, underscoring a growing tug-of-war among U.S. monetary policy makers with differing outlooks for jobs and inflation. Powell made it clear that a follow-up rate cut in December is not a done deal, saying “a further reduction in the policy rate at the December meeting is not a foregone conclusion — far from it.” Powell’s hawkish tone sent U.S. Treasury prices falling (yields rising), making another Fed rate cut in December only moderately likely. “While Powell made it clear that the primary concern for some is a cooling job market, others inside the Fed are warning persistent inflation will limit room for more easing. And a freeze on the release of official economic data during the ongoing government shutdown is only hardening the divide,” said a Bloomberg report.
U.S. to restart nuclear weapons testing… President Trump on Wednesday said the U.S. will match its rivals in testing nuclear weapons after Russia announced trials of a nuclear-powered underwater drone and nuclear-capable cruise missile. Trump instructed the Department of War to start testing nuclear weapons on an equal basis, with the process to begin immediately, in response to Russia’s accelerated testing of nuclear-capable super weapons, reported Bloomberg. The White House didn’t immediately respond to a request for clarification over whether Trump was ordering tests of nuclear-powered weapons and those that can carry nuclear warheads, rather than nuclear detonations.
Trump, Canada Prime Minister Carney, have “very nice conversation”… President Trump today said he had a “very nice conversation” Wednesday with Canadian Prime Minister Mark Carney, despite the latest increase in trade tensions between the two neighboring nations. Trump made his remarks on Air Force One today after departing South Korea, where he had come for meetings of the Asia-Pacific Economic Cooperation group. Carney and Trump sat at the same table for an APEC dinner Wednesday. “I had a very nice conversation with him last night,” Trump told reporters. Carney’s office noted the encounter in a statement late Wednesday: “The Prime Minister had constructive conversations on various topics of interest with all participants, including the President of the United States” as reported by Bloomberg.
Central banks continue to stock up on gold… Central banks accelerated gold purchases in the third quarter, with several returning buyers purchasing gold despite record-high prices to bet on bullion’s value as a hedge against a vulnerable U.S. dollar. The World Gold Council reported central banks purchased 220 tons of gold in the July-September period, marking a 28% increase over the preceding quarter, and added 634 tons of bullion to their reserves in the year through September. The WGC forecast full-year purchases for 2025 within a range of 750 to 900 tons, citing heightened geopolitical tensions, stubborn inflationary pressures, and uncertainty around global trade policy as factors fueling appetite for safe-haven assets.
Malaysian palm oil futures prices stabilize… Malaysian palm oil futures hovered around MYR 4,250 per MT after a four-day decline, as traders weighed mixed global and local signals. Traders awaited China’s upcoming PMI data for further clues on demand prospects. Meanwhile, a weaker ringgit and stronger Dalian soyoil prices spurred some bargain buying after palm oil hit a 12-week low the previous day. In top producer Indonesia, palm oil inventories slipped 1% from the prior month to 2.54 million metric tons in August, according to GAPKI. However, the association projected full-year output at around 56 million metric tons, surpassing earlier forecasts.
Cattle futures markets see strong price rebounds… December live cattle on Wednesday rose $4.325 to $230.90. January feeder cattle gained $9.15 to $334.025. The cattle futures markets today saw strong corrective rebounds after the recent steep price downdrafts. Wednesday’s price action begins to suggest this week’s lows are near- term market bottoms. Steady to higher price action the rest of this week would better suggest the live and feeder cattle futures markets have quickly put in price bottoms after suffering five-session beat-downs. Mexican Agriculture Minister Julio Berdegue said Wednesday that Mexico and the U.S. have not yet set a date to resume Mexican cattle exports. Berdegue spoke with U.S. Ag Secretary Brooke Rollins in a video conference and agreed to test modular mobile plants in Mexico that could increase sterile fly production. USDA reported active cash cattle trading at mid-week. The agency at midday Wednesday reported cash trade has averaged at $229.70 versus last week’s average of $237.89.
Lean hog futures market bulls work to stabilize prices… Lean hog futures price action paused Wednesday following the recent selling pressure that saw lower closes in December futures for five sessions in a row. Firmly bearish technicals and steadily declining cash hog prices are limiting buying interest in the hog futures market. December lean hog futures’ discount to the cash index has somewhat limited selling interest in futures recently. The latest CME lean hog index is down another 24 cents at $92.03. Today’s projected cash hog index is down another 17 cents at $91.86. Wednesday’s national direct 5-day rolling average cash hog price quote was $87.90.