Good morning!
Grain futures prices firmer overnight… As of 6:00 a.m. CDT, December corn was up 1 cent, November soybeans up 9 1/2 cents and hit a two-week high, and December HRW and SRW wheat futures markets were 3/4 to 1 1/4 cents higher. The grain markets are seeing some buying support to start the trading week, on reports the U.S. and China are working on trying to ratchet down their trade tensions. Grain traders this week will keep an extra close eye on the gold and silver futures markets. Both last week hit record highs but then on Friday saw sharp losses that produced high daily price volatility and by the close had produced technically bearish “key reversals” down on the daily bar charts. Those are early warning clues that market tops may be in place. It’s likely gold and silver trading will remain highly volatile this week. Extreme price moves, either up or down in gold and silver, may well have an impact on grain futures trading—especially any major sell-offs in gold and silver that would likely produce spillover selling pressure in the grains. The key outside markets today see the U.S. dollar index a bit firmer. Nymex crude oil prices are modestly down and trading around $57.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.02 percent.
Wetter Midwest weather later this week and into next week… World Weather Inc. Sunday evening reported Midwest weather will trend drier through mid-week this week, with a disturbance likely in the central Plains Thursday into Friday that will move through the lower Midwest, Delta and Tennessee River Basin Friday and Saturday before reaching the middle and southern Atlantic Coast states during the weekend. Rainfall of 0.20 to 0.80 inch will be common with some 1.00- to 2.00-inch amounts possible from this system. Another frontal system will push through the Midwest early next week, resulting in one more wave of rain that may be greatest in the upper Midwest, where some 1.00- to 2.00-inch amounts are possible.
Markets calmer to start trading week as U.S., China try to ease their tensions… Trader and investor sentiment improved early Monday as President Trump sought to ease trade tensions with China after markets were rattled early Friday by U.S. bank-credit woes. However, solid results from regional lenders helped ease fears about credit quality. “Also, a new round of U.S.-China trade talks is set for this week in Malaysia, with Treasury Secretary Scott Bessent and Vice Premier He Lifeng facing the task of negotiating down new escalatory measures,” reported Bloomberg. “The U.S.-China trade spat appears to be easing with conciliatory comments coming from both the U.S. and China,” said Mohit Kumar, chief economist and strategist at Jefferies International Ltd. When asked by Fox News on Sunday about his threat to raise tariffs on Chinese goods by 100%, Trump said the levy was “not sustainable,” though “it could stand.” The U.S. will “be fine” with China, he added. Bessent virtually met with He on Friday, discussions that Chinese state media described as a constructive exchange of views. Trump on Sunday reiterated he wants China to buy U.S. soybeans. For the first time since at least the 1990s, China hasn’t bought any U.S. soybeans at the start of the export season, a sign that Beijing is once again using agriculture as leverage in its trade negotiations with the U.S.
China’s economic growth slows… China’s economy expanded 4.8% from a year earlier in the three months ending in September. That’s slightly better than economists’ forecasts. The growth in the first three quarters laid a “solid foundation” for achieving the full-year growth goal of around 5%, according to the National Bureau of Statistics. The latest data showed weakness in retail sales and fixed-asset investment, but an unexpected uptick in industrial output, which expanded 6.5% in September and exceeded all economists’ estimates. “The latest official snapshot of China’s economy marks the start of a high-stakes week for China, as top leaders gather in Beijing at the so-called fourth plenum to hash out development plans for the next five years,” said Bloomberg in a report.
Trump says U.S. may import Argentine beef to lower prices… President Trump said Sunday the United States could purchase Argentinian beef in an attempt to bring down prices for American consumers. “We would buy some beef from Argentina,” he told reporters aboard Air Force One during a flight from Florida to Washington. “If we do that, that will bring our beef prices down” the Associated Press reported. Trump last week promised to address rising beef costs at the meat counter as part of his efforts to keep inflation in check. The U.S. Cattlemen’s Association (USCA) Friday responded with a press release. “America’s ranchers have weathered years of rising input costs, drought and market shifts with unwavering resilience. Today’s beef prices are a direct reflection of these challenges. The cost of producing beef today is accurately represented in the consumer markets where it is sold,” said Justin Tupper, president of the Association. “Ranchers are facing historic highs for feed, fuel, labor, and land—and those costs have risen far faster than beef prices on grocery shelves,” said the USCA.
Day 20 of U.S. government shutdown with no end in sight… U.S. senators failed for the 10th time to resolve the U.S. government shutdown impasse in votes last Thursday. The shutdown is now the third-longest funding lapse in modern history, eclipsed only by the shutdowns of 1995 and 2018-19. Shutdowns are a relatively recent phenomenon, having only begun in their current form in 1980, reports CBS News. The House has been out of session since Sept. 19, with no plans to return until the shutdown is over.
Major internet outage… Amazon Web Services (AWS), the world’s largest cloud provider, suffered a widespread disruption today that degraded services for several companies, including artificial intelligence company Perplexity and the Coinbase and Robinhood financial platforms. AWS found a problem with a regional gateway on the U.S. East Coast that’s causing the disruption and is working on “multiple parallel paths to accelerate recovery,” the Amazon.com Inc. company said on the AWS health dashboard. Amazon’s cloud service is the most popular provider globally, underpinning a large chunk of the internet. It accounts for about a third of the cloud market, meaning any outage has major ripple effects.
Cattle futures bulls need to stop the bleeding soon… December live cattle futures on Friday fell $6.05 to $241.825. November feeder cattle futures Friday closed down the daily limit of $9.25 to $371.70. Cattle futures traders were badly spooked Friday by the announcement last Thursday afternoon by President Trump that his administration is working on lowering beef prices at the meat counter. Trump provided no details on how the administration will proceed, but the cattle futures markets bulls ran for cover due to the keen uncertainty of the matter. Key for the bulls is to stop the bleeding fast. Strong follow-through selling pressure today could mean the end of the major bull runs in the cattle futures markets. Cash cattle trading Friday turned more active. USDA at midday reported steers fetched an average price of $239.73 and heifers an average of $239.57. That compares to last week’s average cash cattle trade at $234.07.
Selling pressure in lean hog futures continues… December lean hog futures on Friday hit a two-month low and saw a technically bearish weekly low close for the second Friday in a row, which will further encourage the chart-based bears to play the short side early this week. Big losses in the cattle futures markets Friday also limited buying interest in hog futures. However, the hog futures market is now short-term oversold, technically and due for a corrective bounce soon. Serious near-term technical damage has been inflicted to suggest more downside in the near term. The latest CME lean hog index fell 61 cents to $96.59. Today’s projected cash index price is down another 47 cents to $96.12. The index has dropped around $3.00 the past week. The national direct five-day rolling average cash price Friday was $93.75.