Good morning!
Grain futures firmer overnight; USDA S&D report today… As of 6:00 a.m. CST, December corn was up 1/4 cent. January soybeans were 2 1/4 cents higher and hit a 17-month high overnight. December HRW and SRW wheat futures markets were 3 to 4 1/2 cents higher. Grain traders will get their first major dose of USDA economic data in over a month with today’s release of the November supply and demand report. (See analysts’ forecasts below.) Wheat traders are closely monitoring a major drone attack on Russia’s main Black Sea grain port. (See below.) The near-term technical postures for corn, soybeans and meal futures have turned more bullish late this week, which will likely draw in better chart-based speculator buying interest the near term. The key outside markets early this morning see the U.S. dollar index a bit firmer. Nymex crude oil prices are up and trading around $59.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.13 percent.
Windy and near-record warmth in the Midwest/Plains… The National Weather Service today said a pronounced surge of unseasonably warm air is resulting in near-record to record-breaking high temperatures across a broad region of the central and southern Plains. Highs are forecast to reach the upper 60s and 70s, up to 20-30 degrees above normal, across parts of the northern and central Plains. Farther south, temperatures will soar into the upper 70s and low 80s across Texas and Oklahoma. Numerous daily temperature records will likely be broken today from Texas to South Dakota. The combination of this unusual warmth, low relative humidity, and the strong, gusty winds will create favorable fire weather conditions. Therefore, red flag warnings are in effect for portions of Nebraska and South Dakota, where any ignition could lead to rapid growth. High wind warnings are also in effect across parts of the northern Rockies and high Plains today. An advancing cold front will generate powerful, potentially damaging winds, with gusts forecast to reach as high as 85 mph. Temperatures over the northern and central Plains will retreat from their well-above-normal highs over the weekend as a cold front pushes south. Conversely, the southern Plains (including much of Texas and Oklahoma) will remain well above normal, with additional daily record high temperatures likely through the weekend. The next period of widespread precipitation will arrive this weekend as the frontal system advances out of the Central U.S. This front will bring the chance for scattered showers and isolated thunderstorms to the Upper Ohio Valley, with a limited risk of strong wind gusts.Central and southern California will see periods of heavy rain, strong winds, and high-elevation snow today and into weekend. Widespread rainfall totals of 2 to 5 inches are expected across the urban and coastal areas of Southern California over the next 48 hours.
USDA November supply and demand report out today… USDA will release its monthly World Agricultural Supply and Demand report for November this morning at 11:00 a.m. CST. The agency did not release a monthly report in October due to the federal government shutdown. The averages of a Bloomberg poll of grain analysts’ forecasts show the following:
--U.S. corn production: 16.566 billion bushels per acre versus 16.814 billion in its September report.
--U.S. average corn yield: 184.0 bushels per acre versus 186.7 bushels reported by USDA in its September report.
--U.S. soybean production: 4.271 billion bushels versus 4.301 billion in reported by USDA in its September report.
--U.S. soybean average yield: 53.1 bushels per acre versus 53.5 in the September USDA report.
--2025-26 Argentina corn production: 53.3 million MT versus 53.0 million MT in USDA’s September report.
--2025-26 Brazil corn production: 132.8 million MT versus 131.0 million MT in USDA’s September report.
--2025-26 Argentina soybean production: 48.6 million MT versus 48.5 million MT in USDA’s September report.
--2025-26 Brazil soybean production: 175.7 million MT versus 175.0 million MT in USDA’s September report.
--2025-26 U.S. corn ending stocks: 2.168 billion bushels versus 2.110 billion bushels in USDA’s September report.
--2025-26 U.S. soybean ending stocks: 306 million bushels versus 300 million bushels in USDA’s September report.
--2025-26 U.S. wheat ending stocks: 869 million bushels versus 844 million bushels in USDA’s September report.
--2025-26 world corn ending stocks: 283.2 million MT versus 281.4 million MT in USDA’s September report.
--2025-26 world soybean ending stocks: 124.4 million MT versus 124.0 million MT in USDA’s September report.
--2025-26 world wheat ending stocks: 265.9 million MT versus 264.1 million MT in USDA’s September report.
USDA also Thursday said it has compiled a list of daily sales reported by exporter companies for the timeframe October 1 through November 13, 2025, which will also be released today at 11:00 a.m. CST.
Major drone attack on Russia’s main Black Sea grain port… Wheat traders are assessing the fallout from a major drone attack on Russia’s Black Sea port of Novorossiysk, a key export hub for grains and crude oil, Bloomberg reports. A fuel depot at an oil terminal along with coastal facilities were damaged during the strike, according to local authorities, but it’s unclear if any grain operations were hit. Novorossiysk “is the main port for Russian grain exports,” said Tobin Gorey, a strategist at Cornucopia Agri Analytics. If the attack “interrupts the flow for any significant period, the merchants are going to have to replace that grain from somewhere else, and that’s not easy to do,” he added. Other sources said the attack prompted local authorities to declare a state of emergency, and while the main grain terminal was impacted by debris it continued to function normally.
U.S., Argentina reach new trade deal, including better terms for bilateral trade in beef… The U.S. and Argentina reached a deal to deepen bilateral trade and investment cooperation, the White House said Thursday in a notice posted to its government website. “The countries will open their markets to each other on key products,” according to the White House statement that said Argentina would provide “preferential markets access for U.S. goods exports” including certain medicines, chemicals, machinery, information technology products, medical devices. The White House also said the “countries have committed to improved, reciprocal, bilateral market access conditions for trade in beef.” The moves to ease trade in cattle come as the Trump administration is looking to provide relief to U.S. consumers, with wholesale beef prices rising in recent years after the U.S. cattle herd dwindled to its lowest level in decades, and on the heels of elections in which Republicans suffered losses with an electorate increasingly focused on affordability. The U.S. on Thursday also announced frameworks for trade deals with El Salvador and Ecuador.
U.S. stock market wobbles ahead of onslaught of U.S. data, hawkish Fed-speak… U.S. stock indexes tumbled Thursday and were also down overnight, halting a rally this week that was spurred by the prospects of the U.S. government reopening. Hawkish statements from Federal Reserve officials ahead of a deluge of U.S. economic data spooked traders and investors. With optimism about the shutdown’s resolution priced in, concern about stock valuations re-emerged, prompting a sell-off in tech giants. As Fed officials Thursday signaled caution about future U.S. rate cuts, money markets now put the odds of a December rate cut below 50%, according to a Bloomberg report. In separate statements, Fed Bank of St. Louis President Alberto Musalem said Fed officials should move cautiously on rates with inflation running above target. Meantime, Cleveland Fed President Beth Hammack said U.S. monetary policy should remain “somewhat restrictive.” Minneapolis Fed President Neel Kashkari said he didn’t support the last cut and is undecided on December. “It’s an expensive market and expensive markets need lower rates to help justify today’s elevated valuations,” said Matt Maley at Miller Tabak + Co and as reported by Bloomberg. “So, the idea that this could change quickly with so much data coming out all at once, this uncertainty is raising some fear in the marketplace.”
More downbeat China economic data… China’s economic activity cooled more than expected at the start of the fourth quarter, with an unprecedented slump in investment and slower growth in industrial output, reports Bloomberg. Fixed-asset investment shrank 1.7% in the first 10 months of the year, and industrial production climbed 4.9% last month from a year earlier, the smallest gain since the start of this year. The government’s stimulus measures have been slow to feed into the economy, with domestic demand weakening across the board and borrowing demand failing to pick up, despite a total of 1 trillion yuan in stimulus approved since the end of September. Said Bloomberg Economics: “China’s October data showed momentum softening into the fourth quarter — but not enough to prompt fresh stimulus for now. On the one hand, holiday distortions likely exaggerated the slowdown. The sharp pullback in production and exports probably reflected payback after factories brought orders forward to September ahead of the holiday. Average output growth in September and October was still faster than in August.”
Noted palm oil analyst says prices may push to three-year high in early 2026… Palm oil prices may surge to a three-year high of 5,500 ringgit ($1,332) a ton in the first quarter of next year if global supplies are squeezed by rising use in biofuels, according to veteran trader Dorab Mistry and as reported by Bloomberg. That price level is possible “if Indonesia continues to seize plantations and talks about implementing B50”, the director of Godrej International Ltd. said on Friday in slides prepared for an industry conference in Bali. Mistry was referring to the government’s recent takeover of farms deemed to be operating illegally, and the proposed expansion of the country’s biodiesel mandate. In September, Mistry, who’s been trading vegetable oils for more than three decades, said palm prices would surpass 5,000 ringgit a ton by year-end. His forecasts are underscored by flat supply, a decline in productivity, and biofuel mandates around the world. Indonesia, the world’s biggest producer, is planning to raise its biofuel mix in diesel to 50%, a move that is anticipated to deepen palm’s supply crunch. Any tweaks to the nation’s domestic obligation policy, which requires producers to sell locally before exporting, will add to the “very bullish” outlook for palm oil, he said. The U.S. biodiesel regime, meanwhile, is also critical to the price outlook for vegetable oils, he added. “Politicians like biofuels as a clever way to help farmers and fight climate change,” said Mistry. He expects global demand for vegetable oil used in energy to climb around 4 million tons in 2025-26, from growth of 3 million tons a year ago, due to an expansion of capacity and use in the US, Brazil and Indonesia.
Malaysian palm oil futures weaker… Malaysian palm oil futures on Friday fell below MYR 4,120 per MT, extending losses from the Thursday session. Prices were weighed down by weaker Dalian palm olein and subdued demand from key buyers like India and China. Markets hovered at a four-month low and were set for a fifth straight weekly decline amid expectations of higher supply. Data from the Malaysian Palm Oil Board showed October output jumping 11.02% to the highest since August 2015, with stocks reaching a 6-1/2-year peak. In China, softer industrial output and retail sales in October added further pressure. Meanwhile, top producer Indonesia’s plan to open 600,000 hectares of new plantation land, the first expansion since its moratorium ended four years ago, reinforced expectations of rising future supply. Still, a slightly weaker ringgit helped limit losses.
Cattle futures bears reassert their power late this week… December live cattle futures on Thursday fell $6.275 to $219.00. January feeder cattle lost $9.025 to $318.45. The cattle futures bulls late this week are fading fast as strong technical selling pressure from the speculators was featured Thursday, along with lower cash cattle trade so far this week. Cash cattle trading turned more active Thursday, with USDA at midday reporting the average steer price at $225.58 and the average heifer price at $226.51. USDA early this week reported cash cattle trading activity last week occurred at an average of $228.70. That’s down $2.16 from the week prior’s USDA average of $230.86.
Lean hog futures see more technical selling as charts turn more bearish… December lean hogs Thursday fell $2.55 to $78.075 and hit a four-month low. Hog futures Thursday saw heavy technical selling. A continued erosion in cash hog prices and weakening pork cutout values late this week also pressured futures prices. Sharply lower live and feeder cattle futures prices Thursday again spilled over into selling in hog futures. The latest CME lean hog index is down another 4 cents at $89.13. Today’s projected cash hog index is down 30 cents at $88.83. Thursday’s national direct 5-day rolling average cash hog price quote was $83.32.