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Oklahoma auction volumes point to limited supplies of feeder cattle with the fall run of calves under way, said Derrell S. Peel, Oklahoma State University livestock marketing specialist, in OSU’s latest Cow-Calf Corner newsletter Monday. Weekly auction volumes have been below year-ago levels with only one week in the last 12 higher year over year, he said. Since July 1, total auction volume is down 23.2% year over year, a decrease of around 78,000 head. While the summer market drop and high temperatures might explain reduced volumes in July, August and September, that would also imply that delayed marketings should be pushed into fall, Peel wrote, noting that, instead, October auction volumes haven’t indicated a strong fall run.
- “This is perhaps more surprising given poor forage conditions due to continuing drought,” Peel said. “The most recent pasture and range conditions for Oklahoma show 51 percent in poor to very poor condition. Perhaps larger auction runs are coming yet this fall…or maybe the cattle just aren’t there.”
Market recap: Corn futures consolidated Monday, scoring modest gains Monday after ending last week with a sharp selloff in the wake of USDA’s surprise decision to lift its average corn yield and production estimates, defying expectations for a further cut (see item below).
- December corn rose 3 ¼ cents to $4.83 after ending Friday at a two-month low.
- November soybeans lost 4 ¼ cents to $12.87 ¾.
- December soybean meal rose $3.10 to $368.70.
- December soybean oil gained 61 points to 68.63 cents.
- December soft red winter wheat rose 1 ¼ cents to $6.72 ¼.
- December hard red winter wheat lost 4 cents to $7.15 ¼, for the lowest close in three months.
- December cotton rose 6 points to $80.60 cents.
- December live cattle fell 45 cents to $226.60, while November feeders fell 85 cents to $341.10, with both markets seeing modest corrective pullbacks and some profit taking after ending at multiweek highs on Friday.
- December lean-hog futures rose 55 cents to $68.375, finding modest short covering interest after hitting a contract low on Friday.
Crude oil rises… Crude oil futures rose Monday, with both December Brent and December WTI up 2% to $106.84 and $92.80 a barrel, respectively. Continued attacks on the international airport in Riyadh, the Saudi capital, while traders weigh the impact of President Donald Trump’s deal with Russia to allow more of the country’s diesel on the global market in a bid to bring down prices ahead of next month’s U.S. midterm elections. Diesel futures were down 0.4% Monday but further downside may be limited, analysts said.
- “Geopolitical tensions have not calmed, at all,” said Tom Essaye, founder of Sevens Report Research, in a Monday note. “The Houthi/Saudi conflict is now the #1 geopolitical risk to energy flows from the Middle East and that escalated dramatically in recent days. Despite these rising risks (which include more tanker attacks in the Strait of Hormuz), energy is flowing out of the Middle East and that is preventing an even more dramatic rise in oil prices.”
Cordonnier skeptical of USDA corn yield: Pro Farmer crop consultant Michael Cordonnier shares in the widespread skepticism around USDA’s surprise decision to lift its corn yield estimate 2.7 bushels per acre Friday to 181.2 bushels per acre in the October Crop Production report. “Such a surprising result might indicate there is something amiss at USDA,” he wrote, arguing that it doesn’t seem possible that crop condition ratings could fall as yield estimates increase. He also questioned whether late-season rains in the western Corn Belt were fully reflected. Still, he noted, USDA remains the final arbiter on crop production, though he expects production will likely be trimmed in the November report or the January year-end summary. Due to his suspicion USDA’s figure may be overstated, Cordonnier raised his estimate to just 180 bushels per acre from 177.0 bushels per acre. USDA’s soybean yield estimate of 53.1 bushels per acre seems more reasonable, he said.
- Brazil planting moves ahead: Despite worries about El Nino, Brazil’s soybean planting season appears off to a record start, pegged at 19.7% as of last Friday versus an average of 11.5%. Planting hit 33.2% complete in Mato Grosso while other states also saw impressive gains. Parana was slowed last week but already saw planting at 36% complete. Early planted soybeans should be ready harvest in early January, providing an opportunity to plant the safrinha corn crop in the ideal window if weather cooperates, he said.
Food inflation focus: The September consumer price index reading will be a key event for financial markets this week, with a contraseasonal snapback in gasoline prices and a surge in diesel prices last month with the rest of the report showing disinflation elsewhere, said Thomas Simons, chief U.S. economist at Jefferies, in a note. Economists surveyed by the Wall Street Journal, on average, expect CPI to show a 0.6% rise after a 0.4% bump in August, with the year-over-year rate accelerating to 3.7% from 3.4%. Core CPI, which strips out volatile food and energy costs, is expected to show a monthly rise of 0.2% after a 0.3% increase in August, with the year-over-year rate ticking up to 2.5% from 2.4%.
Simons said he expects food prices to grow at a subdued 0.2% on the month, but that there is a risk that higher shipping costs translate into higher food prices due to tight margins across the supply chain.
- “So far, this hasn’t happened, but it is certainly something the Fed is looking at,” Simons wrote. “ Food may end up being one of the most important determinants of whether the Fed ends up hiking again in October or if they stand pat.”
Fed’s Warsh speaks late Thursday: Federal Reserve Chairman Kevin Warsh will speak at an International Monetary Fund event in Thailand at 10:30 p.m. CT on Thursday. Speeches by Fed chairs are always closely watched. This one comes just ahead of the communications blackout that precedes the Fed’s Oct. 27-28 policy meeting. Speeches by Fed officials last week saw Governor Chris Waller hint that his base case is two more hikes in December and March, St. Louis Fed President Albert Musalem signal a need for higher rates but no hurry to deliver another hike in October — a message that seemed to be echoed by the minutes of the September meeting, said economists at BofA Global Research, in a note.
- “Now it comes down to Warsh...Barring a big surprise in September inflation, we think he will be able to swing the committee either way in October,” they wrote.
China risks debt spiral: Chinese leader Xi Jinping’s push to build China into a technological and military superpower is fueling a steep rise in debt that is choking the domestic economy and damaging trade partners, according to a Wall Street Journal report. It noted that China’s total credit to the nonfinancial sector last year topped 300% of GDP, adding more than $43 trillion in borrowing since Xi took office in 2012. Chinese companies funded by this enormous debt are churning out more cars, solar panels and electronics than domestic consumers want, the report said, contributing to the flood of exports that has built a trillion dollar annual surplus with the rest of the world.
U.S. economists win Nobel: American economists Robert E. Hall of Stanford University and Michael Woodford of Columbia University were awarded the 2026 Nobel Memorial Prize in Economic Sciences. The Royal Swedish Academy of Sciences recognized the pair for establishing the “microeconomic foundations of macroeconomic stabilisation”. Their research was credited with reshaping how global central banks design monetary and fiscal policy to manage inflation, smooth business cycles, and handle financial shocks.
One such new approach was forward guidance, in which central banks offer more explicit statements about the future path of interest-rate policy, which was used by central banks following the global financial crisis beginning around 2009, the Wall Street Journal noted. It’s an approach that’s fallen out of favor with new Federal Reserve Chairman Kevin Warsh, who contends it has distorted market signals that can help central banks set policy.