SOYBEANS
The bean market is seeing some light pressure to start the week, weighed down by a decline in bean oil due to the sharp weakness in crude oil. Generally favorable South American weather and the improved planting pace in Brazil are negative factors, while near-term demand has been a positive. The million-dollar question is whether China is buying out of necessity or to hedge itself from a potential trade war. Our best guess is perhaps a little of both. This afternoon’s US harvest progress is expected to be above 90%. Strong demand and low water restrictions on the Mississippi are driving barge freight rates higher. French dairy giant, Danone, says they are no longer sourcing beans from Brazil and have switched to Asian origin instead due to the anticipated implementation of the deforestation rules in 2026.
SOYBEAN MEAL
Soymeal prices are continuing the recent downswing to start this week, hitting their lowest level since August 26. US soymeal export prices are well above South American origin despite the recent price drop in US futures. The strength of the US dollar lately is not helping US competitiveness. Soymeal exports have been disappointing lately, possibly due to less urgency to find supplies compliant with coming deforestation regulations now that implementation has been pushed back 12 months to 2026.
CORN
Corn prices are starting the week slightly lower. Still, it certainly could be much worse, with crude oil more than $4 a barrel weaker this morning after Israel’s retaliatory strike did not significantly damage Iran’s energy facilities. US harvest progress this afternoon is expected to be around 80%, and weather was generally dry across the Midwest over the weekend. Later this week and through the weekend, chances of rain will rise across eastern Kansas, northeast through Iowa, Missouri, and Wisconsin. Temperatures will remain mostly above normal across the entire Midwest. The California governor is calling for a speedier review of E-15 approval as they are the only state in the nation that doesn’t allow the sale of E-15.
WHEAT
Chicago December hit a two-month low overnight on anticipated beneficial rainfall over the next 10 days for the southern Plains. Last week’s Drought Monitor showed that nearly 80% of the lower 48 states are abnormally dry or worse, with some of the driest areas in the southern Plains. US winter wheat areas under drought jumped 6% last week to 58%. However, improvement may be on the way based on the latest forecast. The 1st winter wheat condition report of the season is expected this afternoon. The Rosario Grain Exchange Argentine wheat production estimate is 19.5 million tonnes, compared to USDA’s 18.0. They also estimated Argentine wheat exports could be their 2nd highest on record. The Turkish president sent a proposal to Russia to restart the grain corridor. It’s unclear whether Ukraine would have any reason to be part of any agreement when their exports are moving briskly through their own corridor.
CATTLE
Friday’s Cattle on Feed report numbers were near guesses, except for placements. On feed was 100% of last year, compared to the average guess of 99.8, and placements were 98%, compared to the average guess of 95.9. Marketings were also near the guesses at 102% compared to the estimate of 101.6. Beef in cold storage in September was 1.7% below a year ago.
HOGS
December hogs rallied Friday and avoided confirmation of Thursday’s reversal down, and the uptrend remains intact. The market is acting as though hog numbers are much tighter than USDA suggests, as each minor price break finds solid buying. Pork in cold storage was down 0.3% from a year ago, while frozen bellies were down 40% year-over-year.
MILK CLASS III
November Class III milk came under early pressure and maintained downside momentum, falling to an 11-week low before finishing with a sizable weekly low. The USDA reported that milk volumes in the Central region are slowly rising as cooler temperatures bring more comfortable conditions for cows. Milk output is seasonally steady in the East region and steady to improving in most of the West region, while California is seeing a decrease.
GOLD, SILVER & COPPER
December gold futures declined on Monday due to slightly reduced geopolitical tensions in the Middle East. However, there is underlying support in light of increasing probabilities that the Federal Open Market Committee will lower its key interest rate by 25 basis points at its November 7 policy meeting.
December silver futures are higher despite a rally in the U.S. dollar and rising U.S. Treasury yields. Silver prices are higher even though there are perceived slightly easing geopolitical tensions in the Middle East.
December copper futures are steady and remain in a broadly based congestion pattern. December copper futures have traded within inside trading periods on the daily chart for last two days.
ENERGIES
December Crude Oil gapped lower overnight and fell to its lowest level since October 1 after Israel’s retaliatory missile strike against Iran over the weekend focused on military targets and avoided oil and nuclear infrastructure and civilian targets. This helped ease concerns about escalation and possible interruptions in global oil supply. Iran’s response to the strike was low-key and lacking the usual bellicose tone, which also indicated a step back from escalation. Next up is the OPEC+ scheduled unwinding its quotas. The steep selloff today may encourage them to postpone plans to lift them, which is currently scheduled for December 1. Focus may also resume on Chinese demand, which has been weighing on the market this year. Their sluggish economy and the switch to EV’s are to blame, but their the recent stimulus announcements had offered some hope. The Baker Hughes rig count on Friday showed US oil rigs in operation were down 2 rigs to 480 last week. This was down from 504 rigs a year ago and below the five-year average of 493.
Lower December Natural Gas was sharply lower overnight after in impressive rally last week that took the market to its highest level since October 11. One has to think that the somewhat calmer tone out of the Mideast, had eased concerns about an interruption to supply within the region. The market may also be seeing pressure from the increase in the Baker Hughes rig count last week, with US natural gas rigs in operation up 2 rigs to 101. This was down from 117 rigs a year ago and below the five-year average of 115.8 but marks a continued increase since they reached a low point of 94 on September 6, which was the lowest since April 2021. The market did find support last week from a cooler forecast for the western part of the US. The 6-10 day forecast calls for below normal temperatures west of the Rockies and above normal east, with much above across the eastern Midwest down to the Delta and southeast. Warmer than normal temperatures persist across the lower 48 in the 7-14 day, which could keep heating demand lower than normal.
STOCK INDEX FUTURES
Stock index futures are higher. The 9:30 central time October Dallas Federal Reserve manufacturing survey is expected to be negative 9.0. December S&P 500 futures advanced above a downtrend line on Friday.
DOLLAR INDEX
The U.S. dollar index advanced to a new high for the move, and to the highest level since July 10, in the overnight trade. However, prices are slightly lower this morning. Much of the strength in the U.S. dollar recently is linked to flight to quality buying in light of geopolitical tensions in the Middle East and favorable interest rate differentials.
INTEREST RATES
The yield on the 10-year U.S. Treasury note increased to around 4.27%, hitting its highest level in three months in light of growing expectations that the Federal Reserve will adopt a more cautious approach to further interest rate reductions, likely opting for more moderate 25 basis point cuts at upcoming meetings. The December 30-year U.S. Treasury bond futures declined to the lowest level since July 3.
SOFTS
December Cocoa was higher overnight after a steep selloff last week that did some technical damage. The market fell to its lowest level since July 2 on Friday but was up more than $500 off Friday’s lows this morning. There was a report on Reuters over the weekend saying that pod counters in Ivory Coast had lowered their expectations for the main crop after too much rain this month has caused larger flower and cherelle mortality in their October counts versus September and August. They suggested that if the weather remains unfavorable, the harvest could only reach 1.30-1.35 million metric tons versus current expectations of 1.5 million.
December Coffee was sharply higher overnight, taking back most of its losses from the reversal lower on Thursday/ Recent rainfall in Brazil has improved the outlook for 2025 production, but the possibility of extensive tree damage from the extended drought is still a concern. Coffee growing areas received moderate rainfall over the weekend, with some areas of Minas Gerais seeing heavier amounts of up to 45 millimeters. Brazil has been getting favorable to excessive moisture recently, something that has not been seen in many years. London robusta coffee was also higher overnight following a move to its lowest level since August 16 on Friday.
December Cotton was lower overnight and was approaching the October 17 low. The market has fallen for three straight sessions. Recent weather in the Delta and the southeastern states has been favorable to crop development and harvest ever since the hurricanes swept through the region and caused damage. Last week’s Crop Progress report showed 44% of the US crop had been harvested, and this afternoon’s report is expected to show good progress. Last week’s export sales report showed decent sales for the second straight week, but they are still running well below normal. Sharply lower crude oil prices may have added additional pressure to cotton overnight because lower oil prices make man-made fibers less expensive to produce.
March Sugar was lower overnight on an extension of Friday’s selloff from a higher than expected sugar production for the first half of October. Additional pressure overnight came from sharply lower crude oil prices. Center-south Brazil saw moderate rainfall over the weekend with some locally heavier amounts, especially northern Sao Paulo, and this does improve the outlook for next year’s crop. The recent trend of increased rain marks a significant change from the extended drought this year. Friday’s Unica report on Brazil Center-South sugar production showed sugar production for the first half of October at 2.443 million metric tons, down from 2.823 million for the second half of September but up 8.0% from the same period a year ago.
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