Periodic Updates on the Futures Markets

January canola is down $8.00 per metric ton (mt), Dec soybean oil is down .26 cents per pound, February European rapeseed is down 4.50 euro per mt and December Malaysian palm oil is down .29%. Dec oats are down 6 cents per bushel. December crude oil is down $.62 per barrel, December ULSD is up $.0370 per gallon, and the December Canadian dollar is down .00095 at .70910. The December U.S. Dollar Index is down .399 at 99.660 and the December Brazilian real is up .00015 at 0.18565.

It is turning into one ugly risk-off day for no apparent reason. Grain and oilseed markets pulling back after the runs they have had would not be surprising; but as (what appear to be) momentum algorithms kick in, the extent of the losses are somewhat. With China’s state-owned importer COFCO holding an official soybean procurement signing ceremony earlier, it would suggest there are no rising tensions between the U.S. and China that would be behind such moves.

What does look like a problem is widespread risk-off trade across markets in general. Treasuries are sharply higher while equities are selling off, led by the tech-heavy Nasdaq. It is now making new lows for the week on concerns about the similarities between the dot-com bubble and the potential for AI to be a bubble. Flight cancellations being announced officially and private October job loss reports being the worst in over two decades has increased anxiety over the impacts of the record-long government shutdown. With the outlook for a resolution taking a turn for the worst Thursday morning on top of it all, selling across many asset classes has accelerated. Even gold has lost its early gains with the recent speculative buying in it possibly offsetting its traditional safe-haven status. In another unsettling sign, the U.S. dollar is also sharply lower — an unusual development during risk-off trade. It could be a clue that anxiety over the outcome of the tariff ruling and/or possible eroding confidence in the Trump administration in general may be impacting trade.

Trying to end on a positive note, energy product markets are holding onto strong gains which should help grains and oilseeds. And we have been looking for a flow of funds out of equities and into commodities for some time; but hopefully that will occur at a more managed pace. The key will be to see similar resilience as that seen to start the week when Tuesday started the risk-off process but by Wednesday’s close, many grains and oilseeds had already taken out Tuesday’s highs.