Periodic Updates on the Futures Markets

January canola is down $5.90 per metric ton (mt), March soybean oil is down .48 cents/pound, February European rapeseed is up .25 euro per mt and January Malaysian palm oil is down .10%. March oats are down 3 cents/bushel. January crude oil is down $.87 per barrel, January ULSD is down $.0581 per gallon, and the December Canadian dollar is down .00070 at .72230. The December U.S. Dollar Index is up .187 at 99.155 and the December Brazilian real is up .00110 at 0.18275.

The soybean selloff accelerated during the day session, dragging canola down with it, despite another soybean flash sale of 132,000 mt to China announced in early trade. Soybean oil remains weak thanks in part to losses increasing in the energy complex, despite a lack of news. If anything, the lack of progress on peace talks should be supportive. But weakness across all commodities has been a widespread theme with another jump in open-market interest rates possibly to blame. With higher long-term rates, inflation may be less of a risk (with less need to hedge against it), regardless of expectations for lower overnight Fed Funds rates to be announced Wednesday.

A relatively weak U.S. weekly export sales report for the week ended Nov. 6 could take some of the blame for pressure in the grain and oilseed markets, reminding traders of how slow soybean sales to China were at the time (with the USDA still trying to get caught up from the government shutdown delays). Weekly export inspections released at midmorning were better, with corn nearing 1.5 mmt and soybean export inspections exceeding 1 mmt, including the first shipments to China. That said, the report did little to impact prices with corn and wheat still mixed on the day.

In outside markets, Treasuries are still weak with equities turning lower on the jump in interest rates. The U.S. 10-year note is now 4.18% after trading below 4% as recently as Nov. 25. Higher Japanese bond yields are taking part of the blame, as is concern over Kevin Hassett likely being the next Fed chairman. That has helped the U.S. dollar add to early gains, looking like an attempted rally off the 100-day moving average is working out.