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Pressure overnight… Corn and soybean futures favored the downside overnight. As of 6:40 a.m. CT, corn futures are down 1 to 3 cents and soybean futures are 3 to 4 cents lower. The wheat complex also faced pressure overnight, with most contracts seeing losses around 3 to 4 cents. The greenback is slightly higher today; crude oil futures are under pressure.

Mnuchin comments on Phase 1… “What I will tell you is we made substantial progress last week in the negotiations,” Treasury Secretary Steven Mnuchin said Monday on CNBC. “We have a fundamental agreement, it is subject to documentation, and there’s a lot of work to be done on that front.” He said the deal includes “very significant structural issues in agriculture” as well as the promise of buying up to $50 billion of U.S. commodities. China had “some concerns as to whether our farmers can meet those numbers. We think they can,” Mnuchin said. “The next phase is deputy-level calls that will be going on this week,” Mnuchin said. “Ambassador [Bob] Lighthizer and myself will have a principal-level call next week with the vice-premier. My expectation is we’ll have the deputies meet between now and Chile, and my expectations are that we will be meeting with the vice-premier in Chile before the presidents meet to finish the deal.”

State-affiliated social media in China now says both sides have the same stance... Taoran Notes, a social media account affiliated with China’s official Economic Daily, today said China and the U.S. essentially shared the “same position” on the progress of the trade talks. “If the Chinese side has disagreement with [what U.S. President Donald Trump has said], it will make a response immediately,” it said. “People who are familiar with China’s situation would know that China takes a very cautious approach when it comes to official language used in announcements to the public … but we can confirm that both sides essentially share the same stance.” Over the weekend, Chinese state media warned of uncertainties and cautioned against being “overly optimistic” about negotiations. But on Monday, the Chinese foreign ministry confirmed that progress was made on issues including agriculture, intellectual property protection, exchange rates, financial services, the expansion of trade cooperation, technology transfer and dispute settlement. An editorial from China’s state tabloid Global Times published today also echoed the more hopeful tone with a commentary under the headline, “The breakthrough in China-U.S. [talks] should be celebrated instead of being dismissed.”

China details farm product buys from the U.S… China has already bought 700,000 MT of U.S. pork and 700,000 MT of U.S. sorghum this year to meet market demand, along with 320,000 MT of cotton, 230,000 MT of wheat and 20 MMT of U.S. soybeans, according to Foreign Ministry spokesman Geng Shuang.

Growing Chinese concern regarding its economy... Data overnight showed China’s factory deflation deepened in September due to slowing output growth and falling raw material prices. Chinese Premier Li Keqiang has urged local authorities to do everything possible to tackle ‘downward economic pressure’ amid U.S./China trade war tensions. “The downward pressure on the economy is increasing continuously, and many real economic entities are struggling amid weak domestic demand,” Li said. He added local authorities must do everything they can to “make sure targets for this year are achieved.” The premier’s address was the first time the government has suggested its full-year targets — including a minimum gross domestic product (GDP) growth rate of 6% — are at risk of being missed. The country’s GDP growth figures for the third quarter, set for release on Friday, are expected to show a further deceleration from the second-quarter rate of 6.2%.

China data continues to signal economic struggles… Inflation at the wholesale level in China declined 1.2% in September compared with year ago, according to the PPI data released by the National Bureau of Statistics, the steepest drop in more than three years. Consumer prices, however, rose 3% in September from year-ago marks, faster than expected, and the biggest rise since prices rose 3.2% in October 2013. The CPI data was pushed up in large part by a food price increase of 11.2%, fueled by a rise of 69.3% in pork prices. Pork prices rose 46.7% on an annualized basis in August. Meanwhile, Chinese banks extended 1.69 trillion yuan ($238.98 billion) in new loans in September, above the August mark and above trade expectations. Outstanding yuan loans increased 12.5% from year ago, up from a 12.4% pace in August.

NOPA expected to report another record-setting crush for September… Members of the National Oilseed Processors Association (NOPA) will likely report they crushed around 162.193 million bu. of soybeans during September, according to analysts polled by Reuters. These crushers handle around 95% of all soybeans processed in the United States. If this tally is hit, crush would top the previous September record of 160.779 million bu. that was hit last year. Soyoil supplies are expected to decline for the fifth month in a row to 1.320 billion lbs.; that would be the lowest month-end supplies since October 2017. The report will be released at 11:00 a.m. CT today.

Cordonnier sticks to his guns on U.S. crop estimates… Crop Consultant Dr. Michael Cordonnier made no change to his U.S. corn yield estimate of 162 bu. per acre or his crop estimate of 13.04 billion bushels, noting that he still believes “the corn harvested acreage, yield, and production will decline in the November and maybe the January reports.” He has a neutral bias going forward. The killing freeze over the weekend for the northwestern and western Corn Belt likely caught some later-planted corn before it was mature, and he says heavy snow over the weekend will likely result in some lodging and harvest losses. Cordonnier also maintained his soybean crop estimate of 3.47 billion bu. with an average yield of 46 bu. per acre. He said USDA moved in the right direction, but he feels there’s more room to the downside. Recent cold temps likely cut the growing season short for some soybeans and heavy snow also resulted in lodging, especially for plants that hadn’t shed their leaves. “If it stays cold and wet, there could also be quality issues for the soybeans as well,” Cordonnier continues.

Consultant leaning down on South American corn crop estimates… Cordonnier maintained his Brazilian soybean and corn crop estimates of 124 MMT and 105 MMT, respectively, but this week he shifted his bias on corn to neutral to lower, citing delayed soybean planting. That could push planting of some safrinha corn outside the ideal planting window. AgRural reports 11% of the Brazilian bean crop has been planted, just a point behind the norm but 9 points slower than last year. Conditions are expected to remain pretty dry in central Brazil this week. Cordonnier also made no change to his Argentine soybean or corn crop estimates of 57 MMT and 50.0 MMT, but again, he is shifting his bias to neutral to lower on corn. Western and southwestern Argentina have been too dry, limiting planting and spurring talk of acres shifting to soybeans. In addition, there is concern that if the opposition candidate, Alberto Fernandez, win the Oct. 27 election, he will hike export taxes and resume government interference in the export market, especially for corn.

Analyst raises wheat crop and export forecast for Ukraine… APK Inform has raised its grain crop forecast for Ukraine by 398,000 MT to 71.912 MMT, as increases to its wheat crop estimate outdid cuts to its corn crop. The analyst’s wheat production forecast climbed 1.4% to 27.9 MMT, which helped to push its 2019-20 wheat export forecast 4.5% higher to 18.6 MMT.

Mexico’s president wants Pelosi to accelerate USMCA ratification vote… Mexican President Andres Manuel Lopez Obrador said Friday he sent a letter to House Speaker Nancy Pelosi (D-Calif.) asking her to speed up the process of ratifying the U.S.-Mexico-Canada Agreement, (USMCA), according to reports out of Mexico City. Obrador, in a press conference, said the letter was a follow up to a visiting delegation of House Democrats last week. Lawmakers and others in recent days have signaled the votes are sufficient in both the House and Senate to clear USMCA, as early as the end of November, but possibly taking into December.

WTO clears U.S. retaliation against EU over airbus subsidies... The special meeting Monday at the World Trade Organization (WTO) requested by the U.S. saw the U.S. granted approval to impose sanctions on $7.5 billion in goods from the European Union (EU). The EU continued to contend the U.S. action was unfair while the U.S. maintained the position that the dispute has been ongoing for some 15 years without any changes on the part of the EU. Incoming EU Trade Commissioner Phil Hogan said he would seek a negotiated settlement with the U.S. and said the block would likely finance and aid a plan for olive farmers as they are among the sectors that will be hit by tariffs. The U.S. intends to hit the full $7.5 billion slate of products with tariffs, setting them at 10% for large commercial aircraft and 25% on agricultural and industrial goods. The tariffs will take effect October 18.

Rally in Chinese pork prices likely to accelerate… Retail pork prices surged 84% from year-ago to 43.4 yuan per kilogram ($2.78 a pound) the week ending Oct. 2 amid a devastating outbreak of African swine fever, according to ag ministry data. Prices actually moderated to some degree in the weeks leading up to this month’s National Day holiday, but the price rally is expected to accelerate going forward. “Every week it’s a new record, notes Jim Huang, chief executive of the consultancy China-America Commodity Data Analytics. “We saw it really shoot up on the 12th as the market started rebuilding commercial-level inventory after the holiday,” he continues. And additional releases of government reserves will likely have a limited impact, according Huang and other analysts who say state reserves have dwindled and represent just a small portion of demand. Some expect the government to intervene to stop live hog prices from reaching 40 yuan per kilogram nationwide.

Live and feeder cattle futures tracking near in line with respective cash markets… Lighter cash cattle trade last week resulted in an average price of $109.21, up roughly $2 from the week prior. The light nature of the sales could lead to trade earlier trade this week, especially on the Southern Plains. Packer profit margins have stabilized near $230 a head. Live and feeder cattle futures posted solid gains to start the week, with October live cattle trading at a modest premium to the cash market. November feeder futures are also just slightly above its respective cash index. Boxed beef prices strengthened on Monday, but movement was light at 82 loads.

Big hog kill last week… Last week’s kill was massive and up 9% from year-ago levels. The year-to-year difference this week should be less dramatic as slaughter surged last year at this time. But the tallies remain high. Big Chinese purchases are helping to chew through the market’s abundance of pork and a trade truce/deal ups the odds for additional large purchases. That has helped keep the product market pretty stable and cash hog prices rising. Bids firmed 69 cents to start the week.

Overnight demand news… Turkey tendered to buy 127,500 MT of durum wheat from the European Union. The country also tendered to buy 190,000 MT of milling wheat from the EU. South Korea bought around 60,000 MT of corn in a deal last week.

Today's reports: