Good morning!
Grain futures mixed overnight… Just before 6:00 a.m. CDT, July corn was down 1 1/2 cents and hit another contract low. July soybeans were down 3 1/4 cents and hit a four-month low. July soybean meal was down $2.20 and hit a four-month low. July bean oil was 34 points higher. July SRW wheat was up 1/4 cent and hit a three-month low overnight. July HRW was up 5 3/4 cents and not far above Friday’s six-week low. The stunning price downdrafts in the grain futures market continue, with Friday’s technically bearish weekly low closes in all the grains suggesting follow-through, chart-based selling early this week. The strong rally in the U.S. dollar index late last week was also a bearish outside-market development for the grains. But the main price-bearish fundamental in the corn and soybean futures markets is generally good growing weather over much of the Midwest. Weather forecasts for the Midwest for the next couple of weeks do not point to any threatening weather conditions for the young U.S. corn and soybean crops. On tap today are the weekly USDA export inspections and weekly crop progress reports. The key outside markets today see the U.S. dollar index slightly up and hit a nine-week high overnight, while Nymex WTI crude oil prices are sharply higher and trading around $94.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.57%.
Second New World screwworm case detected in same Texas county… USDA on Friday afternoon confirmed a second case of New World screwworm in a one-month-old calf in Zavala County, Texas. The infected calf was found about 5 1/2 miles from the first confirmed case announced last week, placing it well within the 12-mile quarantine and surveillance zone already established by federal and state animal health officials. USDA officials said the second case of NWS does not necessarily indicate that the outbreak is spreading beyond the controlled zone. USDA said it has accelerated sterile fly releases, movement controls, animal inspections and surveillance to prevent the parasite from becoming established in the U.S. Meantime, USDA. Secretary Brooke Rollins this afternoon will hold briefings at the new Knipling-Bushland U.S. Livestock Insects Research Laboratory in Kerville, Texas. Following the briefings, she will host a press conference there to provide updates on NWS situation. The press conference is scheduled to begin at 2:00 p.m. CDT. Texas Governor Greg Abbott expressed concern Friday that a new factory isn’t slated to start breeding sterile New World screwworm flies for more than a year as a big part of the effort to stop its flesh-eating larvae from threatening the $113 U.S. billion cattle industry, the Associated Press reported. Abott said Texas is willing to spend its own funds to see that construction is “24 hours a day, seven days a week.”
Latest on U.S.-Iran war…
--Oil jumps as Iran and Israel exchange fire and tensions escalate
--U.S., Iran appear far from peace deal 100 days since war began
--U.S. floats steering frozen Iran assets to Gulf allies for repairs
--Asia-to-U.S. container rates spike 109% since Iran war started
--U.S. intercepts fresh Iranian attacks as peace talks stall
--Houthis to impose “complete ban” on Israeli ships in Red Sea
Israel said it struck military targets in Iran, retaliating against earlier missile attacks by Tehran despite President Trump’s call for Prime Minister Benjamin Netanyahu to refrain from hitting back. Iran launched fresh strikes targeting key facilities at Israel’s Nevatim and Tel Nof airbases in response, the semi-official Fars news agency said and as reported by Bloomberg, citing the Islamic Revolutionary Guard Corps. Yemen’s Iranian-backed Houthis also announced a blockade of Israeli ships in the Red Sea. The Israel Defense Forces see the campaign against Iran lasting several days and are preparing to mobilize reserve soldiers, Israel’s Army Radio reported. On Sunday, U.S. Central Command said it downed two Iranian attack drones that threatened international maritime traffic in Hormuz, which followed six ballistic missiles fired at Bahrain and Kuwait on Friday. Those were intercepted, while the U.S. struck Iranian coastal surveillance radar sites.
Rain in the Plains (and Midwest) makes grain… The National Weather Service today said showers and thunderstorms with heavy rain are likely today over the upper/middle Mississippi Valley, the Ohio Valley, and the Tennessee Valley. There is a slight risk (level 2/4) of excessive rainfall over parts of the region through Tuesday morning. In addition, showers and severe thunderstorms will develop over parts of the central Plains and central High Plains. There is a slight risk (level 2/5) of severe thunderstorms over parts of the central High Plains and the central Plains through Tuesday morning. On Tuesday, there is an enhanced risk (level 3/5) of severe thunderstorms over parts of the Northern Plains. Temperatures will be heating up in the Midwest and Plains states near mid-week but then tapering off heading into the weekend.
“Good things” coming for U.S. farmers: Trump… President Trump said Friday afternoon that farmers would see “good things” happen in the coming months, as he sought to bolster his relationship with an agriculture industry that has been battered by tariffs as well as high fuel and fertilizer costs triggered by his war with Iran. “The president at an ag event in Wisconsin on Friday pledged that costs would soon decrease, addressing a key concern for the agriculture industry. But he didn’t lay out any specifics for what his administration is doing to allay worries from farmers who are feeling the burden of higher fuel and fertilizer costs stoked by the Middle East war. The conflict has led to the effective closure of the Strait of Hormuz, a key corridor for shipments of both crude and fertilizer,” said a Bloomberg report. “Today we’re celebrating the historic strides for some of the most loyal, hardworking patriots anywhere in the nation, and they’re really called our American farmers,” Trump said. “You’re going to see some very good things happen over the next 90-day period.”
Heavy rains risk damaging China’s rice crop… Forecasts for heavy rains in southern China over the next week are raising the risk of flash floods, potentially inundating crops and damaging rice fields, Bloomberg reports. “A rain belt will cover the south of the country in the next 10 days, with some areas getting over 16 inches of total precipitation over that period, according to the China Meteorological Administration. China is the one of the world’s biggest rice producers and the challenges for its crop come as other key growers in Asia are also contending with adverse weather, as well as rising fuel and fertilizer costs due to the war in the Middle East. Global production of the grain is expected to fall for the first time in a decade, the US Department of Agriculture has forecast,” said the Bloomberg report.
Trump still wants Fed interest rate cut… President Trump said over the weekend that Federal Reserve policymakers would be wrong to raise U.S. interest rates after a blowout U.S. jobs report Friday, while insisting he doesn’t want to influence Kevin Warsh before he chairs his first Fed meeting. “Nowadays when you have good reports, the market goes down because they think they’re going to raise interest rates,” Trump said in an interview with NBC’s Meet the Press that aired Sunday and as reported by Bloomberg. “There’s no reason to raise interest rates.” U.S. job growth in May topped all forecasts in Friday’s employment report, prompting a sell off in Treasuries and leading traders to fully price in a quarter-point increase in the Fed’s benchmark rate by the end of the year. Trump’s comment adds to the economic and political forces tugging at Warsh as he prepares to chair his first Federal Open Market Committee meeting on June 16–17. Raising the benchmark rate “is the wrong thing to do,” Trump said. “We should actually lower interest rates,” he said.
European Central Bank set to hike rates this week… A euro-zone interest-rate hike on Thursday is widely believed to place the European Central Bank at the vanguard of global tightening caused by the Iran war. The quarter-point increase expected for Thursday would be the most notable move so far, given that similar action in advanced economies has taken effect in much smaller jurisdictions. The response of ECB officials in Frankfurt to the energy shock unleashed by the U.S.-Iran war will aim to ensure that the fastest euro-zone inflation since 2023 doesn’t become entrenched.
OPEC+ implements symbolic production quota hike… Major OPEC+ members over the weekend agreed to a modest increase to their collective crude oil output quotas for July, raising their target by 188,000 barrels a day. The OPEC+ decision remains theoretical due to a blockage of exports from the Persian Gulf, which prevents most members from implementing the increase. The increase could become relevant when the Strait of Hormuz reopens, with buyers expected to clamor for barrels to replenish the world’s depleted oil inventories.
IMF warns that geopolitical shocks are piling up… International Monetary Fund Managing Director Kristalina Georgieva said the world needs to build foundations that can withstand shocks that have become more frequent. Georgieva noted that the spread of artificial intelligence is a major transformation underway, and she wants to make sure the IMF does not fail to recognize inequalities arising from it. The IMF will update its outlook for the global economy in July, and Georgieva said the fund will restart its regular assessment of Russia’s economy at some point, after delaying it due to the war in Ukraine.
Indonesia officials want investigations on its palm oil companies… Indonesia’s agriculture minister has asked police to investigate hundreds of domestic palm oil companies that failed to pay farmers more as prices recovered from a slump. The ministry has submitted information on 270 to 300 firms to police, including special crime units, and asked for proper investigations before taking enforcement action. Most of Indonesia’s palm oil companies have increased the prices paid to farmers, and all parties at a meeting agreed there should be no further decline in Indonesian palm oil prices.
Malaysian palm oil futures rally… Malaysian palm oil futures on Monday traded above MYR 4,550 per MT, rebounding from recent losses as a weaker ringgit improved export competitiveness and firmer Chicago soyoil lifted sentiment across the vegetable oil complex. A jump in crude oil prices, driven by fading hopes for a near-term resolution to Middle East tensions, added support through biofuel demand. In top producer Indonesia, authorities issued a technical regulation tightening oversight of key commodity exports, including palm oil, a move that could redirect some demand toward Malaysia. However, gains were capped by weaker rival oils on China’s Dalian exchange and bets of ample supply. Reuters forecast Malaysia’s inventories likely rose again in May, as sluggish exports outweighed lower output. Cargo surveyors estimated shipments fell 8.8%–15.5% from April, underscoring soft demand. Purchases by top buyer India recovered modestly from April’s four-month low but remained below typical levels, limiting the upside.
NWS on the front burner for cattle futures traders… August live cattle futures on Friday rose $0.125 to $241.65 and hit a two-week high early on. For the week, August cattle were up $2.60. August feeder cattle futures Friday gained $0.525 to $353.90 and for the week were up $5.475. The cattle futures markets late last week caught the updraft of bullish notions of NWS now on U.S. soil being price-bullish from a perspective of potentially less cattle supplies coming to market during the peak summertime grilling season. However, Friday’s lower-range closes in cattle futures prices does give the bulls some pause heading into trading this week. In the Northern Plains excessive heat expected this week, with highs nearing 100 degrees, which may cause some livestock stress. Cash cattle trading turned active late last week, with USDA reporting at midday Friday steers were averaging $256.38 and heifers $256.17. That compares to the week prior’s USDA-reported cash cattle trading average of $256.86.
Lean hog futures bears continue to press the short side… August lean hog futures on Friday fell $2.05 to $97.225 and for the week were down $1.125. The hog futures market sold off as the chart-based speculators were back at it, pressing the short side. Friday’s technically bearish weekly low close also sets the table for follow-through technical selling early this week. A price downtrend remains firmly in place on the daily bar chart. The latest CME lean hog index is up 26 cents to $92.51. Today’s projected CME index price is up 9 cents at $92.60. The national direct five-day rolling average cash hog price quote for Friday was $94.71.