Good morning!
Grains relatively calm as crude oil shoots higher... Corn futures faced selling pressure overnight, while soybeans and wheat traded modestly higher. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are steady to 2 cents higher, winter wheat markets are 4 to 5 cents higher and spring wheat is mostly 2 cents higher. Front-month crude oil futures are around $5.50 higher and the U.S. dollar index is more than 600 points higher this morning. Gold reached a five-week high.
Israel strikes Iran... Oil prices surged to the highest level since January after Israel launched widescale strikes against Iran, sparking Iranian retaliation and raising worries about disrupted Middle East oil supplies. Israel said it targeted Iran’s nuclear facilities, ballistic missile factories and military commanders at the start of a prolonged operation to prevent Tehran from building an atomic weapon. The primary concern was whether this would affect the Strait of Hormuz, as about one-fifth of the world’s oil consumption passes through the key waterway. The global outlook now hinges on Iran’s next move and whether the conflict broadens. The next few days will be crucial in determining whether this shock is short-lived or the start of prolonged global energy and geopolitical instability.
Trump warns Iran to accept nuclear deal or face ‘even more brutal’ attacks... President Donald Trump issued a stark warning to Iran early Friday, urging its leaders to agree to a new nuclear deal or face even deadlier military strikes in the wake of Israel’s devastating attack on Tehran’s top military brass. In a post on Truth Social, Trump declared, “Iranian leaders didn’t know what was about to happen. They are all DEAD now, and it will only get worse! There has already been great death and destruction, but there is still time to make this slaughter, with the next already planned attacks being even more brutal, come to an end. Iran must make a deal, before there is nothing left, and save what was once known as the Iranian Empire.” U.S. officials say the window for diplomacy is rapidly closing as Israel prepares for further military action. Trump’s ultimatum underscores the mounting pressure on Tehran.
EPA’s RFS proposals expected today... As we reported in “Evening Report” on Thursday, EPA is poised to propose new biofuel blending requirements for the next two years, with expectations the biomass-based diesel (BBD) quota will fall short of industry requests. EPA is also expected to address the longstanding backlog of small refinery exemption (SRE) requests. EPA reportedly is considering a two-step approach to the backlog of over 160 pending small refinery exemption (SRE) requests: Step 1: Approve a limited number of current SRE applications — specifically, many of the 19 requests for the 2024 compliance year. Step 2: Issue a rule to seek public comment on how to handle the remaining, older SRE requests, some of which date back as far as 2016. If SREs are granted, EPA could require larger refiners to make up for the exempted gallons, effectively “reallocating” the waived volumes across the rest of the obligated parties. Another EPA decision awaited is the 2024 cellulosic biofuel waiver, which under a proposed rule in December 2024, would reduce the requirement from 1.09 billion to 0.88 billion RINs.
Grassley presses Bessent on 45Z tax credit implementation... At a Senate Finance Committee hearing Thursday, Sen. Chuck Grassley (R-Iowa) urged Treasury Secretary Scott Bessent to ensure that new biofuel tax credit regulations (45Z) are crafted with input from farmers and industry experts —warning against the missteps of previous administrations. Regarding the 45Z Clean Fuel Production Tax Credit — a policy of major importance to the agriculture and biofuels sector — Grassley was blunt in his assessment of the Biden administration’s handling of related rules: “The regulations that [the Biden Treasury] released for the 40B Sustainable Aviation Fuel Credit demonstrated that Treasury officials in that administration knew nothing about farming.” Bessent said, “I look forward to working with your office and making sure that it is implemented in the most robust way, but that it does not allow for foreign actors to have a back door into the program.”
Trump promises immigration order soon on farm, leisure workers... President Donald Trump said he would issue an order soon to address the effects of his immigration crackdown on the country’s farm and hotel industries, which rely heavily on migrant labor. “Our farmers are being hurt badly and we’re going to have to do something about that... We’re going to have an order on that pretty soon, I think,” Trump said. He did not say what changes the order would implement.
Japan won’t accept partial trade deal, seeks comprehensive agreement... Japan’s chief tariff negotiator, Ryosei Akazawa, has categorically rejected the possibility of a partial trade agreement with the U.S., stating that Tokyo will only accept a comprehensive package that addresses all outstanding issues between the two countries. Akazawa’s remarks come as Japan faces the threat of a significant increase in US tariffs, including a 24% rate set to take effect July 9 unless a new deal is reached. The talks are particularly focused on the auto sector, which is currently subject to a 25% U.S. tariff, as well as additional levies on steel and aluminum. Japan is seeking to secure exemptions for its automotive industry and to persuade Washington to roll back or eliminate these tariffs. A sixth round of negotiations is expected to be the final set of ministerial-level discussions before Japanese Prime Minister Shigeru Ishiba and Trump meet on the sidelines of the Group of Seven (G7) summit in Canada.
Trump considers raising auto tariffs... Trump said Thursday he might raise tariffs on imported automobiles to encourage more investment in U.S. manufacturing. “I might go up with that tariff in the not-too-distant future,” he said. “The higher you go, the more likely it is they build a plant here.”
Exchange raises Argentine soybean crop forecast... With harvest 93% complete and yields running higher than expected, the Buenos Aires Grain Exchange raised its Argentine soybean crop estimate 300,000 MT to 50.3 MMT. The exchange continues to estimate the corn crop at 49 MMT.
Japan to ban reselling of rice... The Japanese government will prohibit the reselling of rice purchased at retail shops to ensure that rice reserves recently released at lower prices will stably reach consumers. Under the ban, which will take effect June 23, those who sell rice at a higher price than they paid at supermarkets and online shops will face up to one year in prison, a fine of up to 1 million yen ($6,960) or both. The ban will also affect rice other than supplies released from government stocks.
China’s May bank loans rise less than expected... Chinese banks extended 620 billion yuan in new loans in May, up from 280 billion yuan in April, which was the smallest in nine months and the lowest level for that month since 2005. Companies and consumers remained cautious about taking on more debt despite interest rate cuts and a 90-day trade truce between Beijing and Washington. The May loan figure fell short of expectations of 850 billion yuan and 950 billion yuan last year. Meanwhile, total social financing increased 2.29 trillion yuan, more than double April’s 1.16 trillion yuan and roughly in line with forecasts. However, other indicators pointed to continued softness in credit demand. Outstanding loan growth slowed to 7.1%, the lowest rate since at least 1998. M2 money supply growth eased to 7.9%, down from 8% in April and missing the 8.1% forecast.
Cattle traders remain cautious... June live cattle futures scored another contract high, which was also a new all-time high on the continuation chart on Thursday, but deferred contracts faced pressure despite strength in the cash market. Cattle futures continue to trade at huge discounts to cash, with traders highly cautious about actively adding new longs with prices at record levels.
Traders have cash hog optimism built in through summer... June lean hog futures, which expire at noon CT today, finished Thursday at a $1.90 premium to the CME lean hog index, which is up another 84 cents to $101.75 as of June 11. The premiums in July and August futures stood at $7.15 and $8.425, respectively, signaling traders expect the seasonal rise in the cash market to extend through summer.
Overnight demand news... Exporters reported no tenders or sales.
Today’s reports
- 1:00 p.m. Season Average Price Forecasts — ERS
- 1:00 p.m. Wheat Data — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Turkey Hatchery — NASS
- 2:30 p.m. Commitments of Traders — CFTC