GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 3 to 5 cents higher.
Wheat: Winter wheat 3 to 5 cents higher; HRS 1 to 3 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each traded higher early in the overnight session, supported by strength in the overall commodity marketplace as Israel launched a widespread attack against Iran. Front-month crude oil futures led strength, up around $6.00 to the highest levels since January. The U.S. dollar index saw strength as well and is currently up around 500 points.
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.
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.
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.
CORN: July corn futures continue to chop sideways. Bulls continue to struggle breaking prices above 10-day moving average resistance, which currently stands at $4.39 3/4. Strength above that mark eyes resistance at $4.44. Support lies at $4.33 1/2 then the June 10 for-the-move low at $4.29 1/4.
SOYBEANS: July soybean futures favored the upside overnight. Resistance at the 20-day moving average at $10.50 1/2 limited the upside overnight. Strength above that mark would have bears eyeing resistance at $10.57 3/4. Support comes in at $10.42 1/4 on a reversal back lower, with backing from yesterday’s low of $10.38 1/2.
WHEAT: July SRW futures saw corrective buying overnight. Additional strength has bulls looking to overcome resistance at $5.36, the 10-day moving average. Additional resistance comes in at $5.40. Support lies at $5.28 1/2 then the psychological $5.25 mark on a reversal lower.
LIVESTOCK CALLS
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Live cattle and feeders are expected to open higher as futures are supported by steep discounts to the cash market. Futures have consolidated most of the week, forming a bull flag on the daily bar chart. While additional consolidation is possible, the steep discounts futures hold to cash is hard to ignore and higher cash trade taking place in the latter portion of this week could be the catalyst traders have been looking for to push prices higher. Cutout continues to march higher as well, pushing to the highest mark since the 2020 Covid-driven spike. Choice was up another $1.96 to $376.72 while Select rose $2.32 to $363.07 Thursday.
HOGS: Lean hog futures are expected to open with a mostly firmer tone in a continuation of recent strength, though some consolidation is possible after the open given overbought conditions on the daily bar chart. Cash fundamentals continue to work higher, which has encouraged bulls to build premiums into futures. The CME lean hog index is up another 84 cents to $101.75 as of June 11. July and August futures settled Thursday $7.15 and $8.425 above that mark, respectively. Pork cutout continues to march higher as well, rising another $1.42 to $114.50 on Thursday, led by strength in bellies, hams and butts.