Good morning!
Grain futures higher overnight… At 6:00 a.m. CDT, December corn was up 5 1/2 cents. November soybeans were up 15 1/4 cents and hit a new 3.5-year high for the contract. September soybean meal was up $2.40 and September bean oil was 31 points higher and hit a six-week high. December SRW and HRW wheat prices were near steady. Corn and bean bulls are out of the chute strong to start the trading week, amid some weather risks for the U.S. crops heading into late July. Better domestic and export demand is also a positive for corn and bean futures. Rising crude oil prices that hit a six-week high overnight are also a positive outside market for the grains. On deck today for grain traders are the morning weekly USDA export inspections report and the afternoon weekly USDA crop progress reports. The key outside markets today see the U.S. dollar index near steady. August Nymex WTI crude oil prices are slightly lower and trading around $82.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.56%.
U.S. pounds Iran for ninth-straight day… The U.S. conducted a ninth straight day of airstrikes on Iran, trying to force that nation to stop shipping attacks and reopen the Strait of Hormuz. Shipping through the Strait has been drastically reduced during the recent military escalation. “The American military bombed military targets and communications networks in a three-hour operation ending around 5:30 a.m. Iranian time on Monday. Iran continued to attack U.S. bases in the likes of Kuwait, Jordan, Bahrain and Iraq. The standoff shows no sign of easing, with Iran refusing to relent over Hormuz and insisting it has a right to manage traffic through the waterway,” said a Bloomberg report. “The diplomatic apparatus has been active in recent days, and ideas from some mediators have been conveyed to the Islamic Republic of Iran,” an Iranian foreign ministry spokesman said to reporters. The tit-for-tat attacks are getting deadlier. The U.S. military announced the death of a service member in northern Iraq on Saturday during a “controlled detonation” of a downed Iranian drone. That was a day after two other U.S. soldiers were killed in an Iranian attack on Jordan, with another service member still missing from the same strike.
U.S. gasoline price average back above $4 a gallon… U.S. gasoline prices climbed back over the $4-a-gallon mark at the pump as the conflict in the Middle East has escalated, “threatening to exacerbate a global crunch for transportation fuels and stoke inflation,” said Bloomberg. Regular unleaded gasoline averaged $4.003 a gallon, according to daily prices posted by the American Automobile Association, breaking through the $4 dollar threshold after hovering below for a month. Gas prices remained stubbornly high even as crude oil prices fell precipitously in June, dropping as low as $3.79 a gallon before trending back up in early July.
Diesel price spike in Europe… A diesel fuel squeeze is happening across Europe due to major supply challenges, with record refining margins and slumping stockpiles, according to Bloomberg. “The market for diesel is tightening due to factors including disruptions in the Strait of Hormuz, Ukrainian attacks against Russian refineries, and a diesel-export ban imposed by Moscow. Morgan Stanley analysts say the tightness is already reflected in prices, advising investors against betting on more gains from current levels, saying the market is ‘full priced — don’t chase,’ ” said the report. Read more about the global supply crunch driving up diesel prices: Diesel prices are surging on tight supplies as input squeeze intensifies
Total New World screwworm cases detected in U.S. at 41… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is now reporting 41 total New World screwworm detected cases in the U.S. There are 12 active cases, all still in Texas.
Heat and smoke across much of the U.S. … The National Weather Service today said the central Rockies, Midwest and Plains will continue see much-above-average temperatures early this week, as was as the same in the lower Missouri and lower Mississippi valleys. There is no let-up in air quality issues over the next few days downwind of the ongoing Canadian wildfires across western portions of Ontario. Air quality alerts are currently in effect across the Great Lakes into portions of the Midwest, with this likely to continue over the next few days. Air quality issues are also expected across portions of the Pacific Northwest into the northern Rockies due to wildfires across this area. Meantime, there will be widely scattered severe thunderstorms and some flash flooding today and tomorrow across portions of the Midwest, Northeast, and Mid-Atlantic.
Rubio says China’s Xi still coming to U.S. … Secretary of State Marco Rubio said Chinese President Xi Jinping’s upcoming trip to America remains on track, days after the U.S. leader’s claims of Chinese election fraud threatened to upend the truce. “We anticipate that the trip is happening in September,” he told reporters before departing for a meeting of ASEAN foreign ministers in Manila and as reported by Bloomberg. “They continue to send over their teams to prepare for it. I’ve heard nothing otherwise.” President Trump last week accused the Chinese government of interfering with U.S. elections in 2020. When asked on Sunday evening if there would be consequences for Beijing’s alleged actions, Trump told reporters: “We’re going to see. We’ll be speaking to them.”
China keeps interest rates at record lows… The People’s Bank of China kept its key lending rates at record lows for a 14th straight month in July, as widely expected. The move reflected caution over the fallout from the conflict in the Middle East, while Q2 GDP growth eased to its lowest level since Q4 2022, although exports remained strongly supported by AI-related demand. The one-year loan prime rate, the benchmark for most corporate and household borrowing, was held at 3.0%. Consumer and producer price pressures persisted amid higher energy prices and supply chain disruptions linked to the Middle East conflict.
New stiff competition from China on U.S. artificial intelligence firms… Moonshot AI Inc. has released Kimi K3, a model that outperforms all rivals except for the U.S.’s Anthropic Claude Fable 5 and OpenAI’s GPT-5.6 on overall capability. “The release of Kimi K3 has stunned some AI watchers and investors, fueling concerns about whether the immense spending commitments from Silicon Valley will pay off and shaken confidence in the U.S. lead. Moonshot’s gains may complicate efforts by U.S. regulators to safeguard new models and could undercut OpenAI, Anthropic and others on price, as K3 is a premium product that performs well on coding and other lucrative tasks,” said a Bloomberg report.
Malaysian palm oil futures gain… Malaysian palm oil futures traded above MYR 4,600 per MT Monday, recovering from the prior weakness as stronger edible oil prices on the Dalian and Chicago exchanges lifted sentiment. Higher crude oil prices also provided support after intensified attacks in the Middle East disrupted energy shipments through the Strait of Hormuz, boosting the appeal of biodiesel feedstocks. Export demand remained solid, with cargo surveyors estimating palm oil shipments during July 1-15 increased by between 4% and 12.4% from the same period in June. Supply concerns also persisted after the U.S. Climate Prediction Center said El Niño had strengthened over the past month and is expected to intensify through 2026 before lasting into early 2027, raising risks of lower palm oil production in the coming months. However, gains were capped by weaker demand from top buyer India, where palm oil imports fell to a 14-month low in June as the narrower price discount against competing edible oils discouraged purchases.
Cattle futures markets in major swoon… August live cattle futures on Friday fell $2.65 to $224.425, hit a four-month low and for the week were down $10.775. August feeder cattle futures lost $0.65 to $345.95, closed at a five-week low close and for the week were down $8.65. The cattle futures markets saw still more technical selling Friday as the bleeding continues. The technically bearish weekly low closes again on Friday set the stage for follow-through chart-based selling early this week. Lower cash trade last week also hit futures prices. Cash cattle trading turned very active as of midday Friday, with USDA reporting steers averaging $238.59 and heifers $238.16. That is well down from the week prior’s USDA-reported cash cattle trading average of $248.01. Live cattle futures prices have dropped more than $20 in under a month. The multi-year bull market has paused as elevated prices have somewhat dented consumer demand, giving packers greater leverage in cash negotiations. Cattle traders await this Friday’s USDA monthly cattle-on-feed and semiannual cattle inventory reports.
Lean hog bulls keep their pedal to the metal… August lean hog futures on Friday rose $1.375 to $101.65, hit a seven-week high and for the week were up $2.65. The lean hog futures market saw more technical buying interest from the specs amid charts that are turning more bullish as prices are in a solid uptrend on the daily bar chart. The latest CME lean hog index is up 50 cents to $95.10. Today’s projected CME index price is up 55 cents at $95.65. The national direct five-day rolling average cash hog price quote for Friday was $99.80. Wholesale and cash hog fundamentals have turned supportive, led by rising cash hog prices and BLT-season strength in bellies. Seasonally declining slaughter levels in the coming weeks would continue to provide near-term price support for cash and futures.