Good morning!
Grain futures prices higher overnight… As of 6:00 a.m. CST, July corn was up 4 cents and hit a four-week high. July soybeans were 3 1/4 cents up. July soybean meal was up $3.80 and July bean oil was 4 points higher. July SRW wheat was up 4 cents and hit a four-week high. July HRW was down 1 3/4 cents after hitting a nearly two-year high Friday. Corn bulls are working on a price uptrend on the daily chart at present. Winter wheat futures prices are also trending up. Soybean prices are still trapped in a sideways trading range. On tap today is weekly USDA export inspections this morning and USDA weekly crop progress reports this afternoon. The key outside markets today see the U.S. dollar index lower, while Nymex WTI crude oil prices are up and trading around $95.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.32%.
Latest on the war in the Middle East…
--Iran told Pakistan the war could end if the Americans lift a naval blockade
-- Traffic in Strait of Hormuz remains halted with blockades firmly in place
--U.S. says Navy intercepted Iran-linked vessel in Arabian Sea
--Germany readies naval units for possible Hormuz mission
Iran has given the U.S. a new proposal to reopen the Strait of Hormuz and end the war, which includes postponing nuclear negotiations. The plan calls for extending the ceasefire so the parties can work toward a permanent end to the fighting, with nuclear talks to come later after a U.S. blockade of the Strait of Hormuz is lifted. Pakistani mediators have given the proposal to the White House, but it’s unclear whether the U.S. wants to explore it, with the White House saying the U.S. will only make a deal that puts the American people first, according to a report from Axios.
Armed man storms event where Trump, Vance, other officials were attending; all safe… A man armed with guns and knives stormed the lobby outside a high-profile journalists’ dinner at the Washington Hilton attended by President Trump, Vice President Vance and multiple senior U.S. leaders on Saturday night. The man rushed toward the ballroom before Secret Service agents swarmed him and took him into custody. The president and vice president were uninjured and were hustled away. One law enforcement official said a gunman had opened fire. A law enforcement officer was shot in the bullet-resistant vest but is expected to be OK, several sources told The Associated Press.
Potential severe weather the next few days for mid-South … The National Weather Service today said a plume of very moist and unstable air will set the stage for several days of severe weather and heavy rainfall across the mid- to lower-Mississippi Valleys and mid-South. For today, the area of concern will extend roughly along a Peoria to Memphis line, where numerous storms this afternoon will be capable of producing strong tornadoes, wind, hail, and scattered flash flooding. The threat should shift into the lower Mississippi Valley and mid-South by tomorrow as the cold front presses southward and overtakes a dryline in central Texas, leading to another round of thunderstorm clusters capable of all severe modes (although the coverage and intensity of tomorrow’s severe weather should be lower compared to today) and scattered flash flooding. Meanwhile, critical fire weather conditions will continue over the southern High Plains. Warnings are in effect across portions of west Texas and eastern New Mexico.
Drought in U.S. winter wheat regions getting more mainstream media attention… “U.S. Wheat Crops Wither, Herds Thin as Spring Drought Deepens.” That’s a Bloomberg headline from a weekend story on the present drought in U.S. hard red winter wheat country. “Farmers across the Great Plains are confronting an intense drought that threatens winter wheat harvests and is pushing cattle producers toward costly feed purchases and possibly abandoning plans to expand their herds. Drought now covers nearly 90% of Nebraska and Oklahoma, with more than half of Nebraska in ‘extreme’ drought, and the dryness is expected to persist through spring,” said the report. “The drought is also colliding with higher input costs, including fertilizer prices that have soared, and relief may not arrive soon enough, with heavy rains possibly not returning to the central U.S. until later this summer.
Ukraine attacks Russia fertilizer plant… Ukrainian drones caused damage to a fertilizer plant owned by PhosAgro PJSC as well as a major oil refinery “as Kyiv seeks to thwart Russian commodities exporters which are benefiting from higher prices as a result of the Iran war,” Bloomberg reported. The PhosAgro plant was targeted for the second time this month. Refineries have long been struck in the conflict, with the latest strike on the Yaroslavl oil-processing plant reported by the General Staff of the Armed Forces of Ukraine on Telegram. “Ukraine has intensified strikes on Russian fertilizer plants and other oil infrastructure to blunt the economic benefits for Russia. Nitrogen fertilizer prices have doubled from pre-Iran war levels as vital supplies remain stranded in the Persian Gulf due to the effective closure of the Strait of Hormuz. Russia has imposed curbs on fertilizer exports, although producers are still able to ship some fertilizers within a government quota,” said the Bloomberg report.
Major central banks hold meetings this week… Monetary policy makers in the U.S. and across the Group of Seven will probably keep interest rates steady this week, while watching nervously for signs of higher energy costs fanning inflation, Bloomberg reports. “Three days of decisions in Washington, Ottawa, London, Frankfurt and Tokyo are widely anticipated to result in unchanged borrowing costs across the club of rich nations, with each central bank seen keeping a hawkish eye on fallout from the Iran war,” said the report. The Bank of Japan will be first on Tuesday, with officials who spoke in the past week leaning toward holding off this month on a potential hike. The Bank of Canada and the Federal Reserve on Wednesday are both expected by economists and investors to insist on waiting and watching events too, and the Bank of England and European Central Bank will almost certainly echo with similar messages on Thursday. “While domestic conditions are key for all of them, events at the Strait of Hormuz, the Middle East pinch point of global energy supply, could well partly dictate the path of their monetary policy too,” said the report. The FOMC meeting this week may well be the last for Jerome Powell as head of the U.S. central bank.
Big hurdle cleared for Warsh becoming next Fed chair… U.S. Senator Thom Tillis Friday said he is dropping his blockade of Kevin Warsh’s nomination to head the Federal Reserve. The Justice Department’s decision, announced Friday, to end its criminal probe targeting Fed Chair Jerome Powell removed a threat to the central bank’s independence, according to Tillis. Tillis said he looks forward to supporting Warsh’s confirmation, calling him an “outstanding nominee” who can help the Federal Reserve move beyond the distraction and return its full attention to its mission. The North Carolina Republican’s decision sets the stage for Warsh’s swift confirmation to succeed Powell, whose term ends on May 15.
Malaysian palm oil futures weaker… Malaysian palm oil futures hovered below MYR 4,600 per MT Monday, after recent gains. Palm oil was weighed down by a stronger ringgit and weakness in Dalian soyoil. On the export front, cargo surveyor Intertek Testing Services noted that shipments of Malaysian palm oil products for April 1–25 fell 15.7% from the same period in March, reflecting softer demand following the festive season. However, the downside was capped by a continued rise in crude oil prices, as stalled peace talks between the U.S. and Iran heightened supply concerns. Bets of stronger demand from top buyer India also lent support, with prospects of a rebound after March imports dropped 19% from February. At the same time, Malaysia is moving toward a higher biodiesel mandate, targeting B15 from the current B10, which could absorb up to 1.5 million MT annually and tighten supply. Meantime, the Malaysian Palm Oil Council expects prices to hold above MYR 4,500 in the near term, supported by elevated energy costs and potential El Niño risks.
Cattle futures bulls losing steam… June live cattle futures on Friday rose $1.725 to $245.225 but for the week were down $2.475. May feeder cattle futures Friday gained $2.025 to $360.90 and for the week were down $4.375. The live cattle and feeder cattle futures markets Friday saw corrective bounces but the bears had the better week. The near-term technical postures for both markets have deteriorated further. USDA at midday Friday reported active cash cattle trade, with steers averaging $246.00 and heifers $246.01. The agency earlier last week reported cash trading the week prior averaged $248.02.
Lean hog futures bulls work to stabilize prices… June lean hog futures on Friday fell $1.55 to $101.90 but for the week were up 85 cents. The futures market saw technical selling pressure to end the trading week as prices remain trapped in a downtrend on the daily bar chart. The latest CME lean hog index is up 38 cents to $91.43. Today’s projected cash index price is up a penny to $91.44. Both cash hog and wholesale pork fundamentals have improved of late. Domestic demand remains relatively flat, though grocers should begin ramping up purchases for Memorial Day features and to meet summer grilling demand before slaughter and supplies wane seasonally. However, a potentially price-bearish element is that both average hog and carcass weights have risen in recent weeks.