Good morning!
Grain futures mixed-firmer overnight… As of 6:00 a.m. CDT, July corn was down 1/2 cent and dropped to a more-than-three-month low. July soybeans were up 5 1/4 cents. July soybean meal was up $0.90. July bean oil was up 39 points and hit another contract high overnight. July SRW was 3 1/2 cents higher and HRW wheat futures were up 5 1/2 cents. The corn and wheat bulls are starting the month of June on their heels, while the soybean market has stabilized. On tap today is USDA’s monthly fats and oils report, USDA grain export inspections and USDA’s weekly crop progress reports. The agency will release its first national corn and soybean crop condition ratings of the season in this afternoon’s crop progress data. The first Pro Farmer Crop Condition Index of the season for corn and beans will also come out later today. The key outside markets today see the U.S. dollar index slightly up, while Nymex WTI crude oil prices are solidly higher and trading around $91.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.46%.
Latest on U.S.-Iran war…
--Trump says peace deal will “work out well” even as U.S., Iran clash
-- Israel expands Lebanon assault with Iran-U.S. peace talks in the balance
--U.S. says deals with Iran for safe Hormuz transit are prohibited
-- Europe Is facing up to a painful vulnerability to drone warfare
--Americans injured in Iranian missile strike on Kuwaiti air base
-- Strait of Hormuz ship transits are rising thanks to U.S. help
-- Bessent says, “we’ll see” on potential Iran sanctions relief
President Trump said talks with Iran over an interim peace deal will “work out well,” even as forces clashed again near the Strait of Hormuz. Trump, in a Truth Social post late on Sunday U.S. time, said constant speculation over whether he’ll agree to a deal — which will likely see the two sides extend their ceasefire by around two months, with Iran reopening the strait and the US lifting a blockade of Iranian ports — weren’t helping. “It is MUCH tougher for me to properly do my job and negotiate, when political hacks keep negatively ‘chirping,’” Trump said, “that I should move faster, or move slower, or go to war, or not go to war, or whatever. Just sit back and relax, it will all work out well in the end.” Tensions remain high and the U.S. struck Iranian radar and command-and-control sites over the weekend. The U.S. said it was a “measured” response to “aggressive Iranian actions” including the shootdown of a drone over international waters.
Showers and thunderstorms likely over the Plains, Midwest, Southeast… The National Weather Service today said a lingering upper-level low near the U.S.-Canadian border will maintain showers and thunderstorms across the northern Rockies into the Plains and the Southeast. With a broad corridor of Gulf moisture extending from Texas into the central Plains, widespread afternoon and evening thunderstorm development will be possible. Across the central and eastern U.S., an expanding upper ridge will promote increasingly warm temperatures. High temperatures from Texas through the Mississippi Valley, Midwest and portions of the Ohio Valley are expected to run several degrees above normal.
Rare “Super El Nino” may occur this year… “A cyclical weather phenomenon that can drive flooding in one continent and drought in another looks increasingly likely to emerge this year,” according to a weekend Bloomberg report. “El Niño occurs when the atmosphere reacts to a sustained warming of Pacific Ocean surface temperatures above normal levels. The water has been rapidly heating up in recent months, and the odds of El Niño forming by the end of July have climbed to 82%, according to the U.S. Climate Prediction Center. The looming El Niño could be particularly powerful. There’s a 67% chance it may evolve into a strong or very strong event — what’s informally known as a “Super El Niño” — heading into 2027,” said the report. El Niño doesn’t hit every region in the same way. The effects typically materialize in the tropics first, before spreading across Australia, Asia, the Americas and Africa. Australia, southeast Asia, the northern U.S. and Canada usually become hotter and drier, making them more prone to drought and wildfires. India can experience disruptions to monsoon rainfall. The southern U.S., Chile, Argentina and parts of East Africa frequently experience wetter conditions and a greater risk of flooding, said the report. Also read: Transition to El Nino signals drought relief, but global crop disruption looms
New World Screwworm found within 31 miles of U.S. southern border… New World Screwworm has been found in a young sheep in Mexico within 31 miles of the U.S. border, USDA reported on Friday. “The detection heightens the risk for America’s beef industry and cattle producers, who have feared for more than a year that the pest would cross into the U.S. and infect livestock after spreading northward in Mexico,” said a Reuters report. This latest detection of the fly was in a six-month-old sheep in Mexico’s Coahuila state, according to USDA data. It was the closest the parasite has come to the U.S. during the most recent outbreak, despite a sprawling effort by USDA and Mexico to contain the pest. “Experts cautioned that if the fly enters the U.S., it could further spike record beef prices by keeping more calves out of the U.S. cattle supply. An outbreak in the U.S. could cause $1.8 billion in damage to Texas’ economy alone, according to a USDA estimate,” said the Reuters report.
Indonesian government controlling commodity exports, effective today… Indonesia is pushing ahead with plans to centralize exports of key commodities starting June 1, casting a cloud of regulatory uncertainty over natural resource producers. Coal, palm oil and ferro alloy producers are expected to start submitting export-related documents to the newly formed state-owned firm PT Danantara Sumberdaya Indonesia beginning on June 1. The firm will take over specific export activities as early as September or latest by Jan. 1, according to Coordinating Economic Minister Airlangga Hartarto and as reported by Bloomberg.
Mixed economic data from China, but still overall downbeat… China’s factory activity slowed in May as disruptions from a five-day break added to pressures on global demand and input costs from the continuing conflict in the Middle East. The official manufacturing purchasing managers’ index fell to 50.0 from 50.3 in April, while the non-manufacturing measure of activity rose to 50.1 from 49.4 last month. A reading below 50.0 suggests contraction in the sector. China’s economy is showing signs of faltering after a strong first quarter, with growth slowing across the board in April, prompting economists to call for stronger monetary and government policy support.
Rice prices in Asia surging… Asian rice prices posted their biggest monthly jump in nearly two decades in May and could rally further due to weather risks and surges in energy and fertilizer costs, said a Bloomberg report. “An expected El Niño event and high input costs due to disrupted fuel and fertilizer supplies threaten rice production in import-reliant Asia, where the crop is critical to food security. Any reductions in Asia’s output is likely to impact global supply, although price gains could be capped due to ample rice stocks and relatively weak global demand,” said the report.
Key monthly U.S. jobs report out this Friday… It’s jobs week for the U.S. marketplace, with a slate of indicators on the labor market culminating on Friday with the government’s official report on employment for May, issued by the Labor Department. The median estimates in a Bloomberg survey of economists see the unemployment rate holding steady at 4.3% in May, while payrolls are expected to rise by 89,000 jobs. Other labor market indicators to watch this week include April job openings, ADP Research’s monthly report on private-sector hiring, ISM’s services PMI, plus the monthly Challenger, Gray & Christmas Inc. report on job-cut announcements, and the weekly data on U.S. jobless claims.
Malaysian palm oil futures gain… Malaysian palm oil futures hovered around MYR 4,550 per MT, extending recent gains amid firmer edible oil prices on the Dalian Exchange and concerns over softer Malaysian output. Sentiment remained supported by top supplier Indonesia’s plan to route key commodity exports, including palm oil, through a state-run trading firm starting in September, a move that could potentially benefit Malaysian shipments. However, contracts are on track for a second monthly decline, weighed down by sluggish exports. Cargo surveyors noted exports during May 1–25 fell between 14.5% and 18.0% from April, partly due to the absence of festive buying. Meanwhile, demand outlook from India, the world’s largest palm oil importer, remained uncertain after the country’s April palm oil imports plunged 26% to a four-month low. Separately, crude oil prices are on track to post a steep monthly fall as reports of a tentative extension of the U.S.–Iran ceasefire eased fears of supply disruptions in the Middle East.
Cattle futures bears still have some technical momentum… August live cattle futures on Friday lost $1.95 to $239.05 and for the week were down 55 cents. August feeder cattle futures lost $4.60 to $348.425 and for the week down $1.425. The sell off in crude oil futures last week pressured much of the raw commodity futures markets, including cattle. Weak long liquidation was featured in the cattle futures markets to end the trading week, as well as profit taking from those traders who had been long from trades placed at lower price levels a few months ago. Some new speculator short-selling was also likely entering the market late last week. Friday’s technically bearish weekly and monthly low closes in August fats and feeders also suggest some follow-through chart-based price pressure early this week.
Lean hog futures bears still in firm control… August lean hog futures on Friday fell $2.575 to $98.35 and hit a nearly six-month low. For the week, August hogs were down $1.725. The lean hog futures market sold off sharply Friday and was caught in the downdraft of sell-offs across the raw commodity sector. Friday’s technically bearish weekly and monthly low close in August hogs sets the table for follow-through, chart-based selling early this week. Bears are in firm technical control amid a price downtrend firmly in place on the daily bar chart. The latest CME lean hog index is up 34 cents to $90.92. The national direct five-day rolling average cash hog price quote for Friday was $94.19.