Good morning!
Grain futures prices firmer early today… Corn, soybean and wheat futures prices are modestly up in early U.S. trading. Grain market bulls are hoping their markets have stabilized at mid-week, after the early-week selling pressure. The key outside markets today see the U.S. dollar index slightly up, with Nymex crude oil prices slightly weaker and trading around $65.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.382%.
“Dome of Doom” settles in over most of the Corn Belt… Pro Farmer editors have not-so-affectionately labeled the
heat and humidity that are building across the Midwest as a “Dome of Doom.” High temperatures and high heat indexes, including in the night-time hours, are garnering more attention from grain traders. Dr. Justin Glisan, state climatologist for Iowa, says even though temperatures may not rise excessively high, the heat index could become intense enough to impact crops and livestock. The National Weather Service late Tuesday said “dangerous heat is expected across portions of the central and southeastern U.S. through July.” Severe storms are possible for parts of the northern Plains and upper Midwest today, and threats include a few tornadoes, damaging winds and excessive rain.
Scattered corn pollination problems emerging… There are some reports surfacing from farmers and agronomists of corn pollination issues resulting from the “overly tight tassel wrap” phenomenon. The condition is not widespread but there are some pictures and commentary posted on social media and other websites. Reigning world corn-yield record holder David Hula reports he is seeing the issue in some Virginia fields and also hearing reports along the eastern seaboard. Farm Journal Field Agronomist Ken Ferrie says he is seeing the issue occur in parts of Illinois as corn reaches about V6 or V7 up through tassel – as the crop goes through rapid growth. “This corn is growing like crazy, putting on an inch and a half of root a day, putting on a node every three days, that type of thing. The tassel can get wrapped really tight, and usually it’s triggered by some type of stress,” said Ferrie.
U.S.-Japan reach trade deal… The U.S. and Japan announced late Tuesday a trade deal has been reached that will impose 15% tariffs on Japanese imports into the U.S., including automobiles, while Japan will create a $550 billion fund to make investments in the United States. President Trump called the trade deal the “largest ever.” The deal spares Japan from a threatened 25% U.S. tariff that was set to take effect next week. Under the deal, automobiles and parts would be subjected to the same 15% rate as Japan’s other exports. In return, Japan will accept cars and trucks built to U.S. motor vehicle safety standards, without subjecting them to additional requirements, which is a potentially major step to selling more U.S.-built vehicles in Japan. Global stock markets rallied in the wake of the announced U.S.-Japan trade deal.
Malaysian palm oil futures rally… Palm oil futures rose by over 1% Wednesday, extending solid gains from Tuesday and boosted by price strength in other edible oils. The Malaysian Palm Oil Council said it expects prices to remain supported over the next month due to strong soybean oil markets and rising festive demand from top buyer India.
Wall Street Journal: “Global economy powers through trade chaos”… The Wall Street Journal today reports “the global economy is sailing through this year’s historic increase in tariffs, displaying an unexpected trait: resilience.” The story said businesses and consumers have surprised economists by “their ability to hedge, finding a short-term path through as they await clarity on where tariffs will end up.” Global producers bought ahead and rerouted goods destined for the U.S. through third-party countries that are subjected to lower tariffs. “For the most part, households and businesses have continued to spend and invest despite the uncertainty,” said the Journal. The world economy grew at a 2.4% annual rate in the first half of this year, which is close to its longer-term trend, according to JP Morgan.
Euro currency near four-year high on EU-U.S. trade-deal optimism… The Euro currency is trading close to its highest level since August of 2021 amid optimism over a potential trade deal between the U.S. and the European Union. Earlier reports said the European Union is preparing countermeasures in case trade talks stall before the Aug. 1 U.S.-imposed trade-deal deadline. Currency traders are also focused on Thursday’s European Central Bank monetary policy decision. The ECB is widely expected to keep its interest rates unchanged after eight consecutive cuts.
Offshore Chinese yuan currency hits two-week high… The Chinese yuan edged higher to around 7.16 per U.S. dollar Wednesday and hit its highest level in over two weeks as traders monitor developments on U.S.-China trade negotiations. U.S. Treasury Secretary Bessent said Tuesday that U.S. and Chinese officials will meet in Stockholm next week for a third round of high-level talks.
Cattle market bulls remain strong… Selling interest in the cattle futures markets so far this week remains scarce, even with prices at record highs. Solid cash and beef market fundamentals, as well as bullish technical charts, are keeping the bulls in command. Look for near-steady or possibly even higher cash cattle prices when more active trading commences this later week. However, packers will again be reluctant to bid up for cattle supplies due to cutting margins that are deeply in the red. Cattle traders get some fresh supply data later this week with Friday afternoon’s monthly USDA Cattle-on-Feed Report.
Lean hog futures fundamentals remain overall friendly… The hog futures market bulls have upside momentum at mid-week as prices continue a solid rebound from the mid-July low. That’s inviting speculators to be more active players on the long side of the market. Improving technical charts and record-high cattle futures prices are also helping boost hog futures prices. Cash hog and pork market fundamentals are also overall price-friendly. The latest CME lean hog index is up another 27 cents to $108.20. Wednesday’s cash index price is projected up 39 cents to $108.59.
Today’s reports--Wednesday
9:30 a.m. Weekly Ethanol Production — EIA
2:00 p.m. Broiler Hatchery — NASS