Good morning!
Grain futures prices mostly weaker overnight… At 6:00 a.m. CDT, December corn was down 1 1/2 cents and hit a two-week low. November soybeans were 1 1/4 cents lower. September soybean meal was up $0.50. September bean oil was 106 points lower. September SRW wheat was down 6 3/4 cents and September HRW wheat prices were 7 cents lower. The grain futures markets are poised to produce technically bearish weekly low closes if overnight losses hold through the day session today. Such would be another chart clue that bulls are out of gas and that the summertime rallies have run their course. The key outside markets today see the U.S. dollar index higher on a corrective bounce. September Nymex WTI crude oil prices are firmer and trading around $84.25 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.65%.
No fresh U.S.-Iran strikes against each other reported overnight… Neither Iranian media nor U.S. Central Command (CENTCOM) reported any strikes hitting inside Iran overnight, marking a change from Wednesday night when the U.S. launched a “heavy wave of strikes” targeting the country. “That wave, the first in almost a week, was a retaliatory response to Iran’s attempted attack on U.S. military positions the previous day, so strikes halting for now perhaps indicates that response is complete. Meanwhile, the Iranian Army claimed it had targeted military infrastructure at Kuwait’s Ahmad al-Jaber Air Base overnight, according to Iran’s state broadcaster, IRIB. Kuwaiti authorities have not publicly confirmed the attack. Meantime, the Saudi Arabia defense ministry said Thursday that 14 countries have backed the kingdom’s proposal to establish a “Maritime Defense Alliance” to protect international shipping routes and global trade, according to CNN. Reports overnight also said President Trump announced the U.S. has reached a peace deal with Hamas.
Unsettled but cooler across Midwest; high heat continues in Southwest … The National Weather Service today said unsettled weather continues across the central U.S. The colder weather over Northern Plains will drop southward today. There is a slight risk (level 2/4) of excessive rainfall over portions of the upper Midwest into the mid-Mississippi Valley and portions of the Ohio Valley, while a broad marginal risk is in place over much of the upper Great Lakes and southeast for today. Over the southwest, southeasterly flow continues to bring monsoonal moisture across the Four Corners, which will produce afternoon to evening thunderstorms. Slow storm motion and increasing instability will bring the potential for isolated flash flooding and severe thunderstorms, with the chance for damaging winds and hail, through Saturday. An upper-level ridge over the southwestern U.S. will continue to bring dangerous heat across the Southwest today and will gradually lift into the northern High Plains/intermountain West by Saturday. Afternoon highs are expected to reach 110-120 degrees for parts of the Southwest, while the areas farther north will reach 90s to 100s.
Total New World screwworm cases detected in U.S. at 43… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is now reporting 43 total New World screwworm detected cases in the U.S. There are eight active cases, all in Texas.
Ukraine drones hit Russian grain export terminal… A Ukrainian drone attack caused “significant damage” to a Russian grain export terminal on the Kerch Strait, Reuters reported on Thursday, the latest in a series of attacks between the two countries that have targeted grain shipping and infrastructure and raised concerns about exports out of the Black Sea region. The report said the terminal has a capacity of 5 million metric tons. Shipping in the Sea of Azov and the Kerch strait, which handled around a quarter of Russian grain exports, has been halted due to drone attacks since June 10. Russia has targeted Ukrainian shipping and ports near Odesa. Meantime, Ukraine on Friday struck one of Russia’s largest oil refineries, threatening to disrupt fuel supplies again as strikes on the country’s energy infrastructure resumed. “Ukraine’s Security Service said on Telegram that it targeted facilities at Lukoil PJSC’s refinery in the Volgograd region, without indicating the extent of the damage. Kyiv has intensified attacks on Russian refineries this year, helping drive the country’s crude processing rates to multiyear lows and contributing to a nationwide fuel shortage this summer, said a Bloomberg report.
Greenback slumps post-Fed meeting… The U.S. dollar on the foreign exchange market is headed for its worst week in three months on concerns the Federal Reserve won’t move forcefully enough to contain inflation. Bloomberg’s Dollar Spot Index is on course for a 1.2% slump in the past five days. While the gauge recovered some ground today, it remains near the weakest level in over a month. “The greenback’s retreat despite higher U.S. bond yields — which would typically support the currency — reflects angst over the Fed’s credibility. Chair Kevin Warsh is facing scrutiny after his messaging stoked worries that the central bank may hold off raising rates and allow inflation to remain above target. Long-dated Treasury yields are at their highest since 2007,” said Bloomberg. Efforts by Japanese authorities to shore up the yen also added to pressure on the dollar. Intervention saw the Japanese currency surge as much as 3.3% versus the dollar in New York trading on Thursday, though it has since pared the advance after the Bank of Japan left interest rates unchanged on Friday.
Corteva reports lower earnings… For the quarter ended in June, Corteva on Thursday reported revenue of $6.38 billion, down 1.2% over the same period last year. Earnings per share came in at $2.30, compared to $2.20 in the year-ago quarter. “The reported revenue represents a surprise of -3.66% over the Zacks Consensus Estimate of $6.62 billion. With the consensus EPS estimate being $2.24, the EPS surprise was +2.68%,” said Yahoo Finance. Net sales for crop protection were $1.85 billion versus $1.93 billion estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -3.8% change. Net seed sales were $4.53 billion compared to the $4.66 billion average estimate based on three analysts. The reported number represents a change of -0.1% year over year.
Eurozone inflation on the rise… The eurozone annual inflation rae accelerated to 2.9% in July, in line with market expectations and up from 2.8% in June and remaining well above the European Central Bank’s 2.0% target, according to preliminary estimates. The increase was largely driven by a renewed surge in energy prices, with energy inflation accelerating to 10.0% from 8.5% as hostilities between the U.S. and Iran resumed. Underlying price pressures also strengthened. Services inflation edged up to 3.3% from 3.2%, while inflation for non-energy industrial goods rose to 0.9% from 0.7%. The core inflation rate, which excludes energy and food, increased to 2.5% from 2.4% annually.
A “Situational Awareness” hiccup in the stock market… Leopold Aschenbrenner’s hedge fund, Situational Awareness, at mid-week was forced to sell billions of dollars of technology investments that had rapidly lost value, as nervous banks began to demand more collateral for his trades. Billionaire Ken Griffin’s Citadel hedge fund reached out to Situational Awareness and snapped up the investments at a discount, after a conversation between Griffin and Aschenbrenner. Aschenbrenner’s firm has watched its assets plunge, but he continues to run one of the biggest equity hedge funds in the world and is still set to come out only bruised, with the hedge fund still up around 80% on the year. The U.S. stock market sell off on Wednesday was “completely unwarranted to be honest,” said Vuk Vukovic, chief investment officer at Oraclum Capital. “There had to be something else behind it. Now we see what happened,” he said, according to Bloomberg. Even before this week’s margin calls, there were signs that Wall Street was starting to grow cautious, said the report.
Malaysian palm oil futures prices dip… Malaysian palm oil futures slipped below MYR 4,650 per MT Friday, reversing recent gains as softer rival oils in Dalian and Chicago pressured sentiment. The benchmark contract was set to close the week down about 1.7% so far, ending a three-week winning run, after Indonesia, the world’s largest palm oil producer, cut its August crude palm oil reference price to USD 996.52 per MT from USD 1,000.90 in July. Still, prices remained roughly 2% higher for the month, the first monthly rise in four months, supported by about a 20% surge in crude oil during July as U.S.-Iran diplomacy eased Middle East tensions, boosting palm’s biodiesel appeal. Export demand also stayed firm, with cargo surveyors noting July 1-25 shipments up between 8.1%-15.9% from the same period in June. Further support came from higher blending mandates in Indonesia and Malaysia, weather risks to next year’s Malaysian output, and hopes of stronger imports by top buyer India between July and October ahead of festive demand.
Cattle futures extend gains as bulls work to forge market bottoms… August live cattle on Thursday rose $3.325 to $231.225 and hit a two-week high. August feeder cattle rose $2.20 to $346.475. The cattle markets saw more corrective buying and perceived bargain hunting. For August live cattle, technical odds are increasing that a near-term market bottom is in place. August feeders still have an existing price downtrend in place on the daily chart. USDA at midday Thursday reported very light cash cattle trade taking place so far this week, with steers averaging $229.00 and heifers $228.41. The agency Monday reported cash cattle trading last week averaged $230.48, which is down $7.80 from the week prior.
Lean hog futures hit three-week low, with bulls fading fast… August lean hog futures on Thursday fell $2.25 to $98.425 and hit a three-week low. The hog futures market saw more heavy profit-taking pressure. A price uptrend on the daily bar chart has been soundly negated to suggest a near-term market top is in place. The cash hog market rally may also be stalling out. The latest CME lean hog index is up 10 cents to $98.45. Friday’s projected CME index price is down 1 cent at $98.44. The national direct five-day rolling average cash hog price quote for Thursday was $100.93.