Good morning!
Grain futures prices higher overnight… As of 6:00 a.m. CST, July corn was up 3 cents. July soybeans were up 12 3/4 cents. July soybean meal was up $4.20 and July bean oil was 52 points higher. July SRW wheat was up 5 3/4 cents and July HRW was 6 3/4 cents higher. The grain markets bulls are out of the chute in good fashion to start what is an extra important trading week for the grain markets. The monthly USDA supply and demand report is out Tuesday and President Trump and Chinese President Xi meet in China later this week. (See items below). On tap today is the weekly USDA export inspections and crop progress reports. The key outside markets today see the U.S. dollar index modestly higher, while Nymex WTI crude oil prices are higher and trading around $98.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.4%.
Latest on U.S.-Iran war…
--U.S. nixes Iranian response to peace deal
--India-bound fertilizer shipment scrapped over Iran origin risk
--Asian currencies slide as crude jumps on Middle East standoff
--Ships’ signals go haywire as Hormuz Strait tensions escalate
--Gold falls as Trump rejection of Iran offer fans inflation fears
--Israel’s Netanyahu says war with Iran isn’t over, need to secure uranium
The U.S. and Iran remain far apart on a framework to end their war and reopen the Strait of Hormuz, with President Trump calling Iran’s reply to his proposed peace plan unworkable. Iran demanded a lifting of the U.S. naval blockade and sanctions relief, while maintaining a degree of control over traffic through Hormuz, and insisted that any agreement must result in an immediate end to fighting. The impasse means Hormuz remains largely blocked, with Iran and other Persian Gulf countries unable to export energy supplies through the waterway, and a ceasefire that took hold just over a month ago remains fragile.
Frost/freezes in upper Midwest; red flag and fire danger in the Northern Plains … The National Weather Service today said frost and freezes occurred overnight in much of the upper Midwest and upper Great Lakes. Meantime, a red flag and critical fire warning is in effect for much of Montana, the Dakotas and west-central Nebraska today. Meantime, moderate to heavy rain will develop over parts of the lower Mississippi Valley on Monday. Meanwhile, a front over the northern Intermountain region into the Great Basin moves eastward to the Great Lakes by Tuesday evening. The system will produce showers and thunderstorms over the Northern Plains on Monday evening, then move into the Ohio Valley and the middle Mississippi Valleys by Tuesday evening. Rain will develop over parts of the Upper Great Lakes on Tuesday. The western third of the country will be relatively quiet.
Grain, cotton traders await Tuesday’s USDA monthly supply and demand report… Tuesday’s monthly USDA supply and demand report will be a highlight of the grain-trading week. Corn traders are expecting the agency to significantly reduce this year’s U.S. corn production level from that seen last year. Traders are also expecting a slight rise in U.S. and global corn stocks, compared to the April USDA S&D report. Soy complex traders expect a modest rise in U.S. soybean production, compared to last year. Traders expect a slight dip in U.S. soybean stocks but a slight rise in global stockpiles, compared to the April USDA S&D report. Wheat traders expect Tuesday’s report to show a significant decline in U.S. all wheat production this year compared to last year. Global wheat stocks are seen near unchanged from last year. Wheat traders will be watching results of this week’s annual HRW tour sponsored by the Wheat Quality Council. For cotton, analysts expect U.S. cotton production to come in slightly lower than the April USDA estimate.
U.S.-China summit coming into grain trader focus… Thursday and Friday, the highly anticipated summit meeting between President Trump and Chinese leader Xi Jinping in China will be very closely watched by grain traders and especially soybean traders. Bulls are upbeat about a positive outcome from the meeting that could mean China purchasing more U.S. soybeans. For more Pro Farmer perspective on the U.S.-China summit and other ag-related events this week, click here.
Signs of rising inflation in China… China’s factory prices grew at the fastest pace since the pandemic as the U.S.-Iran war raises costs and leaves profits under pressure, with China’s producer prices rising 2.8% in April from a year earlier. Consumer inflation in China unexpectedly climbed to 1.2% from a year earlier, driven by higher motor fuel and gold prices, despite food prices slumping. The acceleration in producer inflation was driven by factors including the rapid rise in international commodity prices, increased demand in certain domestic sectors, and improved market competition.
U.S.-India trade talks… A U.S. trade delegation is likely to visit India for talks, a New Delhi official said Monday and as reported by Bloomberg, as the two sides continue negotiations toward a bilateral agreement. “The visit dates have not yet been decided, the official told reporters, asking not to be identified as the discussions are not public. Last month, a team of Indian trade officials visited Washington to conclude the first phase of a trade pact agreed in February. The two countries reached that understanding before the U.S. Supreme Court struck down President Trump’s sweeping reciprocal tariffs,” said the report. “India’s Commerce and Industry Minister Piyush Goyal last month said that while the initial phase is complete, efforts are now focused on securing preferential access for Indian exports to the U.S. market relative to competitors.”
Traders await U.S. consumer price index Tuesday… Traders and investors are awaiting a key U.S. inflation report on Tuesday to gauge how long the Federal Reserve can afford to hold interest rates steady as Middle East turmoil keeps oil prices elevated and shipping commerce in the region constrained. Economists expect Tuesday’s inflation report will show consumer prices rose in April from a year earlier, with core inflation forecast to have climbed. A Dow Jones Newswires survey showed economists expect the April CPI to come in at up 0.6% from March, and up 3.8%, year-on-year. The “core” CPI (excluding food and energy) is seen up 0.3% from March and up 2.7%, year-on-year.
Malaysian palm oil futures rally… Malaysian palm oil futures jumped around 1% to MYR 4,550 per MT Monday, halting recent declines amid a weaker ringgit and firmer edible oils on the Dalian and Chicago markets. Meanwhile, crude oil prices strengthened as the U.S. and Iran failed to agree to a peace proposal drafted by Washington, boosting expectations for biodiesel demand. Higher exports further lifted sentiment, as cargo surveyor Intertek Testing Services noted that exports for May 1-10 rose 8.5% from the same period in April. On the policy front, Malaysia will roll out a B15 biodiesel mandate from June 1, up from the current B10, to curb fuel imports and spur domestic consumption. However, upside was capped by monthly data from the Malaysian Palm Oil Board showing April stocks rose 1.71% from the prior month to 2.31 million metric MT, with output surging 18.37% to 1.63 million MT. Meanwhile, demand concerns persisted as India, the world’s largest palm oil buyer, saw April imports plunge 27% mom to a one-year low.
Live cattle futures see profit taking, bearish weekly low close Friday… June live cattle futures on Friday fell $1.15 to $248.90 and for the week were down $4.10. May feeder cattle futures Friday rose $1.05 to $367.375 and for the week were down $4.025. June live cattle futures saw a technically bearish weekly low close Friday as the bulls are fading, technically. However, selling interest in futures this week will likely be limited by solidly higher cash cattle prices late last week. USDA at midday Friday reported active cash cattle trading, with steers averaging $258.32 and heifers $258.05. The agency said cash trading the prior week averaged $255.02. Still overall bullish technicals and supply and demand fundamentals continue to lean supportive for the cattle futures markets.
Lean hog futures see the bears in control… June lean hog futures on Friday fell $0.75 to $98.625 and hit a five-month low. For the week, June hogs were down $2.65. The lean hog futures market bears are in firm technical control and gained more strength by producing a bearish weekly low close Friday in the June contract. The latest CME lean hog index is down 17 cents to $91.02. Today’s projected cash index price is down another 17 cents to $91.02. The national direct five-day rolling average cash hog price quote for Friday was $95.11. A smaller U.S. breeding herd and waning slaughter into the second and third quarters should provide a floor under cash hog and futures prices.