Good morning!
Grain markets near steady overnight; corn likely to lead price direction… As of 6:00 a.m. CDT, December corn futures were up 1/4 cent, November soybeans 3/4 cent higher and winter wheat futures were near steady. King Corn appears to be the grain markets leader at present, with December futures hanging by a thread just above important technical support at the contract low of $4.07 1/2. Bulls need to defend that level, as pre-placed sell stop orders likely lurk just under it. Soybeans continue to suffer from a sickly meal futures market, which hit a contract low Tuesday. Meal will have to start performing better if soybeans have any chance of sustaining a price uptrend. Winter wheat futures bears are in solid control, with December SRW and HRW prices also trading just above their contract lows. The key outside markets today see the U.S. dollar index slightly lower on a corrective pullback after hitting a five-week high Tuesday. Nymex crude oil prices are down a bit and trading around $68.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.336 percent.
Major earthquake near Russia… A mammoth magnitude 8.8 earthquake struck off Russia’s Kamchatka Peninsula today, triggering tsunami alerts from Japan and China to the U.S. and Canada, and as far away as Indonesia and New Zealand. It’s the biggest quake since 2011, according to the U.S. Geological Survey, and the most powerful in Russia since 1952. Four-foot waves were recorded in Hawaii and the initial signs of a tsunami were detected in California. While some alerts in Hawaii were downgraded to advisories and warnings in Shanghai were canceled, authorities remained watchful. “Everything has been okay so far; we haven’t seen a big wave,” said Hawaii Governor Josh Green, in a Bloomberg report. Water was seen receding from the coastline, which can be a sign of an imminent tsunami, and “we expect two to three hours at least until we can call all clear,” he said.
Iowa, Illinois in the bullseye for heavy rain, severe weather today… The National Weather Service reports the Midwest will finally cool down to end the week, with daily high temperatures in the 70s over much of the region. However, Iowa and Illinois will see more strong to severe storms today, after Iowa was hit with heavy rain and storms overnight. Potentially damaging winds may accompany the heavy rain that is expected. Amounts of 1-3 inches are likely in Iowa, with smaller pockets of 3-5 inches or more possible, producing flash flood watches.
Big U.S. data day Wednesday… A big slate of U.S. economic data at mid-week is highlighted by the conclusion of the Federal Reserve’s Open Market Committee (FOMC) meeting that began Tuesday morning and ends this afternoon with a statement and press conference from Fed Chairman Jerome Powell.The Fed is widely expected to leave its benchmark Fed funds rate range unchanged this week. However, many market watchers think Powell might indicate at this meeting the Fed could lean easier on the Fed’s monetary policy intentions this fall. Also on tap today is the advance estimate for second-quarter U.S. gross domestic product. GDP in the second quarter is seen coming in at up 2.3%, year-on-year. On Friday comes the all-important U.S. employment report from the Labor Department.
China’s politburo vows to work to end trade wars… China’s top leadership says it is determined to reduce excess competition in the Chinese economy, with President Xi Jinping endorsing a campaign targeting one major cause of deflation and tensions with global trade partners. The Communist party’s decision-making politburo vowed to ramp up its management of overcapacity in key industries, according to a report Wednesday by the official Xinhua News Agency. Local government practices in attracting investment will also be regulated, it added. Xinhua also published a separate report calling for Xi to “break involution,” a phrase referring to a destructive state of intense competition sparked by excess capacity that forces people to overwork despite diminishing returns. U.S.-China trade talks in Stockholm, Sweden ended Tuesday without an extension of the current truce. President Trump must now approve any proposed plan. Otherwise, tariffs will revert to April levels if no deal is reached by the August 12 deadline.
Trump suggests 20–25% tariffs on India… President Trump on Tuesday said India could face tariffs of 20–25%, slightly below the 26% rate announced in April, though a final decision has yet to be made as trade talks continue ahead of the Friday deadline. When asked if that rate was likely, Trump replied, “I think so,” adding, “India has been a good friend, but India has charged basically more tariffs than almost any other country. You just can’t do that.” Bloomberg reported both countries were exploring a compromise to bring the rate below 20%, but progress has been slow as the U.S. is demanding more access to India for U.S. agricultural and dairy markets.
U.S. dollar index showing early signs that price bottom in place… The U.S. dollar index (a basket of six major currencies weighted against the greenback) on Tuesday scored a five-week high and is now trending higher. The Euro currency on Tuesday scored a five-week low. Generally upbeat U.S. economic data released recently, as well as U.S. trade deals with other countries starting to fall into place, have boosted the USDX to begin to suggest it has put in a price bottom. It can be argued an appreciating U.S. dollar on the foreign exchange market is bearish for U.S. ag markets. Most major commodities are priced in U.S. dollars on the world trade markets. An appreciating dollar means those commodities are more expensive to purchase in non-U.S. currency. To counter that notion, we would argue a stronger dollar suggests a stronger U.S. economy, therefore meaning better domestic demand. And a healthy U.S. economy also helps other major global economies—also meaning better global demand for goods and services.
Palm oil futures rally at mid-week… Malaysian palm oil futures rose to above MYR 4,260 per MT Wednesday, building on slight gains from Tuesday amid a weaker ringgit and stronger rival Dalian oils. Top producer Indonesia has projected its palm oil exports to India will exceed 5 million MT this year, up from 4.8 million MT in 2024.
The powerful bull market runs in cattle futures roll on… Live and feeder cattle futures markets on Tuesday hit record highs, with no early, solid technical clues that market tops are close at hand. In fact, recent rallies that have been followed by “backing and filling” on the charts are bullish signals the price uptrends can continue. Live cattle futures’ discount to the cash cattle market will continue to limit the downside in cattle futures. There has been no cash cattle trading activity reported by USDA yet this week. Beef packer cutting margins are still deep in the red at present, which will likely have packers reluctant to bid aggressively for cash cattle when trade does commence later this week.
Hog market bulls losing some steam… The lean hog futures market Tuesday saw some profit taking and technical selling pressure, as bullish momentum is waning a bit. However, hog futures’ discount to the CME lean hog index will limit the downside in futures. The latest CME lean hog index is up another 4 cents to $110.32 as of July 25. Wednesday’s projected cash index price (as of July 28) is up 13 cents at $110.45.
Today’s reports—Wednesday
--2:00 pm Broiler Hatchery NASS