—Updates to correct cash cattle prices.
Good morning!
Grain futures mixed overnight… As of 6:00 a.m. CDT, July corn was down 1 1/4 cents. July soybeans were up 5 cents. July soybean meal was down $0.40. July bean oil was up 48 points and hit a contract high overnight. July SRW was 3/4 cent higher and HRW wheat futures were down 1 1/4 cents—with HRW hitting a five-week low. Grain traders this morning will get the weekly USDA export sales report, which was delayed one day by Monday’s holiday. On this last trading day of the month, soybean, meal and bean oil futures will exit May in the best shape--beans and meal near the middle of their monthly trading ranges and bean oil at the top. Meanwhile, corn and winter wheat futures will leave the not-so-merry month of May near the bottom of their monthly trading ranges. The key outside markets today see the U.S. dollar index slightly up, while Nymex WTI crude oil prices are lower and trading around $87.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.45%.
Latest on U.S.-Iran war…
--U.S., Iran reach deal on extended ceasefire pending Trump approval
--Crude oil set for 19% decline in May as traders bet on truce renewal
The U.S. and Iran have reached a preliminary deal to extend a ceasefire by 60 days and discuss the future of Tehran’s nuclear program, Bloomberg reported, citing a person with knowledge of the matter. Vice President J.D. Vance said the U.S. and Iran are “going back and forth on a couple of language points,” including over issues relating to Tehran’s nuclear capabilities, and that Iran appears to be negotiating in good faith. U.S. Treasury Secretary Scott Bessent reiterated President Trump’s three “red lines” — reopening the Strait of Hormuz, Iran surrendering highly enriched uranium and ending its nuclear program — remain in place.
Severe storms possible over the Plains, Midwest … The National Weather Service today said the central Plains into the lower Mississippi Valley and Southeast will see repeated rounds of showers and thunderstorms. There is a risk of severe thunderstorms for portions of western and northern Montana and across parts of the Plains/High Plains, with a chance for gusty winds and hail on Friday. The severe weather threat continues into Saturday with a slight risk over western Nebraska and south Dakota. With the upper-level low over the West, cooler-than-average temperatures will continue from Friday into Saturday across much of the western U.S., with temperatures 10-20 degrees below normal. Over the northern Rockies/Plains, 20-25 degrees above normal temperatures on Friday will begin to moderate into the weekend.
USDA announces “Great American Cotton Plan” … USDA Secretary Brooke Rollins Thursday announced the Great American Cotton Plan, “a comprehensive USDA initiative to strengthen the cotton farm economy, restore domestic textile manufacturing, expand cotton trade opportunities and increase demand for products made with American-grown cotton,” said a USDA press release. “The announcement comes as cotton producers face a fifth consecutive year of negative returns driven by rising input costs, trade distortions, and increasing competition from synthetic materials.” As part of the plan, USDA will elevate the “Plant Not Plastic” initiative to encourage consumers to purchase products made with healthy natural American cotton fibers rather than synthetic plastic-based alternatives.
Federal Trade Commission probing U.S. fertilizer industry… The Federal Trade Commission recently launched an antitrust investigation into the rising costs of fertilizer in the U.S., the agency’s head said at an event in Texas on Thursday. “I’m announcing that, on my order, the commission some time ago commenced a major industrywide investigation into the precipitous rise of fertilizer prices in this country, which has affected so many of our nation’s farmers, including everyone in this room,” FTC Chairman Andrew Ferguson said. “USDA data has shown the single largest increase in input costs of farmers across the United States since 2020 has come from fertilizer.” That helped deliver a profit windfall for some fertilizer companies, including CF Industries Holdings Inc. and Nutrien Ltd., though other producers like Mosaic Co. have struggled significantly as the chemical inputs it requires also become more expensive. The industry has long faced scrutiny, as just a few players control most of the country’s supply. The Justice Department also has criminal and civil investigations into potential collusion on price by several leading producers of commercial fertilizers, Bloomberg previously reported.
Euro zone farmers need billions of euros in funding to help with fertilizer needs…The European Union will need to provide its farmers with several billion euros of funding to prevent crop cutbacks following a surge in fertilizer costs caused by the Iran war, Spain Agriculture Minister Luis Planas said, according to Bloomberg. Spain is leading individual country efforts to ease the blow with a 500 million euro ($580 million) aid package, while the European Commission’s current plans have yet to address funding needs, Planas said in an interview. “The European Commission’s fertilizer plan is a good analytical document but it does not address the immediate objective: the extra cost,” he said. “The money is needed at the right moment and, for now, we have provided the missing leg of the European plan.” Farmers worldwide are under pressure from soaring energy and fertilizer costs, with prices for the most widely used nitrogen fertilizer up more than 65% since the start of the war at the end of February.
Weaker monsoon rains in India may crimp crop production… India lowered this year’s monsoon forecast, a blow to farmers who are already facing higher input costs due to the Middle East conflict, Bloomberg reports. Cumulative rains during the June-September season are likely to be 90% of the long-term average, M. Ravichandran, secretary at the Ministry of Earth Sciences, said during a news conference on Friday. The prediction carries a 4% margin of error. In April, the India Meteorological Department had said that rains would be at 92% of normal. A likely El Niño weather pattern is expected to reduce rainfall activity during the monsoon, which first reaches the country’s southern tip around June 1 before moving northward to cover the entire subcontinent over the next four to six weeks. Hundreds of millions of farmers in India, one of the world’s largest producers of rice, sugar and cotton, depend heavily on the seasonal rains to irrigate their fields.
U.S. stock indexes: No “sell in May and go away” this year… The major U.S. stock indexes this week hit all-time record highs as traders and investors at the end of May are more hopeful the U.S. and Iran could finally get a peace deal across the line and restore oil flows through the Strait of Hormuz. “The prospect of a peace deal in the Middle East after weeks of elusive progress is easing pressure on oil prices and raising conviction that markets’ worst inflation fears wouldn’t come to pass. That confidence comes against a backdrop of an unprecedented artificial intelligence-led rally that has seen U.S.-listed chipmakers surge nearly 70% since the beginning of April,” said a Bloomberg report.
Blue Origin rocket explodes on launch pad… Blue Origin’s New Glenn rocket exploded in a massive fireball while undergoing a test on a Florida launchpad Thursday evening, dealing a major setback to the Jeff Bezos-backed firm in its efforts to challenge a dominant SpaceX. Blue Origin was preparing the vehicle for its fourth launch, which was slated to deploy a batch of satellites for Amazon.com Inc.’s Leo, a rival satellite network to SpaceX’s Starlink. None of the satellites were on the rocket when it exploded, a spokesperson for Amazon said. “Very rough day, but we’ll rebuild whatever needs rebuilding and get back to flying,” Bezos wrote in a post on X.
Malaysian palm oil futures extend gains… Malaysian palm oil futures on Friday 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.
Cattle futures see profit-taking, weak long liquidation… August live cattle on Thursday fell $1.50 to $241.00. August feeders lost $1.60 to $353.025. The cattle markets sold off late on profit taking and weak long liquidation. The bulls had been working prices up from their May lows but took a step backward Thursday. Key for the bulls will be to show more price strength, or at least stability, in the coming sessions. It could be that feeder futures will lead live cattle in daily price direction in the near term. USDA at midday Thursday reported very light cash cattle trading so far this week, averaging $256.00. The agency earlier this week reported cash cattle trading last week averaged $258.77, down $4.08 from the week prior’s record high of $262.85.
Lean hog futures see price pause… August lean hog futures on Thursday rose $0.075 to $100.925. The lean hog futures market paused following decent gains Wednesday. Buying interest in lean hog futures continues to be squelched by the near-term technical posture remaining firmly bearish. Prices are still in a steep downtrend on the daily bar chart. The latest CME lean hog index is down 12 cents at $90.58. Today’s projected cash index price is up 34 cents at $90.92. The national direct five-day rolling average cash hog price quote Thursday was $94.30.