Good morning!
Grain futures prices up overnight… As of 6:00 a.m. CST, July corn was up 2 1/2 cents and hit a three-week high. July soybeans were 8 1/4 cents up and hit a five-week high. July soybean meal was up $2.40 and July bean oil was 29 points higher. July SRW wheat was up 1 1/2 cents and hit a three-week high. July HRW was 2 1/4 cents lower. It was a good overnight session for the grain market bulls, overall. July corn pushed above its key 40-day moving average for the first time in over two weeks, while prices are starting to trend up on the daily bar chart. July soybeans may be seeing a bullish upside breakout from a sideways and choppy trading range that had been in place the past five weeks. And SRW wheat bulls are establishing a price uptrend on the daily chart. July HRW wheat still sees stiff overhead technical resistance at last week’s high of $6.63. However, if HRW prices push above that key level, a hefty number of pre-placed buy stop orders would likely be triggered to drive prices higher. The key outside markets see Nymex WTI crude oil prices firmer and trading around $90.00 a barrel. The U.S. dollar index is a bit weaker. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.28 percent.
Latest on the war in the Middle East…
--U.S.-Iran ceasefire indefinitely extended but peace talks on hold
--Ships come under Iran gunfire near Strait of Hormuz, U.K. navy says
--Iran oil tankers go dark to sneak past U.S. blockade
--Trump says U.S. caught Chinese ‘gift’ for Iran, testing red line
President Trump indefinitely extended a ceasefire with Iran as peace talks remain on hold, walking back threats to resume fighting even as the Strait of Hormuz remains all but shut. Trump said Pakistan, the main mediator between the warring sides, asked the U.S. to hold off on fresh strikes, something Tehran denied was the case. Washington is extending the truce — which began just over two weeks ago — until Iran submits a new proposal “and discussions are concluded, one way or the other,” Trump said on Truth Social late Tuesday. There’s still no sign the vital Strait of Hormuz will be reopened to oil, gas and fertilizer shipments soon. The U.S. and Iran seem closer to resolving longer-term issues such as the status of Iran’s nuclear and missile programs.
Windy, stormy across much of western, central U.S. the next two days… The National Weather Service today said an incoming system from the Pacific will bring a wide range of impacts including snow, severe weather, heavy rainfall and a threat for wildfires from the western to central U.S. mid- to late-week. On Thursday, strengthening wind fields will spread eastward and increased, with moist, unstable air from the south leading to widespread, robust thunderstorms across the upper Midwest southwest through the Missouri Valley and into portions of the central/southern Plains. A slight risk of severe weather (level 2/5) includes the threat of large hail, damaging winds, and a few tornadoes. Deepening troughing east of the Rockies will also lead to strong, gusty winds and warm, very dry conditions, prompting a widespread critical risk of fire weather (level 2/3) today across much of the High Plains. This threat will continue into Thursday but with the focus shifting to the southern High Plains.
Russia caps fertilizer exports until December… Russia extended its fertilizer export quotas until December as a global deficit deepens due to the Iran war and disruptions in the Strait of Hormuz, a key route for the seaborne trade in nutrients, said a Bloomberg report. “Russian producers are allowed to export 20 million tons of fertilizers for the period from June 1 to Nov. 30, the government said in a statement Wednesday. The effective closure of the strait has cut off about a third of the seaborne fertilizer trade, fueling fears of a food crisis,” said the report. “Nations have raced to secure alternative supplies for farmers, but top producers including China and Russia have capped exports, forcing buyers to pay premiums for limited volumes.” Russia, the world’s second-largest fertilizer producer, accounts for about 20% of the global trade. It’s already been prioritizing domestic supply with the current export quota of 18.7 million tons running through the end of May. The new limits will cover 8.7 million tons for nitrogen fertilizers, more than 4.2 million tons for ammonium nitrate, and about 7 million tons for complex fertilizers, according to the government and as reported by Bloomberg.
China’s central bank adds stimulus… China’s central bank has injected more cash into the banking system, signaling unusual tolerance for abundant liquidity and boosting confidence that the bond rally may have further to run. The People’s Bank of China added a net 9.5 billion yuan using seven-day reverse repos on Tuesday and Wednesday, with the move suggesting policymakers are prioritizing low funding costs and smooth government financing to support the economy. Authorities will start selling ultra-long special government bonds this week as part of a 1.3 trillion-yuan plan, with a total of 119 billion yuan of 20- and 30-year notes to be offered Friday.
Canada wants more U.S. trade flexibility… Canada’s new chief trade negotiator to the U.S. said she wants to see “some mutuality” from Washington in recognition of “significant” concessions it’s already made to address President Trump’s grievances, as a review looms for the US-Mexico-Canada Agreement, said a Bloomberg report. “The Canadian government has made some very significant — I would describe them as concessions — moves already,” said Janice Charette in her first major public remarks since Prime Minister Mark Carney appointed her to the role on Feb. 16. She cited the removal of a digital sales tax on U.S. tech giants, the withdrawal of many retaliatory tariffs that former prime minister Justin Trudeau had put in place, and changes and investments to improve border security. “So far it’s being pocketed,” she said. “And I think it will be important for us to see some mutuality in terms of the negotiating process.”
Crude-oil-shipping constraints will linger for months after war ends… The impact on crude oil flows from the U.S.-Iran war will continue for months even after any deal to restore shipping through the Strait of Hormuz, the world’s largest oil traders have warned, according to Bloomberg. “Executives at some of the world’s largest oil traders warned that the rewiring of the oil market would take months even if a peace deal is agreed soon, and that prices will need to ratchet higher to the point of pushing the global economy toward a recession if the conflict continues. The oil market faces a guaranteed supply loss and executives and analysts warned that the oil market will come under growing strain if a resolution isn’t reached soon, with some saying that flows through the waterway may never return to normal,” said the report.
Big global oil firms raking in big profits… The world’s biggest energy traders are seeing high profits due to disruption to oil markets caused by the war in Iran, Bloomberg reported. “Several commodity traders, including Vitol Group and Trafigura Group, have reported some of their best-ever quarters, with profits driven by huge dislocations across energy markets. The profits have been driven by premiums on immediately-available cargoes of oil and fuel products, with some trades reportedly making profits of as much as $20 to $30 a barrel,” said the report.
Malaysian palm oil futures rally… Malaysian palm oil futures extended gains for a third straight session on Wednesday, holding near MYR 4,600 per MT, lifted by a softer ringgit and firmer edible oil prices in Dalian and Chicago markets. On the demand side, purchases from top buyer India may rebound after March shipments fell 19% mom, suggesting restocking ahead. Meanwhile, Malaysia is advancing toward a B15 biodiesel mandate from the current B10, with an interim target of B12. The move is expected to absorb 1–1-1/2 million MT of palm oil annually, tightening exportable supply, as Kuala Lumpur follows Jakarta in expanding blending mandates to reduce imported fuel dependence. However, the upside was capped by weak export estimates, with cargo surveyors reporting April 1–20 shipments down about 25.6%–25.8% from March, partly due to the absence of festive demand. Turning to China, another main consumer, authorities signaled imports of key commodities, particularly soybeans, could decline this year, weighing on edible oil demand.
Cattle futures see profit-taking, weak long liquidation… June live cattle on Tuesday fell $2.525 to $243.55 and hit a nearly three-week low. May feeders lost $2.55 to $358.55 and hit a three-week low. The cattle futures markets saw more technical selling pressure, including profit-taking and weak long liquidation, after recent losses have produced near-term chart damage. USDA at midday Tuesday reported very light cash cattle trading taking place so far this week at $246.00. Last week’s average cash cattle trade was $248.02. Cattle futures markets have seen price uptrends on the daily bar charts stall out. There are early chart clues to begin to suggest market tops are in place.
Lean hog futures see short covering, perceived bargain hunting…June lean hog futures on Tuesday rose $1.475 to $103.20. The hog futures market saw a solid short-covering and perceived bargain hunting today, after prices last Friday hit a four-month low. The latest CME lean hog index is down 14 cents at $90.37. Today’s projected cash index price is up 14 cents at $90.51. The national direct five-day rolling average cash hog price quote Tuesday was $70.80. June lean hog futures bears still have the overall near-term technical advantage. Prices are trending down on the daily bar chart.