Good morning!
Grain futures prices mostly weaker overnight… At 6:00 a.m. CST, December corn was down 1 3/4 cents and hit a three-week low. November soybeans were 6 cents lower and hit a three-week low. September soybean meal was down $1.90. September bean oil was 2 points lower. September SRW wheat was up 1 cent and hit a three-week low early on. September HRW wheat prices were 2 1/4 cents lower and hit a three-week low. The grain market bulls stumbled badly last week, including Friday’s technically bearish weekly low closes, to suggest the summertime rallies have run their course. Wetter weather forecasts for the drier western Corn Belt are bearish for corn and soybean prices. It’s likely going to take a U.S. soybean crop weather market scare in August to reignite bullish enthusiasm in soybeans, which then could spill over into better buying interest in wheat and corn. The Pro Farmer crop tour later this month is coming into grain trader focus. On tap today is the weekly USDA export inspections report this morning and the weekly USDA crop progress reports this afternoon. USDA will also release its monthly crush report this afternoon. The key outside markets today see the U.S. dollar index slightly lower. September Nymex WTI crude oil prices are sharply down and trading around $80.25 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.7%.
U.S. halts military action against Iran as Iran says progress made on opening Hormuz… Iran suggested negotiations to get more ships moving through the Strait of Hormuz are making progress, after President Trump called off what he said was a major attack on the Islamic Republic. Crude oil fell today, with Brent crude down about 4.5% to just over $83 a barrel and Nymex crude down about $4.00 and trading around $80, after Iran’s foreign minister, Abbas Araghchi, said discussions between Tehran and Oman over management of the strait are in the final stages, according to Bloomberg. Trump said Sunday that a deal to open the waterway may be close and that new unspecified talks with Iran would begin on Monday. “Still, there’s little clarity on the Iran-Oman negotiations and no sign the Islamic Republic is willing to allow vessels free passage through the waterway, which Trump has demanded. Instead, Iran said it’s talking to Oman about a new route and not about whether the strait as a whole will be open or closed,” said the report. Last week, Bloomberg reported that Muscat and Tehran were discussing reopening the so-called middle passage through Hormuz. It has, however, been mined by Iran, according to people familiar with the matter, and could have to be cleared before vessels use it on a regular basis. Trump said he had canceled U.S. strikes after lobbying from Iran and Middle Eastern countries.
Scattered rains across Midwest, Plains and eastward early this week… The National Weather Service today said a front over the Northern Plains into the Great Basin today will move slowly eastward to the upper Great Lakes, the central/southern Plains and then into the southern Rockies by Wednesday morning. The boundary will trigger showers and severe thunderstorms over parts of the upper Mississippi Valley and Northern Plains today. There is a slight risk (level 2/5) of severe thunderstorms over parts of those regions today through Tuesday morning.Showers and thunderstorms will also develop over the upper Great Lakes/middle Mississippi Valley into the central Plains Tuesday and Wednesday. Additionally, showers and thunderstorms will extend over the eastern and central part of the country Tuesday into Wednesday. Monsoonal moisture will produce showers and thunderstorms with heavy rain over parts of the Southwest through Wednesday morning.
Total New World screwworm cases detected in U.S. at 44… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is now reporting 44 total New World screwworm detected cases in the U.S. and all in Texas and New Mexico. There are eight active cases, all in Texas.
Fort Morgan, Colorado beef packers to vote this week on ending walkout… The teamsters local 455 union votes early this week on a tentative agreement reached last week with Cargill covering more than 1,700 workers at the Fort Morgan, Co. beef plant. “The multinational company worth nearly $60 billion is still offering workers a raise of $2.15 an hour, just as they did in May when workers rejected the deal. But this time, the pay increases are frontloaded in the proposed five-year deal, so workers don’t have to wait so long to see bigger paychecks. That was at least enough to get the union to bring the offer up for a vote by members, which will take place this week. A final agreement is no sure thing,” said a report from Colorado Public Radio. “The new proposal represents workers’ best chance to resume their jobs before the end of August,” the report said.
Heat wave in China this week may damage crops… China’s corn, rice and cotton fields are at heightened risk of crop damage in the coming days as a heat wave sweeps through key agricultural regions in the country’s north and east, Bloomberg reports. High-pressure weather systems will lead to hotter-than-normal conditions this week, according to commercial forecaster Vaisala, with Shenyang in the northeastern province of Liaoning seeing highs of 95F to 100F through Thursday. Beijing will see high temperatures into the weekend. The provincial climate center for Shandong, which accounts for 10% of China’s corn production, warned last week that sustained high temperatures will persist through at least Aug. 5 and may crimp yields of the summer corn crop. High humidity caused by moist monsoonal flows could also raise the risk of crop diseases, it added. Further north, officials in Liaoning – which contributes some 7% of national corn output – have also expressed concern. “Major crops such as corn and rice are currently in their critical growth stages, and soil moisture loss is accelerating on sloping hills and sandy areas,” the city government of Jinzhou, a city in the province, said Friday. Separately, Vaisala meteorologist Kyle Tapley also said there was potential for heat stress on corn and soybean crops in Liaoning and Inner Mongolia. Scorching heat is set to take hold in Xinjiang too, the autonomous region of northwest China where almost all of the country’s cotton is grown. In an early-warning notice last week, the regional climate center forecast widespread high temperatures through Aug. 11. “Sustained high temperatures could negatively impact corn grain filling, cotton boll growth and fruit enlargement, leading to stunted development, sunburn and premature ripening,” the Xinjiang Uygur Autonomous Region Climate Center said in a bulletin and as reported by Bloomberg. The ongoing heat and drought may cut Xinjiang’s cotton production by as much as 5% this month, according to commercial forecaster Marcus Weather Inc.
OPEC+ to slightly raise its collective crude oil production… Major OPEC+ nations over the weekend approved a small increase to their production quotas, a move that will complete the theoretical revival of supplies halted in 2023. The group agreed to boost their collective target by another 188,000 barrels a day next month, which may give Saudi Arabia leeway to raise production once oil flows from the Persian Gulf return to normal. An eventual supply boost by OPEC+ could help to rekindle a surplus that was expected to hit the oil market this year prior to the Iran war and help to replenish the world’s depleted stockpiles, said a Bloomberg report. Meantime, high fuel prices are likely to stick around even if oil prices drop due to global refining capacity being critically short, according to ExxonMobil Holdings Corp. and Chevron Corp and as reported by Bloomberg. Nearly 10% of the world’s ability to refine crude oil is effectively offline, causing refineries to run flat out to meet demand and resulting in record-high fuel-making margins. “The constraint on refining capacity is expected to continue, with ExxonMobil CEO Darren Woods saying it will take a while for the industry to climb out of the hole and Chevron CEO Mike Wirth warning of upward pressure on product pricing,” said Bloomberg.
Ukraine drones continue to hit Russian oil infrastructure… Ukrainian forces struck Rosneft PJSC’s refinery in Russia’s Saratov this weekend, resulting in a fire at the facility. The attack also targeted Engels airfield in the Saratov region, a critical operating hub for Russian warplanes, and caused damage to civilian infrastructure and killed two people. The intensified strikes on Russia’s refineries threaten to disrupt fuel supplies in Russia again, after many regions had increased limits for gasoline and diesel sales at filling stations or lifted them after a period of shortages.
U.S., Japan intervene in foreign exchange market to defend yen… The U.S. and Japanese governments defended the yen in the first joint action to support the yen in 15 years, with warnings they won’t “hesitate” to move again, underscoring their unprecedented determination to defend the Asian currency. “It’s still unclear how much Washington spent to help lift the yen from its four-decade low. But the currency’s rebound points at interventions larger than in 1998 and 2011, when U.S. contributions didn’t surpass the $1 billion mark. Japan alone is estimated to have spent $53 billion on Thursday — a likely single-day record,” said a Bloomberg report. Treasury Secretary Scott Bessent publicly vowed on X that the US “will not hesitate” to wade back into the market, if needed. On Monday morning, Japanese Finance Minister Satsuki Katayama confirmed their joint campaign — sending a clear signal Tokyo had a powerful partner in its bid to strengthen the currency. South Korean officials also appeared to be part of the coordination. The yen gained as much as 1.4% versus the dollar during morning trading in Tokyo, as that message was digested. “Speculation is now emerging of further joint moves. Expectations are rising for both the Federal Reserve and Bank of Japan to raise interest rates in September, after the central bank in Tokyo held its benchmark rate on Friday but flagged inflation risks ahead,” said Bloomberg.
Key U.S. jobs report on Friday expected to show growth in July… Economists estimate the monthly jobs report from the U.S. Labor Department will show an 85,000 increase in non-farm payrolls after the 57,000 gain reported in June, with the unemployment rate holding steady at 4.2%. However, “the labor market appears less stable than the headline unemployment rate suggests, with temporary hiring associated with the FIFA World Cup likely to reverse, leading to declines in leisure and hospitality employment. Investors will have a slew of other labor market data to parse this week, including job openings, ADP Research’s estimate of private-sector payroll growth, and applications for unemployment insurance,” said Bloomberg.
“Warsh’s Silent Treatment Has S&P Traders Bracing for Wild Swings”… That’s the headline of a weekend story from Bloomberg. “A Federal Reserve that won’t tell investors what it’s thinking has challenged investors, with Fed Chairman Kevin Warsh finishing his FOMC press conference last Wednesday without giving guidance on interest rates. Traders were spooked, triggering a wild final hour of trading on Wednesday, with the S&P 500 Index plunging to its worst sell off on a Fed decision day since December 2024. Investors want a ‘higher uncertainty premium’ to cover the risk that the central bank waits too long to act on inflation, with some saying the Fed’s lack of guidance is exacerbating risks in an already volatile market,” said the report. “A relentless run of uncertainty, from war to tariff fights to inflation that refuses to die, has challenged investors this year. Now they have to balance another risk: A Federal Reserve that won’t tell them what it’s thinking.”
Malaysian palm oil futures firmer… Malaysian palm oil futures inched higher to trade around MYR 4,650 per MT, recovering from recent weakness amid a softer ringgit and firmer rival edible oils on the Dalian and Chicago exchanges. Sentiment was further lifted by stronger export prospects, with cargo surveyors estimating Malaysian palm oil shipments in July rose between 12.1% and 19.5% from the same period in June. Prices also drew support from higher biodiesel blending mandates in Indonesia and Malaysia, weather-related risks to Malaysia’s 2027 output, and expectations of stronger imports by the world’s largest importer, India, between July and October ahead of the festive season. In China, another key buyer, the central bank pledged to maintain ample liquidity after last week’s Politburo meeting, raising hopes for firmer demand. However, gains remained limited as Dalian palm olein softened and crude oil prices eased after U.S. President Trump refrained from launching a fresh attack on Iran.
Cattle futures bulls enter trading this week with confidence market bottoms in place… August live cattle futures on Friday rose $0.525 to $231.75, hit a two-week high and for the week were up $4.50. August feeders gained $1.55 to $348.025 and for the week up $2.70. The cattle futures markets Friday saw more short covering and perceived bargain hunting from the speculators. Last week’s price gains in the cattle futures markets, including Friday’s technically bullish weekly high closes, begin to suggest price bottoms are in place. USDA at midday Friday reported active cash cattle trading, with steers averaging $232.77 and heifers $230.13. The agency reported average cash cattle trading the week prior was $230.48.
Lean hog futures bulls work to stop the bleeding… August lean hog futures on Friday rose $0.425 to $98.85 and for the week were down $4.00. The hog futures market saw a mild corrective rebound Friday but suffered strong losses last Wednesday and Thursday that produced near-term technical damage to suggest a price top is in place. The cash hog market is also looking toppy. The latest CME lean hog index is down 1 cent to $98.44. Today’s projected CME index price is down 21 cents at $98.23. The national direct five-day rolling average cash hog price quote for Friday was $101.14. The weakening CME lean hog index may signal a seasonal top as summer demand softens and supplies typically build into fall.