Good morning!
Grain markets mixed to weaker overnight… As of 6:00 a.m. CDT, December corn futures were down 1 1/2 cents and hit a contract low overnight. November soybeans were up 2 1/4 cents and December winter wheat futures were 2 to 4 cents lower and hit fresh contract lows overnight. The grain market bulls are sliding off a slippery slope amid price downtrends in place that have also seen prices fall below what were important near-term technical support levels. The chart-based bears are now licking their chops and looking to pile on. The key outside markets today see the U.S. dollar index up a bit. Nymex crude oil prices are down and trading around $65.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.21 percent.
Weekly USDA crop progress: corn, beans looking good down the stretch… USDA Monday afternoon rated the 2025 U.S. corn crop in 73% good/excellent condition, unchanged from last week. Corn silking is 88% compared to 86% last year and an 89% five-year average. The corn is 42% dough compared to 44% last year and 40% average. Corn is 6% dented compared to 6% last year and 6% average. “The corn condition held steady last week, which is actually a good thing this time of the year, when the corn condition normally declines,” said Pro Farmer crop consultant Michael Cordonnier. “The gap between this year’s condition and the long-term average continues to widen.” The condition of the 2025 U.S. soybean crop declined 1%, to 69% rated good/excellent. “The soybean condition increases one week and declines the next week. The bottom line is that the crop continues to be rated a little better than the long-term average,” said Cordonnier. His 2025 U.S. corn yield estimate was unchanged this week at 182.0 bu/ac, with a neutral bias going forward. “The hot and humid weather during July was generally beneficial for the corn, except for isolated pollination issues, but good July rains have probably offset any losses from poor pollination.” Nighttime temperatures during July were warmer than normal and the third highest since 2000, behind only 2011 and 2012. Cordonnier’s 2025 U.S. soybean yield was left unchanged this week at 52.5 bu/ac, with a neutral bias going forward.
Smoky skies over the Midwest, Northeast… The National Weather Service has issued air quality alerts over the upper Midwest and parts of the Northeastern U.S. due to Canadian wildfires. Meantime, showers and some severe thunderstorms are likely over parts of the Northern Plains the next day or so. Upper-level energy will produce showers and thunderstorms over parts of the Ohio/Tennessee Valleys, as well as the Northeast on Tuesday. The front moving across the Northern Plains on Wednesday will produce showers and strong to severe thunderstorms over parts of the Northern/Central Plains and Upper Mississippi Valley. There is a marginal risk of severe thunderstorms over parts of the Northern/Central Plains and Upper Mississippi Valley from Wednesday into Thursday morning. Moderate to heavy rain is expected, with thunderstorms over the Upper Midwest. There is a marginal risk of excessive rainfall over parts of the Upper/Middle Mississippi Valley and Upper Great Lakes from Wednesday through Thursday morning.The associated heavy rain will create localized areas of flash flooding.
New U.S. tariff rollout details… President Trump’s expanded reciprocal tariffs will not apply to products loaded onto vessels for transport into the U.S. before 12:01 a.m. New York time on Thursday. Expected exemptions from the tariffs include products under the U.S.-Mexico-Canada free trade agreement and relief items like food, clothing and medicine. The average U.S. tariff rate will rise to 15.2% if rates are implemented as announced, according to Bloomberg Economics.
India pushes back on U.S. tariff threats… India rebuffed criticism from the U.S. and EU over its Russian oil imports, calling the criticism “unjustified and unreasonable.” Indian Foreign Ministry spokesperson Randhir Jaiswal said on Monday the purchases of Russian oil were crucial for maintaining affordable and stable fuel prices for Indian consumers. The pushback followed President Trump’s threat to impose steep tariffs on India for trading in Russian oil. Jaiswal added that India turned to Russian oil only after the Ukraine war disrupted traditional supply chains, with many suppliers shifting focus to Europe.
Some optimistic economic news from China… China’s services activity unexpectedly grew in July to the fastest pace in over a year, indicating resilience in the sector during the summer travel season. The S&P China services purchasing managers’ index rose to 52.6 from 50.6 in June, marking the strongest expansion since May of 2024. The result beat the median forecast of 50.4 from economists surveyed by Bloomberg. Summer is typically a peak season for Chinese services such as tourism, transportation and entertainment. Increased travel and a more stable trade environment drove the fastest rise in export orders since February, the index suggested. Despite the improvement, it remains unclear if China’s sluggish consumer sentiment is improving. A central bank survey said Chinese citizens’ perception of the jobs market fell to the lowest level ever in the second quarter. Results of this private survey contrasted with the official PMI, which showed services activity weakened in July, with a gauge falling to 50.0 from 50.1 in June. A reading above 50.0 indicates expansion.
Crude oil under pressure from oversupply concerns… Nymex crude oil futures fell below $66 per barrel at one point overnight, marking a fourth straight session of losses. There are growing worries about a global supply glut following the OPEC-plus decision to increase oil output. Over the weekend, OPEC agreed to boost its collective production by 547,000 barrels per day in September, completing the reversal of a 2.2 million-barrel-per-day cut made by cartel member countries in 2023.The OPEC production cuts are trumping the specter of reduced Russian crude oil sales abroad due to tightened sanctions being threatened by the U.S., especially on Indian purchases of Russian oil.
Buckle up, stock market investors… Bloomberg today reports “a chorus of stock market prognosticators at some of Wall Street’s biggest firms is warning clients to prepare for a pullback as sky-high equity valuations slam into souring economic data.” Morgan Stanley, Deutsche Bank AG and Evercore ISI all warned the S&P 500 stock index is due for a near-term drop in the weeks and months ahead. These forecasts follow a strong stock-market rally from April’s lows that pushed prices to record highs last week. Morgan Stanley’s Mike Wilson sees a correction of up to 10% this quarter. Evercore’s Julian Emanuel expects a more substantial decline of as much as 15%. Deutsche Bank’s team, led by Parag Thatte, said a small drawdown in equities is overdue. History shows the months of September and October can be rocky for stock market investors.
Palm oil prices rally… Malaysian palm oil futures rose over 1.5% to above MYR 4,250 per MT Tuesday, rebounding from losses in the prior session amid strength in rival Dalian oils and bargain hunting after prices neared a three-week low. Sentiment was lifted by hopes for an extension of the current U.S.-China trade truce. However, further palm oil futures gains were limited by a stronger ringgit and news that India’s palm oil imports fell 10% in July from June’s 11-month high, due to contract cancellations.
Cattle bulls out of the chute strong this week… The cattle futures markets Monday saw some speculator buying interest amid cash and beef market fundamentals that are still solid. Live cattle futures’ steep discounts to the cash market continue to limit selling interest, even at elevated price levels. USDA’s official cash cattle average trading price last week was $243.17, which is a record high and compares to $239.38 for the average cash trade the week prior.
Lean hog futures firm but cash hog index weakening… The lean hog futures market saw some fresh technical buying interest from the speculators Monday. August lean hog futures’ discount to the cash hog index also supported futures. The latest CME lean hog index is down another 11 cents to $110.26 as of July 31. Today’s projected cash hog index price (for Aug. 1) is down 27 cents at $109.99. The national direct five-day rolling average cash hog price quote Monday was $112.90.
Today’s reports—Tuesday
--1:00 pm Livestock and Meat Domestic Data
--2:00 pm Egg Products