Good morning!
Grain futures prices solidly lower overnight… As of 6:00 a.m. CST, July corn was down 9 1/2 cents. July soybeans were 8 cents lower. July soybean meal was up $1.40 and July bean oil was 190 points lower. July SRW wheat was down 16 1/4 cents and July HRW was off 16 3/4 cents. The grain market bulls have turned shaky at midweek. Corn traders are staring at a big and bearish double-top reversal pattern on the daily bar chart for July futures. July beans still see an uptrend in place on the daily chart. July winter wheat contracts see SRW and HRW having their price uptrends on the daily charts negated. Profit taking and weak long liquidation is also likely to be featured in the day session for the grains, amid the steep downdraft in crude oil prices. The key outside markets today see the U.S. dollar index lower, while Nymex WTI crude oil prices are strongly lower and trading around $92.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is 4.35%.
Latest on U.S.-Iran war…
--Axios reports U.S., Iran close to agreeing on one-page memo to end the war
--Global stocks rally, crude oil drops on Axios report
--Trump says “great progress” made to end the war
-- China urges reopening of Hormuz in talks with top Iran diplomat
--Gold gains over $125 on peace hopes
--U.S. retail gasoline prices average $4.50 a gallon, near all-time high
U.S., Iran nearing agreement to end war: report… The White House believes it’s getting close to an agreement with Iran on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations, according to two U.S. officials and two other sources briefed on the issue, in an exclusive Axios report. “The U.S. expects Iranian responses on several key points in the next 48 hours. Nothing has been agreed yet, but the sources said this was the closest the parties had been to an agreement since the war began. Among other provisions, the deal would involve Iran committing to a moratorium on nuclear enrichment, the U.S. agreeing to lift its sanctions and release billions in frozen Iranian funds, and both sides lifting restrictions around transit through the Strait of Hormuz. Many of the terms laid out in the memo would be contingent on a final agreement being reached, leaving the possibility of renewed war or an extended limbo in which the hot war has stopped but nothing is truly resolved,” said the report.
Stormy and cool weather over U.S. midsection and South … The National Weather Service today said a significant late-season winter storm is underway in the Rockies, with heavy snowfall expected to continue through tonight. Farther east, thunderstorms will continue throughout the day for much of the lower Mississippi Valley and southern Plains, with coverage expanding into the Southeast today. Thunderstorms have the potential to be strong to severe, bringing risks of strong winds, large hail, and an increased possibility of tornadoes. A cold front will continue moving southward, stretching from the southern Plains into the Gulf Coast and Mid-Atlantic. Below-average temperatures will continue expanding into the South as the cold front progresses. Above-average temperatures will resume in the Southwest today and continue for the next few days, while the Northwest remains unseasonably warm through the remainder of the period.
U.S. gasoline supplies expected to hit record low this summer… U.S. gasoline inventories are on pace to drop to historical seasonal lows by late summer, further straining a tight fuel market upended by the war in Iran, according to a Bloomberg report. “Stockpiles are expected to fall below 200 million barrels by the end of August, Morgan Stanley analysts wrote in a Monday note. The projections for record seasonal low fuel inventories are the latest indication that the global energy supply crunch appears set to continue for months to come.” Total gasoline inventories stood at 222 million barrels as of late April — the lowest for that time of year since 2014, according to the Energy Information Administration. “Meanwhile, high margins for diesel and jet fuel — supplies of which are running shorter as a result of the effective closure of the Strait of Hormuz — are incentivizing refiners to produce more of those fuels instead of gasoline. US gasoline exports have also remained elevated as foreign buyers snap up barrels that might otherwise be delivered to domestic markets.
Trump meets with Brazil’s Lula Thursday… President Trump will host Brazilian counterpart Luiz Inacio Lula da Silva Thursday, amid tensions over the Iran war and its impact on the global economy. “The working visit between the two leaders will include discussions on economic and security matters of shared importance, according to a White House official,” and as reported by Bloomberg. The two leaders have had a thorny relationship in the past as they clashed over trade, foreign policy and the fate of former Brazilian President Jair Bolsonaro — a Trump ally who was convicted of plotting a coup following his 2022 election loss to Lula. Trump leveled steep tariffs on Brazil, along with sanctions on a Supreme Court judge, last year in an unsuccessful bid to stop Bolsonaro’s trial, moves that handed Lula a popularity boost at home.
U.S. threatens European Union with tariffs on autos… U.S. Ambassador to the EU Andrew Puzder said Washington will implement 25% tariffs on cars and trucks from the European Union “relatively soon” if the bloc doesn’t swiftly ratify a long-delayed trade deal, Bloomberg reported. “Unless we see some substantial progress, I think you probably should expect those relatively soon,” Puzder told Bloomberg Television. President Trump recently vowed to slap 25% tariffs on European vehicles, accusing the bloc taking too long to ratify the agreement, which was initially reached last July. The EU, meanwhile, is frustrated over several Trump moves it argues undermine Washington’s commitments under the pact.
Bond traders ramp up bets Warsh Fed will raise U.S. interest rates… Bond traders are boosting wagers that the Federal Reserve’s next policy move could be an interest rate hike rather than a cut, according to a Bloomberg report. “Swaps linked to central bank rate decisions are currently pricing more than a 50% chance that the Fed raises rates by next April, before easing. A growing chorus of traders is also ramping up positions looking to hedge the prospect of rate-hike odds rising by the end of the year. The market shift comes as policymakers appear increasingly divided over the interest-rate outlook, just before Kevin Warsh takes over as Fed chair following a campaign by President Trump for lower rates,” said the report.
Malaysian palm oil futures prices weaken… Malaysian palm oil futures dipped around 1.5% to below MYR 4,700 per MT, reversing gains from the prior two sessions as traders took profits after prices hit a three-week high. Sentiment was further pressured by a stronger ringgit, alongside weaker soyoil prices on Chicago markets. Meanwhile, crude oil prices fell further after President Trump signaled a possible peace deal with Iran, easing energy market concerns. Demand weakness also weighed, with April imports by top buyer India tumbling 27% mom to a one-year low as elevated prices narrowed palm oil’s discount to rivals. Separately, cargo surveyors estimated April 1–25 exports fell 15.7%–16.8% from March, reflecting typical post-festive softness. Still, losses were cushioned by firmer edible oils on the Dalian Exchange as trading resumed after holidays. Meanwhile, Malaysia will roll out its B15 biodiesel mandate from June 1, up from B10, a move aimed at curbing fossil fuel imports and bolstering domestic palm oil demand.
Cattle futures bulls climb back in the saddle… June live cattle on Tuesday rose $1.475 to $253.225. August feeder cattle gained $5.225 to $371.825. The live cattle futures markets bulls climbed back into the saddle Tuesday, after a couple sessions of routine profit taking. Supply and demand fundamentals remain bullish USDA at midday Tuesday reported very light cash cattle trading taking place at an average price of $255.00. USDA Monday reported last week’s average cash cattle trading price at $255.02. That’s $8.84 above the prior week’s average cash cattle price.
Lean hog futures see short-covering bounce… June lean hogs on Tuesday rose $1.675 to $101.425 and scored a 4.5-month low early on. The hog futures market saw short covering following recent price pressure. Still, the near-term chart posture for June hogs has deteriorated, to suggest more selling from the speculators in the near term. Prices are in a downtrend on the daily bar chart. Gains in the cattle futures markets Tuesday also supported some buying interest in hogs. The latest CME lean hog index is down 11 cents at $91.30. Today’s projected cash index price and the national direct cash hog price on Tuesday were not available due to packer submission problems.