Good morning!
Grain futures rally overnight… At 6:00 a.m. CDT, December corn was up 13 1/4 cents and hit a four-week high. November soybeans were up 34 1/4 cents and hit a four-week high. September soybean meal was up $6.40 and hit a four-week high. September bean oil was up 106 points. December SRW wheat was up 10 1/2 cents and hit a two-week high. December HRW was 8 1/4 cents higher and hit a two-week high. History shows the few trading days right after the Fourth-of-July holiday can be price-pivotal for the grain markets, especially corn and soybeans. And after the three-day holiday weekend the bulls are out of the chute snorting today, led by corn and soybeans. An intense heat wave continues in France, one of the European Union’s largest corn producers. The FranceAgriMer agency reported deteriorating crop conditions after preliminary estimates indicated extreme heat may have damaged nearly one-third of the country’s corn crop. Meantime, World Weather Inc. said in a Sunday evening dispatch that while U.S. rainfall during the holiday weekend was heavy to excessive from central through eastern Iowa, southwestern Wisconsin and northern Illinois, soil moisture as of Sunday was showing signs of drying down in the lower Midwest as well as the central and northeastern Plains. Rain this week “will be restricted in quite a few areas, resulting in additional drying, especially with temperatures staying warm. Rainfall next week may be most limited in the southwestern corn and soybean belt, although there may be some lighter-than-usual rain in the northwest part of the region as well,” said the forecaster. The key outside markets today see the U.S. dollar index higher. August Nymex WTI crude oil prices are slightly weaker and trading around $68.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.46%.
New World screwworm cases detected in U.S. stand at 30 over the last 30 days… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is reporting 30 total New World screwworm detected cases in the U.S. the past 30 days. There are now 18 active cases, all in Texas.
Dangerous heatwave in eastern U.S. beginning to contract… The National Weather Service today said the footprint of the oppressive heat that affected portions of the central and eastern U.S. last week will continue to contract through early this week as seasonable to below-normal temperatures spread across much of the Northeast, Mid-Atlantic, and Ohio Valley. Severe thunderstorms are possible over parts of the upper Midwest/Northern Plains into Wednesday morning. Elsewhere, an influx of moisture over the Great Basin will trigger showers and thunderstorms from late afternoon into the late evening on Monday and Tuesday.
OPEC+ to raise its collective crude oil output, prompting talk of glut… Major OPEC+ members agreed in a video conference Sunday to add 188,000 barrels a day to their output target for next month. The increase is part of the group’s plan to finish reversing output curbs made a few years ago and means they’ve added 940,000 barrels a day to quotas since the war began. OPEC and its partners could soon face a choice between restraining output or fighting over market share — a potential price war — as some forecasters predict the re-emergence of a global crude oil glut. ”The dramatic switch from famine to feast means that worries of an oil-led inflation spike are all but vanquished, and major oil producers may soon face questions about whether they are ready to curb supply to prop up prices,” said a Bloomberg report. “Analysts have warned that the market is at risk of a glut heading into next year, with the physical oil market flashing signs of weakness and suppliers struggling to find buyers for their oil.”
Lighter U.S. data week features Fed minutes, Treasury auctions… The U.S. bond market faces a test of investor demand for longer-dated maturities, with auctions of 10- and 30-year Treasuries. The Treasury’s $119 billion week of auctions kicks off Tuesday with 3-year notes, followed by the sale of benchmark 10-year notes and 30-year bonds. Investors will also be watching the release of minutes from the June Fed FOMC meeting for insight into officials’ hawkish shift under new Chairman Kevin Warsh.
Investors turning away from U.S. stocks: Bank of America… Investors are turning away from U.S. stocks at the fastest pace since March, according to Bank of America Corp and as reported by Bloomberg. The country’s stock funds had $17.2 billion outflows in the week through July 1, the team led by Michael Hartnett wrote in a note, citing EPFR Global data. Investors turned to some international stocks instead, with Japanese equities seeing their biggest inflows in seven weeks at $1.9 billion. The mood around U.S. stocks is turning after a strong start to the year in terms of fund flows. Last week, American equity funds registered their first redemptions in three months. “Skepticism around high artificial-intelligence valuations continued to roil chip stocks, with the Philadelphia Semiconductor Index dropping 11% over the past two sessions, the report said.
Malaysian palm oil futures rally… Malaysian palm oil futures jumped over 1% to above MYR 4,500 per MT Monday, halting a recent losing streak as a weaker ringgit and firmer edible oils in China’s Dalian and Chicago markets boosted sentiment. Bargain buying also emerged after prices hit a two-week low last week. Stronger export demand provided further support, with cargo surveyors estimating July 1–5 shipments rose between 10.6% and 11.1% from the same period in June. However, some traders adopted a cautious approach ahead of the Malaysian Palm Oil Board’s monthly report later this week. Attention also turns to June CPI and PPI in China, another major buyer, for demand cues. Separately, a Reuters poll suggested inventories likely hit a June record as output outpaced consumption. In top buyer India, imports fell to a 14-month low amid sluggish demand and narrowing discounts versus rival oils.
U.S. beef exports to China set to rise… China’s decision to renew import licenses for U.S. meat plants has yet to revive the beef trade, but the odds of more shipments in the second half of the year are improving, said a Bloomberg report. China’s slowing economy and austerity measures have sapped demand for premium cuts of meat. “The U.S. still has a large quota allowance intact, giving it a big advantage, as Australia has run out of quota and Brazil is close to using up its allowance, with Chinese quotas allocated to other major suppliers dwindling,” said the report. “I think there’s still a lot to look forward to when it comes to U.S. beef exports to China in the second half of the year,” Alice Xuan, analyst with Shanghai JC Intelligence, told Bloomberg.
Cattle futures bulls are fading… August live cattle futures last Thursday fell $2.60 to $239.225, hit a three-week low and for the week were down $6.60. August feeder cattle futures lost $3.525 to $360.625 and for the week down $9.225. The cattle futures markets bulls faded badly in the holiday-shortened trading week, including technically bearish weekly low closes Thursday, which set the stage for follow-through chart-based selling pressure early this week. Lower cash trade late last week also pressured futures prices. Cash cattle trading turned moderately active as of midday Thursday, with USDA reporting steers averaging $255.25 and heifers $255.35. That compares to the week prior’s USDA-reported cash cattle trading average of $259.34.
Lean hog futures bulls gaining traction... August lean hog futures last Thursday rose $1.70 to $96.75 and for the week up $2.175. The hog futures market posted a strong rebound after moderate price pressure last Wednesday, to produce a technically bullish weekly high close that keeps the chart-based bulls energized heading into trading this week. Bulls are keeping alive a fledgling price uptrend on the daily bar chart. The latest CME lean hog index is up 24 cents to $91.48. Today’s projected CME index price is up 18 cents at $91.67. The national direct five-day rolling average cash hog price quote for Thursday was $96.98.