Good morning!
Grain futures lower overnight as crude oil sinks… At 6:00 a.m. CDT, July corn was down 4 3/4 cents and scored another new contract low. July soybeans were down 4 1/4 cents and hit a 4.5-month low. July soybean meal was up $1.70 and also hit a 4.5-month low early on. July bean oil was 141 points down. July SRW wheat was down 9 cents and hit a four-month low. July HRW was 9 1/4 cents lower. The grain markets are being hit hard today by the big drop in crude oil futures prices, on news of the U.S.-Iran peace deal. Growing weather for most of the U.S. corn and soybean crops also remains very good and that’s price-bearish. Extended Midwest weather forecasts into early July are not showing any problems. On tap today are the weekly USDA export inspections and weekly crop progress reports. Also, the monthly NOPA crush report is out today. The key outside markets today see the U.S. dollar index lower, while Nymex WTI crude oil prices are sharply down, hit a two-month low and are trading around $80.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.45%.
Latest on U.S.-Iran war, including new peace deal reached…
- U.S., Iran reach peace deal, to be signed Friday; details thin so far
- Strait of Hormuz set to reopen to shipping
- Pakistan to host U.S.-Iran peace deal event in Geneva
- Nymex crude oil down sharply, near $80/barrel on peace deal
- Global stock markets rally on peace deal
- Shipowners seek clarity on Hormuz deal as waiting flotillas grow
The U.S. and Iran reached an interim agreement to reopen the Strait of Hormuz, halting their war in the Middle East. Officials from the two countries will meet Friday in Switzerland to formally sign the agreement, with key sticking points left for the next stage of talks, including the removal of sanctions and financial incentives for Iran. The agreement could bring peace and security to the region, but its details remain unresolved, and both sides are casting the deal in different lights, underscoring the difficulties that may lie ahead in resolving outstanding issues. Even as he celebrated the deal, Trump told the New York Times in an interview Sunday that if an agreement on Iran’s nuclear program isn’t reached, he could restart military attacks.
New World screwworm cases detected in U.S. now total 12… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website now reports 12 total New World screwworm detected cases, in Texas and New Mexico. “U.S.’s screwworm fix is still a year away, risking more spread.” That’s a weekend news headline from Bloomberg. “The U.S.'s key tool for suppressing the New World screwworm, a facility that breeds sterile flies, isn’t slated to begin operating until November 2027,” said the report. “The U.S. currently has only a fraction of the sterile flies needed to mount an effective response, with a facility in Panama producing 100 million insects a week and another plant in Mexico expected to come online soon. The U.S.’s best weapon against a deadly cattle parasite threatening the beef industry is more than a year away from showing meaningful results, raising concerns over how far the outbreak could spread before then,” said the Bloomberg report.
JBS to shut Pennsylvania meat plant: JBS, the world’s largest meatpacker and the largest U.S. beef processor by volume, announced Friday it plans to close a plant in Souderton, Pennsylvania, in response to short cattle supplies. The Wall Street Journal said the single-shift plant employs about 1,700 people and can slaughter roughly 2,000 cattle a day – making it one of the company’s smaller facilities. JBS is also planning to close a smaller meat packaging plant in Memphis that employs about 200 people, the report said, while maintaining plans for a $150 million investment in its much larger Cactus, Texas, beef plant.
Cooler weather in eastern two-thirds of U.S. this week… The National Weather Service today said a weather pattern favoring cold air intrusions from Canada is bringing a refreshingly cool airmass into much of the eastern two-thirds of the country. Temperatures behind the front will drop into the 40s and 50s from the northern and central Plains to the Great Lakes this morning, spreading into the Northeast by Tuesday morning. High temperatures will only recover to the 70s and lower 80s, which are more than 10 degrees below normal for portions of those areas. As the cool air mass dominates the weather pattern across much of the central and eastern U.S., the stage is set for a prolonged heavy rainfall event from south Texas through the lower Mississippi Valley.Across the northern tier of states, a couple of quick-moving low-pressure systems will deliver some showers and gusty winds through the next couple of days. The first system will move from the northern Plains today to the Great Lakes on Tuesday.The second system is forecast to be the stronger of the two, and will be intensifying over the northern Plains Wednesday morning.
Trump to meet with G-7 leaders in France early this week… President Trump will meet with U.S. partners in the Middle East at the Group of Seven leaders’ summit in France early this week, underscoring the outsize role the war in Iran continues to play as European allies grapple with the global economic fallout. Trump will hold bilateral meetings with the leaders of France, Qatar, the United Arab Emirates, Egypt as well as India, according to the White House. India and the Middle Eastern countries are not part of the Group of Seven. The U.S. president is expected to focus on economic development and security, supply chain resilience, artificial intelligence, regulatory streamlining and energy abundance, the officials said. The meeting at Évian-les-Bains from June 15 to June 17 comes at a time of growing tensions between the U.S. and many of its largest economic and security partners.
Major central banks likely to keep their rates steady this week…”For several global central banks, the question of whether the Iran war poses more of an immediate danger to inflation or to growth is likely to remain open in the coming week,” Bloomberg reports. “Officials responsible for monetary policy in seven of the world’s most-traded currency jurisdictions are mostly anticipated to keep settings steady again. A well-flagged rate hike from the Bank of Japan to continue its exit from low borrowing costs and a close call in Norway are likely exceptions, but the U.S. Federal Reserve and its peers from the U.K. to Sweden are widely expected to make no major monetary policy changes. However, “a sense of divergence within the club of advanced economies is already crystallizing after the European Central Bank last week delivered its first interest-rate increase since 2023. Peers in Norway and Australia have already raised rates, although they’re seen likely to feel no urgency to do so again. Meanwhile, the Swiss National Bank, whose policy is impacted by safe-haven flows into the franc, will probably keep its own rate at zero,” said the Bloomberg report.
U.S.-Canada trade discussions remain active… Canadian Prime Minister Mark Carney said Trump administration officials have been clear that they don’t want to trigger a vote in Congress by changing the “fundamental architecture” of the North American free trade deal. The three countries in the United States-Mexico-Canada Agreement are currently holding separate, bilateral talks on a variety of trade matters because no side wants to make sweeping changes to the existing deal. Carney said there are still active discussions happening between Canadian and American trade officials, and Canadian minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer have seen positive movement on several issues.
Traders remain bullish the greenback… Traders turned the most optimistic on the U.S. dollar in more than a year as the war in the Middle East supports the currency’s status as a haven. Hedge funds, asset managers and other speculators accumulated $27.8 billion worth of bets that the dollar will strengthen as of June 9. Speculative traders have been holding bets on a stronger US currency for the past 13 weeks, according to the latest Commodity Futures Trading Commission (CFTC) weekly commitments of traders data, released Friday. That marks a shift from before the war when traders had about $22 billion of wagers tied to a weaker greenback. “The fundamental picture continues to point in the bullish direction for the dollar,” said Alex Cohen, a foreign-exchange strategist at Bank of America, according to Bloomberg.
CFTC may nix CME’s 24-hour crude oil futures trading… The U.S. Commodity Futures Trading Commission is considering whether to block CME Group Inc.’s bid to launch a round-the-clock oil contract, heightening tensions between the market stalwart and its regulator, Bloomberg reported. CME Group Inc. announced last Thursday that it would debut 24-hour, seven-days-a-week trading in some crude and gold futures contracts. The news caught the U.S. derivatives regulator by surprise, a senior agency official said, who asked not to be identified discussing confidential deliberations, said the report. “Round-the-clock trading may not be suitable for crude oil because it could worsen already extreme volatility during periods of geopolitical stress, the official said, adding those concerns may justify withholding approval for the contract. A CME spokesperson declined to comment. The new oil-linked contract, which would be one-tenth the size of the existing Micro WTI futures contract, is slated for release on Aug. 30. The exchange wants to start round-the-clock trading in 1-ounce gold futures on July 26. Both products require regulatory review.
Malaysian palm oil futures sell off… Malaysian palm oil futures fell further Monday, hovering below MYR 4,500 per MT and hitting their lowest level in three weeks, pressured by a stronger ringgit and weakness in rival edible oils on the Dalian and Chicago exchanges. Sentiment was further dampened by a sharp drop in crude oil prices, which retreated to their lowest since March, after the U.S. and Iran reached an initial deal to end hostilities and reopen shipping through the Strait of Hormuz. Meanwhile, Malaysia’s lower July crude palm oil reference price kept export duty at 10%, offering little support to exports. Still, losses were capped by firmer demand, with cargo surveyors noting shipments during June 1–10 rose between 3.5% and 4.9% from May. Weather risks also lent support after Kuala Lumpur warned El Niño could cut yields by 8%–10% this year. In top buyer India, palm oil imports edged higher in May from April’s four-month low but stayed below normal as refiners favored cheaper soyoil amid palm oil’s narrowing premium.
Cattle futures markets see corrective price pullbacks amid choppy trading… August live cattle futures on Friday fell $1.50 to $241.175 and for the week were down 47 1/2 cents. August feeder cattle futures lost $2.225 to $357.425 and for the week were up $3.525. The cattle futures markets have turned choppy lately as traders digest the potential ramifications of New World screwworm on the U.S. cattle industry. On up days in futures prices, it appears the potential for less cattle supplies coming to market come to center-stage. On down days in cattle futures markets, the keen uncertainty regarding the NWS matter, including consumer attitudes toward NWS, seem to prevail. Uncertainty is generally bearish in raw commodity markets. Cash cattle trading at midday Friday was still light, with USDA reporting that steers were averaging $254.15. That compares to the prior week’s USDA-reported cash cattle trading average of $256.53.
More short covering in lean hog futures… August lean hog futures on Friday rose $0.45 to $96.35, near mid-range and for the week down 87 1/2 cents. The lean hog futures market saw tepid short covering in a bear market. Chart-based specs are still primed to play the short side in the near term as a price downtrend remains firmly in place on the daily bar chart. The latest CME lean hog index is down 2 cents to $92.90. Today’s projected CME index price is down 15 cents at $92.75. The national direct five-day rolling average cash hog price quote for Friday was $96.73.