Good morning!
Grain futures extend rallies overnight… At 6:00 a.m. CDT, December corn was up 4 cents and hit a two-month high. November soybeans were up 4 3/4 cents and hit a 3.5-year high. September soybean meal was up $0.50. September bean oil was 65 points higher and hit a six-week high. September SRW wheat was up 2 cents and hit a contract high. HRW wheat prices were steady and not far below Wednesday’s contract high. The bull-market runs in the grain markets continue amid global shipping worries and high heat in the U.S. Plains/western Corn Belt and western Europe—and spiking crude oil prices. However, something is now occurring that has the veteran grain market bulls at least a bit worried. (See item below.) The key outside markets today see the U.S. dollar index slightly up. August Nymex WTI crude oil prices are surging, hitting a two-month high and trading around $90.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.66%.
Iran-backed Houthis attack ships in Red Sea… The Iran-backed Houthis claimed their first attack on commercial ships in recent months, “opening a new front in the U.S.-Iran war that has already disrupted global energy supplies and rattled bond markets,” said a Bloomberg report. “The militant group, based in Yemen, said it targeted two Saudi Arabian oil tankers in the Red Sea with missiles and drones. The Saudi government confirmed an attack on one refined-products tanker, called the Encelia. The British navy said a tanker was struck in the southern part of the sea near the Saudi town of Al Shuqaiq in the southern part of the sea. While it’s unclear if the ships were damaged, the move could effectively close another maritime chokepoint vital to energy markets, following Iran’s shutdown of the Strait of Hormuz,” said the report. Meantime, the U.S. carried out its 12th consecutive day of airstrikes on Iranian military sites overnight, including missile and air-defense facilities. President Trump has said American forces will destroy one bridge or power plant each time Iran shoots at vessels in the Strait of Hormuz. The hostilities show little sign of easing. The attacks by the Houthis have escalated the conflict further. Brent crude oil prices are now nearing $100 a barrel.
Total New World screwworm cases detected in U.S. now at 42… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is reporting 42 total New World screwworm detected cases in the U.S. There are 10 active cases, all in Texas.
Scattered rains in the Plains, Midwest, with heat returning for the weekend… The National Weather Service today said a frontal boundary will extend into parts of the central Plains, bringing chances for showers and thunderstorms. There may be some flash flooding and chances for severe thunderstorms across the region. On Friday the central Plains/mid-Mississippi Valley will see organized thunderstorms. Additionally, over into the northern-tier states there will be a chance for severe thunderstorms across the Dakotas into parts of Minnesota on Friday. Hazardous heat continues this week over the southern tier of the U.S. before beginning to expand northward through the Great Basin as well as across the northern and then central Plains Friday into the weekend. Forecast highs range in the mid-90s to mid-100s with heat indices exceeding 105-115 degrees for some locations. Record-warm overnight lows in the 75-to-80-degree range will provide little relief from the heat overnight.
Key Russian Black Sea port bans night navigation… Russia’s key Novorossiysk oil and grain export hub on the Black Sea has imposed an informal ban on nighttime navigation, as Ukraine steps up drone attacks on the country’s port infrastructure, Bloomberg reports. “Captains of vessels that usually call at the port were notified verbally that the ban will be in force between midnight and 5 a.m. local time, according to people in the grain industry with direct knowledge of the matter. The ban is set to affect at least some loadings from Novorossiysk, which normally happen around the clock, the people said on condition of anonymity as the order isn’t public,” said the report. The acting captain of the Novorossiysk port didn’t immediately respond to a Bloomberg email seeking comment outside normal business hours. Reuters was first to report the informal restrictions. “Ukraine has inflicted increasing pain on Russia’s economy by targeting oil refineries, ports and vessels, with the Kremlin’s full-scale invasion of the country into its fifth year. Russia has repeatedly targeted Ukraine’s port infrastructure during the war, disrupting maritime logistics. Most recently, its forces attacked Ukraine’s Black Sea ports of Odesa and Chornomorsk,” said the report.
U.S. HRS wheat tour finding lower yields… A crop tour this week headed by the Wheat Quality Council is reporting yield projections for North Dakota down 4 bushels an acre from last year, according to Dow Jones Newswires. At 46 bushels an acre, it’s still close to the 5-year average, but giving grain traders reason to believe that worse yields might soon be reported from the tour, the report said. High temperatures over the northern Plains last week are feared to have dented yield potential.
Alert! Grain futures rallies now getting general business media coverage… Veteran grain traders know that when grain market price rallies get the attention of the general business media, those rallies may be mostly played out. Reads a Bloomberg headline overnight: “Crop Prices Hit Three-Year High as Heat, War Stoke Supply Fears.” The report said “heat waves and escalating attacks in the Black Sea threaten to disrupt global grain trade, reviving risks to food inflation that have also been stoked by the war in Iran. The Bloomberg Agriculture Spot Index, which tracks 10 major crop products, reached the highest since July 2023 on Wednesday, following a seven-week advance,” said the report.
Malaysian palm oil futures prices rally… Malaysian palm oil futures on Thursday surged around 1.8% to slightly above MYR 4,700 per MT, extending recent gains to a one-month peak, as strength in rival edible oils on Dalian and Chicago exchanges boosted sentiment, along with surging crude oil prices amid persistent Middle East tensions. The biodiesel feedstock outlook improved further with higher blending mandates in Indonesia and Malaysia curbing export availability. Demand prospects in top consumer India also brightened after industry officials projected higher edible oil imports between July and October, as tighter domestic supplies ahead of festive demand are expected to boost purchases of palm oil. Weather risks added support after Malaysia’s meteorological agency warned record-high temperatures could affect output next year. Meanwhile, export data from cargo surveyors for July 1–20 was mixed, with AmSpec Agri Malaysia reporting shipments down 0.9% from June, while Intertek Testing Services estimated a 4.1% increase.
Can a deluge of cattle data Friday p.m. stop the bleeding?... A trio of USDA reports due Friday afternoon will be watched for clues a historic cattle-market selloff has run its course. Through Wednesday’s close, August live-cattle futures have dropped over $24 since June 25, a stretch that included a record, 15-day losing streak, while August feeders shed more than $32 over the same stretch. USDA is scheduled to release a slew of reports on Friday afternoon that will provide an update on the supply picture for both cattle and beef, having ramifications for price action following the peak of grilling season. Pro Farmer’s Spencer Langford breaks down what to watch when the reports hit after Friday’s close: Will Friday’s USDA triple play halt the cattle selloff?
Cattle futures continue to slump on technical selling… August live cattle on Wednesday fell $3.475 to $223.20 and hit a nearly five-month low. August feeder cattle lost $8.375 to $341.175 and hit a six-week low. The cattle futures markets today saw technical selling kick in again, after a brief respite earlier this week. Both markets remain in firmly bearish near-term technical postures, although they have become oversold and are due for corrective upside bounces very soon. Fundamentally, the recent steep drop in the cash cattle market and declining boxed beef cutout values are also keeping cattle futures bulls mostly on the sidelines. Livestock stress continues high in the Plains states and will stay high because of the daily higher heat. USDA at midday Wednesday reported very light cash cattle trading taking place at $232.00. The agency Monday reported average cash cattle trading last week at $238.28, down nearly $10 from the week-prior’s average of $248.01.
Lean hog futures pause at mid-week… August lean hog futures on Wednesday fell $0.05 to $101.45. The hog futures market paused from recent good gains amid a price uptrend in place on the daily bar chart. Bulls have been encouraged by rising cash hog prices. The latest CME lean hog index is up 48 cents to $96.64. Today’s projected CME index price is up 44 cents at $97.08. The national direct five-day rolling average cash hog price quote for Wednesday was $100.46. August lean hog futures see a price uptrend firmly in place on the daily bar chart.