Good morning!
Grain futures mixed overnight… At 6:00 a.m. CDT, July corn was up 2 1/2 cents. July soybeans were up 1/2 cent and poked to another four-month low overnight. July soybean meal was up $3.50 and hit another four-month low early on. July bean oil was 24 points lower. July SRW wheat was up 4 cents. July HRW was up 1 cent. The grain market bulls are working to stabilize their markets and so far this week and are having some success. However, the bulls have some heavy lifting ahead of them to turn the grain markets around. Decent price gains today would give the bulls a little more confidence that the bleeding has been stopped. Still, Corn Belt weather still leans firmly price-bearish for corn and soybeans. The key outside markets today see the U.S. dollar index weaker, while Nymex WTI crude oil prices are lower and trading around $89.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.55%.
New World screwworm update… USDA on Monday confirmed three more cases of New World screwworm in the U.S. on Monday: a calf in Lasalle County, Texas; a goat in Gillespie County, Texas; and a dog in Lea County, New Mexico. The dog was originally announced by USDA as occurring in Andrews County, Texas. USDA Secretary Brooke Rollins told Politico that it isn’t clear how the New World screwworm outbreak will affect beef prices, which have already soared due to strong demand and the shrinking of the cattle herd to its smallest in seven decades. New USDA limits on livestock transportation around the affected region have also sparked concern among industry representatives about getting cattle to market, the report said. “So we’re going to look at a lower tonnage of beef and higher input costs,” said Cooper Little, director of the Independent Cattlemen’s Association of Texas. “Which can keep beef prices on that sharp upward trajectory.” But Ethan Lane, senior vice president of government affairs at the National Cattlemen’s Beef Association, told Politico the impact at the grocery store is “negligible.”
Latest on U.S.-Iran war…
--U.S. strikes India-crewed tanker that may have been Iran-bound
--Crude oil falls as Israel-Iran attacks halt and China slashes imports
President Trump said there is momentum toward ending the conflict with Iran after a halt to hostilities between Israel and Iran. Iran and Israel agreed to halt strikes on each other following a flare-up that saw both countries launch waves of ballistic missiles, with a ceasefire in place for about two months. Trump told reporters that “we’re in the final throes of what will be a very, very good deal” and that they “could have at least an idea one or two days from now” about the deal.
Hot, sticky and stormy in Plains, central, southeastern U.S. … The National Weather Service today said a front moving eastward out of the Northern Plains will trigger showers and severe thunderstorms over the Northern/central Plains and southern High Plains today. There is an enhanced risk (level 3/5) of severe thunderstorms over those regions through Wednesday morning. Furthermore, showers and thunderstorms over the Ohio/Tennessee valleys/Southeast will create heavy rain. There is a slight risk (level 2/4) of excessive rainfall over parts of that region through Wednesday morning. Hot temperatures and dangerous heat indexes also arrive today over much of the Plains and Midwest today through Wednesday.
Latest USDA weekly crop progress results, Pro Farmer CCI ratings… No major surprises jumped out of Monday afternoon’s USDA weekly crop progress and conditions data, which showed just 3% of the U.S. corn crop yet to be planted as of Sunday, while U.S. soybean planting was pegged at 92% complete. Corn rated “good” to “excellent” was unchanged at 67%. Analysts surveyed by Bloomberg had expected the ratings to tick up a percentage point to 68%. The Pro Farmer Crop Condition Index (CCI) for corn (on a scale of 0 to 500, with 500 equaling perfect) edged up to 373.41 from 371.33 a week earlier. Soybeans rated good to excellent totaled 65%, down a percentage point from last week and short of the 67% expected by analysts. The soybean CCI rating fell slightly to 367.88 from 368.10. See all of this week’s CCI ratings here. U.S. winter wheat rated good to excellent declined a percentage point to 25% from 26% a week earlier. Harvest was 11% complete, a percentage point ahead of expectations. Spring wheat rated good to excellent rose to 52% from 47% a week earlier, topping expectations for 49%.
Big funds get a schooling on trading commodities… Pro Farmer Editor Bill Watts reported late Monday that “it was nothing less than a brutal week for the grain and soy markets last week” and that “fund liquidation was the fuel, as Commitments of Traders data from the Commodity Futures Trading Commission showed large speculators exiting long positions built up in the earlier days of the Iran war en masse.” Last Friday’s report, which reflected positions as of one week ago today, marked the biggest weekly bear move on record for Chicago SRW wheat futures and options, according to Barchart. The CFTC COT data showed managed money adding 39,165 contracts to their net short, at 57,781 contracts. Kansas City HRW wheat futures and options saw speculators reduce their net long position by 13,393 contracts, to 13,477 contracts. Ole Hansen, head of global commodity research at Saxo Bank, said that since hitting a four-year high last month, the combined net long across 13 major agricultural futures contracts has almost halved, driven primarily by a two-thirds reduction in bullish positions across corn, soybeans, and wheat--and led by corn.
U.S. fertilizer prices drop… “Prices for a key nitrogen fertilizer have dropped dramatically, giving up all of the soaring gains as the conflict in Iran upended global supply chains for the crop nutrient,” Bloomberg reported late Monday. “Prices for granular urea in New Orleans dropped to $453.50 per short ton, the lowest level since Feb. 6, according to Friday data from Bloomberg Green Markets. That’s down 36% from mid-April, when markets spiked to the highest levels since 2022. Urea is the most common form of nitrogen fertilizer, the class of crop nutrients that faced the most immediate price reaction to the U.S.’s attacks on Iran and the ensuing blockage of the Strait of Hormuz. Nearly half of the world’s urea exports come from countries affected by the conflict, according to the Fertilizer Institute,” said the report. A benchmark in Egypt also plunged to the lowest level since Feb. 27, right before the war began, according to Bloomberg Green Markets. Still, prices of $580 a metric ton (about $640 per short ton) are significantly higher than the U.S. market, said the report.
“Treasury market is telling Kevin Warsh rates need to be higher”… That’s a headline from a Bloomberg story overnight. Yields on U.S. two-year Treasury notes have surged to their highest level in more than a year, with the two-year yield trading above the Fed’s current policy band. The rise in U.S. yields has extended across the entire Treasury curve, creating a charged backdrop for Federal Reserve policymakers and new chair, Kevin Warsh. The market’s assessment of the inflation-adjusted neutral rate is about 1.8%, higher than the median Fed estimate of 1.1% for the neutral rate after inflation. The FOMC meets next week to decide the latest U.S. monetary policy direction. The reset upward only intensified last week after the latest read on U.S. job growth topped all forecasts, reinforcing a growing conviction that rates need to rise in order to rein in inflation pressures and temper the risk of an AI-induced boom overheating the economy. “On Wednesday, the release of consumer price index data for May has the potential to shift rates and Fed policy expectations,” said the report.
China’s exports hit record high… China’s exports surged 19.4%, year-on-year, to a record high of $376.78 billion in May, far exceeding forecasts of 15% and accelerating sharply from April’s 14.1% rise. It was the fastest increase since February, as companies continued to build inventories to pre-empt energy price pressures stemming from the ongoing war in the Middle East, while persistent demand for semiconductors and AI hardware also supported exports. Among trading partners, outbound shipments grew to Japan (10.9%), the US (35.4%), Australia (23.6%), South Korea (42.1%), Taiwan (32.2%), the EU (7.6%), and ASEAN (24.3%). For the first five months of the year, total exports rose 15.5% year-on-year to USD 1.71 trillion. TradingEconomics.com
Malaysian palm oil futures sell off… Malaysian palm oil futures plunged by nearly 2% to below MYR 4,500 per MT Tuesday, reversing prior gains amid a firmer ringgit and weaker edible oils on the Dalian and Chicago markets. A sharp drop in crude oil prices also weighed on sentiment, along with caution ahead of the Malaysian Palm Oil Board’s monthly report due later this week, with expectations pointing to another inventory build in May, according to Reuters. Meanwhile, cargo surveyors noted shipments fell 8.8%–15.5% in May from April. Demand from India, the world’s largest buyer, recovered modestly from April’s four-month low but stayed below historical norms. Still, losses were cushioned by upbeat Chinese trade data, with exports hitting a record and imports accelerating in May, signaling resilient demand in a key market. Additional support came from top grower Indonesia, where new technical rules tightened oversight of strategic commodity exports, including palm oil, potentially shifting some demand toward Malaysian supplies.
Cattle futures turn more volatile as traders assess NWS implications… August live cattle on Monday fell $4.925 to $236.725. August feeder cattle lost $3.20 to $350.70. The cattle markets traders on Monday decided they were more concerned about the bearish aspects of New World screwworm on the U.S. cattle industry, following second and third cases being found in cattle in Texas. The NWS situation is still fluid and cattle futures markets may remain volatile. The bullish aspect of the situation is reduced cattle supplies coming from Mexico and possibly from the far southern U.S. The potentially cattle-price-bearish aspect of NWS is possible negative U.S. consumer psychology toward beef that could result from the flesh-eating parasite and the general news media hyping the situation. Temps in the Northern Plains today could reach 100 degrees and stress livestock in the region. USDA at midday Monday reported last week’s average cash cattle trading price was $256.53—down 33 cents from last week’s average price.
Technical sellers return to lean hog futures market… August lean hog futures on Monday fell $1.075 to $96.15 and hit a six-month low. The hog futures market saw more technical selling pressure and also felt spillover price pressure from sharp losses in the cattle futures markets. Near-term charts remain bearish for hogs as a price downtrend is in place on the daily bar chart. The latest CME lean hog index is up 9 cents at $92.60. Today’s projected cash index price is up another 3 cents at $92.63. The national direct five-day rolling average cash hog price quote Monday was $95.00.