Good morning!
Grain futures mixed overnight… As of 6:00 a.m. CST, July corn was down 1 cent. July soybeans were 5 3/4 cents up. July soybean meal was up $0.60 and July bean oil was 49 points higher. July SRW wheat was up 1/4 cent and July HRW was 1 3/4 cents higher. It appears corn and soybean traders are presently looking to the winter wheat futures markets for daily price direction. HRW has been the upside leader in the wheat markets’ rallies. However, July HRW has bumped up against stiff overhead technical resistance that bulls have so far been unable to punch prices above. The key outside markets see Nymex WTI crude oil prices weaker and trading around $88.00 a barrel. The U.S. dollar index is a bit firmer. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.25 percent.
Latest on the war in the Middle East…
--Kuwait declares further force majeure on oil shipments
--Citi sees oil at $110 if Hormuz disruption lasts another month
--Crude oil prices don’t presently reflect scale of the supply hit, analysts say
--UN agency prepares Hormuz evacuation plan for hundreds of ships
--Asia’s largest oil buyers are running low on Hormuz alternatives
“The U.S. made halting progress toward a second round of talks with Iran to end a war that’s spread through the Middle East, killed thousands of people and thrown energy markets into turmoil,” said Bloomberg today. President Trump said Vice President, JD Vance is ready to leave for negotiations in Islamabad but threatened to return to conflict if Iran doesn’t make a deal. For its part, Tehran didn’t confirm who, if anyone, would travel to the Pakistani capital. Parliament Speaker Mohammad Bagher Ghalibaf, who led Iran’s delegation during the first round of talks earlier this month, said his country would not “accept negotiations under the shadow of threats.” Trump said a two-week ceasefire with Iran will end on Wednesday evening Washington time and has signaled he is unlikely to extend it.
Warmer today, then storms coming to the Midwest, Plains at mid-week… The National Weather Service today said a strong upper-level ridge will bring well-above-average temperatures across the interior West east into the northern/central Plains and Midwest today. Widespread highs in the 60s to low 80s are forecast, with some mid- to upper-80s possible across portions of the northern/central Plains. A dramatic drop in temperatures will reach portions of the northern Plains by Thursday as highs fall into the 40s. Meanwhile, to the east, temperatures will begin to moderate for many following a cold front passage over the weekend. Storm chances will also begin to ramp up across portions of the northern/central Plains by late Wednesday as this system begins to emerge onto the Plains. A deepening lee low/trough east of the Rockies will also bring increasingly gusty winds along the High Plains Wednesday.
USDA weekly crop progress: U.S. winter wheat conditions deteriorating… U.S. winter wheat conditions continue to deteriorate, reflecting drought in key hard red winter wheat areas of the Plains, USDA on Monday. Thirty percent of the winter wheat crop was rated “good” to “excellent,” down from 34% a week earlier and 45% at the same time a year ago. Analysts had expected the “good” to “excellent” ratings of to come in at 33%. Pro Farmer’s Crop Condition Index, which re-weights USDA’s initial ratings based on historical production for the last three years at the state level, also reflected the deteriorating situation. The CCI attempts to more accurately reflect the impact on total crop production than a straight weighting of the values. For the percentage of crops not included in state ratings, the model assumes similar conditions as in the major production states. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop declined 10.8 points to 270.81, and is well below the condition ratings for this time last year. The SRW crop is faring better but still declined 5.44 points to 360.64. The more northern growing regions of Illinois and Ohio are in better shape compared to the drier states in the Southeast. The further deterioration in conditions in HRW areas comes before any potential damage from last weekend’s freeze over parts of the Plains becomes apparent.
USDA U.S. planting progress update… The agency estimated 11% of the corn crop was planted as of Sunday, up from 5% a week earlier and ahead of the five-year average of 9%. The average analyst estimate looked for 10% complete, according to a Reuters survey. Soybean plantings were 12% complete, up from 6% a week earlier and the five-year average of 5% but largely in line with the average estimate of 11%. USDA said 12% of hard red spring wheat was planted, up from 6% a week ago and matching the five-year average. Analysts had looked for a figure of 14%.
Fed chair nominee Warsh heads for the Hill… Kevin Warsh will appear before the Senate Banking Committee this morning for a confirmation hearing to chair the Federal Reserve, facing questions on issues including Fed independence and the interest rate outlook. views on interest rates and his record as an inflation hawk will be scrutinized, as well as a Department of Justice investigation into a building renovation project at the Fed. Lawmakers may also ask about Warsh’s plans for the Fed’s balance sheet, his stance on regulations for the financial industry, and his personal wealth, which includes assets worth at least $192 million.
U.S.-Mexico meet on trade pact… U.S. Trade Representative Jamieson Greer met with Mexican President Claudia Sheinbaum on Monday as the two countries prepare for a review of the North American trade pact, according to a readout of their meeting and as reported by Bloomberg. The two discussed trade between the U.S. and Mexico and their broader economic relationship, said the document. Greer thanked Sheinbaum for her leadership in helping their countries expand bilateral cooperation. Greer’s visit to Mexico City is the latest meeting between the two sides as they ramp up preparations for a review of the USMCA pact later this year. The U.S. trade representative also met with Mexican Economy Secretary Marcelo Ebrard on Monday, according to the readout, and the two officials have directed their teams to push forward on technical discussions this week on economic security and trade actions. Greer and Ebrard agreed to hold the first bilateral negotiating round for the USMCA review the week of May 25 in Mexico City, the readout said.
Malaysian palm oil futures prices gain… Malaysian palm oil futures increased for a second session, rising above MYR 4,500 per MT, supported by a weaker ringgit and firmer edible oil prices on the Dalian and Chicago markets. Sentiment was also underpinned by expectations of a rebound in Indian demand after shipments to the world’s largest buyer fell 19% mom in March. In addition, Malaysia is moving in step with top producer Indonesia to expand its blending mandate, with the industry regulator projecting palm-based biodiesel consumption to increase by more than 300,000 MT annually. However, the upside was capped by softer crude oil prices, which tend to weigh on biofuel-linked demand. Export data also pointed to weakness, with cargo surveyors noting shipments of Malaysian palm oil products for April 1–20 fell between 25.6% and 25.8% from the prior month. In China, another major consumer, imports of key agricultural commodities, including soybeans, are also expected to decline this year, adding to demand-side caution.
Cattle futures see more selling pressure, charts deteriorating… June live cattle on Monday fell $1.275 to $246.075. May feeder cattle fell $4.175 to $361.10. The cattle futures markets saw follow-through selling pressure that intensified in late trading, after solid losses late last week that did produce some near-term chart damage. USDA at midday Monday reported average cash cattle trading last week took place at $248.02. That’s down 36 cents from the week prior’s average cash trade at $248.38. Cattle futures markets have seen price uptrends on the daily bar charts at least temporarily stall out. There are now early chart clues to begin to suggest market tops are in place.
Lean hog futures see short-covering bounce… June lean hog futures on Monday rose $0.675 to $101.725. The hog futures market saw a pause and some tepid short covering after prices last Friday hit a four-month low. The latest CME lean hog index is down 15 cents at $90.51. Today’s projected cash index price is down another 14 cents at $90.37. The national direct five-day rolling average cash hog price quote Monday was $69.65.June lean hog futures bears have the overall near-term technical advantage. Prices are trending down on the daily bar chart.