Good morning!
Grain futures mixed overnight… At 6:00 a.m. CDT, December corn was up 2 3/4 cents and hit a three-week high. November soybeans were 6 1/4 cents higher and hit a nearly three-week high. September soybean meal was up $1.10. September bean oil was 60 points higher and hit a nearly three-week high. September SRW wheat was down 5 1/2 cents and hit a two-week high early on. September HRW wheat prices were 5 cents lower and hit a three-week high overnight. Corn and soybean futures prices rose overnight amid severe flooding in the eastern Corn Belt that may be significantly damaging crops. Winter wheat futures saw some modest profit-taking pressure overnight, following recent gains. On tap today is the start of the annual Pro Farmer crop tour (see item below), as well as USDA’s weekly export inspections and weekly crop progress reports. The key outside markets today see the U.S. dollar index lower and hit a two-month low. September Nymex WTI crude oil prices are higher and trading around $83.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.67%.
Annual Pro Farmer Crop Tour kicks off… Grain traders around the globe will be closely following the annual Pro Farmer Crop Tour of corn and soybeans that begins today and ends Thursday evening. Crop tour scouts will roll into an eastern Corn Belt that has taken a week of record rainfall and a western Corn Belt still working through drought. More than 100 crop scouts leave Columbus, Ohio, and Sioux Falls, South Dakota, this morning on planned routes. We’ll be providing real-time coverage of the Tour right here at ProFarmer.com and on the Pro Farmer app: Live Coverage: Pro Farmer Crop Tour scouts to sample fields across 7 states. Follow along as scouts provide the first, wide-scale, field-level look at corn and soybean crop potential across seven key states— plus real-time market reaction and expert analysis.
Major flooding in eastern Corn Belt… World Weather Inc. said in a Sunday evening dispatch that “weekend rains expanded flooding in the Midwest, raising concern over soybean conditions as pods fill. Mold and mildew concerns will be rising this week for beans on the lower branches of soybean plants and crop yellowing is possible in the most seriously flood impacted areas. Weekend rain was greatest across central Illinois and into west-central Indiana, where totals varied from 3 to more than 5 inches, with doppler radar suggesting 5 to 7 inches occurred in several areas. Lighter rain fell from southern Iowa and northernmost Missouri to Ohio and West Virginia, where 1 to 2 inches and local totals over 3 inches resulted.” The weekend Midwest rain brought moisture totals for the past seven days ending Sunday late afternoon to the range 5 to more than 10 inches in numerous areas from parts of Iowa to Ohio, where flooding has occurred or is still occurring. “Damage to agriculture has resulted from both the derecho of last week (and other severe thunderstorms) as well as from flooding, although flood damage will be more determined by its duration rather than by its occurrence.” Rain frequency and intensity in the U.S. Midwest will slowly decrease over the next week to ten days allowing for runoff to occur, fields to drain and eventually crop areas to dry down. However, total dryness is unlikely and temperatures will be milder than usual keeping the drying rate a little subdued. Weekend rain also occurred in the central U.S. Plains, bringing some needed relief from last week’s oppressive heat and dryness.
Israel, Hezbollah resume fighting… Fighting between Israel and Iran-backed Hezbollah flared in Lebanon over the weekend, the latest setback in efforts to end parallel wars in the Middle East. Israel’s military said it killed a senior Hezbollah commander in southern Lebanon, and 11 people died in the Israeli strikes, which were in retaliation for an attack by the militant group. The renewed fighting in Lebanon risks derailing a U.S.-brokered ceasefire that calls for Hezbollah’s disarmament, an eventual Israeli withdrawal from occupied territory and the Lebanese army taking responsibility for security.
“China rattled by Trump White House chaos weeks ahead of Xi visit. It has happened before”… That’s a weekend headline from the South China Morning Post.“Just months ago, disorganized planning from Washington in the lead-up to U.S. President Donald Trump’s landmark China visit frustrated Chinese officials. Now, Beijing is watching the same story play out on the other side of the world,” said the Post. Veteran China watchers say any lack of an organized protocol for Xi to be aware of in advance, when he’s in the U.S., could mean a less-productive meeting, from a trade-progress perspective--and specifically additional U.S. soybean purchases from China.
Russia-Ukraine war prompting Asian nations to seek grain elsewhere… Bloomberg reported that major crop buyers across Asia are turning to other suppliers in response to the intensifying attacks. Ukraine’s grain exports in the first part of August slumped 75% from a year earlier, and Russian shipments this month are expected to be less than half the five-year average, the report noted. Those buyers include Indonesia, the world’s second-biggest wheat importer, which picked up cargoes from Australia for September and October, the report said. Other Southeast Asian countries have also booked Australian wheat for around the same time, while buyers in Bangladesh reportedly sought offers from Romania. Inquiries have been made as far as North America, the report added.
Global central banks feeling pressure to tighten monetary policies… “As investors debate whether and when the Federal Reserve will raise interest rates, market expectations for further tightening are building around the world — and spelling trouble for bonds,” Bloomberg reports. “Traders see borrowing costs rising faster in Japan, Canada, the U.K. and the Euro zone than in the U.S. over the next year. Of the 32 swap markets tracked by Bloomberg, two-thirds are priced for rate hikes, with South Korea leading the pack at more than 100 basis points,” said the report. It marks a shift from the Fed-dominated rate cycle of recent years. This time, central banks are facing overlapping pressures from higher oil prices from the Iran war, heavy government spending and an AI investment boom that’s supercharging growth. Inflation across countries in the Organization for Economic Co-operation and Development recently hit a two-year high, said the report.
U.S. Treasury yields on the rise… The U.S. Treasury Department is slated to sell $16 billion of 20-year debt on Wednesday, with the new bonds indicating a yield of around 5.27%. The yield of 5.27% would mark the highest yield for the security since it was reintroduced in 2020, revealing investors are demanding a higher payout to buy the debt amid concerns over inflation and government spending. The upcoming auction follows last week’s 30-year and 10-year U.S. debt sales, which commanded high interest rates, with the 30-year debt sale commanding the highest interest rate in a quarter century.
Greenback weakening on foreign exchange market… The U.S. dollar fell index fell to its weakest level in two months as traders and investors scaled back expectations for further Federal Reserve interest-rate increases following a run of softer U.S. economic data. The dollar index weakness comes as traders cut the chance of a Fed rate hike next month to just one-in-three, down from about 75% expected in late July. The USDX downturn follows soft July figures on U.S. employment and inflation, as well as an unexpectedly weak report on U.S. retail sales. While there are few major releases this week to trigger a material dollar breakout, Friday’s global PMIs may offer the next meaningful test.
U.S.-Canada trade agreement still has sticking points… Canada’s chief trade negotiator says there’s still a significant amount of work to do to reach an agreement to stave off a new wave of U.S. tariffs this week. Talks were expected to continue through the weekend in search of a deal to lower tensions between the two nations. The U.S. wants Canada to bring back American alcohol to provincial liquor stores and address other irritants in the bilateral relationship, in exchange for reductions in certain tariffs. Earlier on Friday, U.S. Trade Representative Jamieson Greer said Canada needs to scrap its retaliatory trade measures to avoid the new duties.
Downbeat China economic data… China’s economy got off to a sluggish start in the second half of this year, with industrial output, consumption and investment all faring worse than forecast. Industrial production expanded 4.5% in July from a year earlier, slowing for the first time in three months and missing estimates, while retail sales growth slowed to 0.6%. The July figures suggest growth in gross domestic product likely decelerated to around 4.1%, below the 4.3% level Beijing needs in the second half to reach its annual growth target.
Total New World screwworm cases detected in U.S. at 46… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is reporting 46 total New World screwworm detected cases in the U.S. There are four active cases, all in Texas.
Malaysian palm oil futures rally… Malaysian palm oil futures on Monday surged over 2% to around MYR 4,820 per MT, marking their highest level since early April and rebounding from recent weakness. Firmer edible oils on the Dalian exchange lifted sentiment, while bargain hunting added support. Demand prospects improved as India’s edible oil imports hit a 10-month high in July, with refiners replenishing palm oil and soyoil stocks ahead of the festival season. However, gains were capped by a stronger ringgit and weaker soyoil futures in Chicago markets. Meanwhile, elevated inventories remained a drag, with Malaysia’s July palm oil stocks climbing to a five-month high as production outpaced exports. Simultaneously, export prospects softened, with Intertek estimating shipments fell 7.9% in August 1–15 from the same period in July. Traders also turned cautious ahead of China’s July activity data, including retail sales and industrial output, which could provide fresh clues on demand in another key market.
Trainwreck in the cattle futures markets… October live cattle futures on Friday fell $1.175 to $218.875, hit an eight-month low early on and for the week were down $6.40. September feeder cattle futures lost $2.65 to $334.55, hit an eight-month low early on and for the week were down $10.675. The cattle futures markets saw some panic selling early in the session by traders that were spooked by uncertainty following news Tyson Foods “is making strategic changes to its beef operations” and closing a Joslin, Illinois, beef-packing plant and is pursuing the sale of its Pasco, Washington, beef facility. However, futures prices recovered as the session progressed. Lower cash cattle trade last week was also bearish for futures. Friday’s technically bearish weekly low closes in live and feeder cattle futures set the table for more price pressure from the chart-based specs early this week. USDA at midday Friday reported active cash cattle trading at lower money, with steers averaging $229.40 and heifers $229.44. The agency reported average cash cattle trading the prior week at $235.21.
Lean hog futures hit six-week low… October lean hog futures on Friday fell $0.375 to $81.75, hit a six-week low early on and for the week were down $0.475. Chart-based specs continue to control the futures market as technicals remain firmly bearish, including Friday’s bearish weekly low close in October hogs. Prices are in a downtrend on the daily bar chart. Declining cash hog prices also favor the futures bears. The trainwreck in the cattle futures market late this week has also spooked the hog futures bulls. The latest CME lean hog index is down 2 cents to $95.87. Today’s projected CME index price is down 19 cents at $95.68. The national direct five-day rolling average cash hog price quote for Friday was $96.63.