Good morning!
Grain futures mixed-weaker overnight… As of 6:00 a.m. CST, May corn was down 2 3/4 cents. May soybeans were 3 3/4 cents higher. May soybean meal was up $1.10. May bean oil was 35 points lower. May SRW wheat was down 6 1/2 cents and May HRW wheat was 5 3/4 cents lower. Improved trader/investor risk appetite in the general marketplace at mid-week is not helping the grain market bulls much. Once again, it appears grain traders are tracking price movements in the crude oil market, which is trading sharply down today. Nymex WTI crude oil prices are down over $5.00 a barrel and trading around $87.00 a barrel. The U.S. dollar index is weaker early today. The yield on the benchmark 10-year U.S. Treasury note is presently 4.33 percent.
Latest on the war in Iran…
--Iran received a 15-point peace proposal drafted by the U.S. The proposal covers sanctions relief, civilian nuclear cooperation, a rollback of Iran’s nuclear program, missile limits and access for shipping through the Strait of Hormuz. U.S. awaits Iran’s response. Trump says Iran “wants to make a deal.”
--Tehran has been signaling little willingness to compromise, at least in public, saying the U.S. is negotiating with itself.
-- US is set to deploy 2,000 troops to the Middle East, adding to about 5,000 soldiers expected to start arriving in the region in the coming days.
--Iran has kept up attacks on Arab Gulf states and Israel overnight but no reports of casualties.
--India facing pressure as leader of the BRICS group to steer the bloc toward taking a firmer stand on the Iran conflict.
--Iran’s harder-to-hunt long-range missiles taking greater toll.
--Global stocks bounce, crude oil falls on Trump’s peace push.
USDA’s Rollins: Trump administration “moving at warp speed” on biofuels standards; EPA announcement today… The Trump administration is “moving at warp speed” to get out biofuels blending standards,” said USDA Secretary Brooke Rollins Tuesday and as reported by Bloomberg. “The Trump administration is preparing to expand the opportunity for sales of higher-ethanol E15 gasoline this summer by waiving the fuel from U.S. volatility requirements, according to people familiar with the matter. The Environmental Protection Agency is set to brief industry stakeholders on the planned approach this morning, said the people, who asked not to be named before a public announcement,” and as reported by Bloomberg. Said Rollins: “We have been in a lot of meetings ensuring that our agriculture community is frankly put first and farm security is national security,” in an interview at USDA. “The President has been resolute on that since day one and certainly has not taken his foot off the gas pedal.” The report added “companies have been anxiously awaiting a decision on long-delayed guidance on mandates for mixing renewable fuels with gasoline and diesel. A lack of clarity on the so-called Renewable Fuel Standard has weighed on the agriculture and biofuel industries.” The presentation Tuesday came as the White House prepares to host farmers and CEOs of agriculture companies at an event Friday marking National Agriculture Day
Nations rush to secure fertilizer… “Governments are rushing to secure supplies of critical crop nutrients ahead of spring planting, as the Middle East war chokes off the flow of commodities and amplifies fears of a global food crisis,” according to a Bloomberg report. “Fertilizers exemplify the tight link between energy and food prices, underpinning harvests worldwide. The Middle East is a vital supplier, rich in both mineral reserves and the gas needed to produce nutrients for staples like corn, wheat and rice. With the Strait of Hormuz effectively shut, shipments have ground to a halt,” said the report. Prices of urea — the most widely used nitrogen fertilizer — have surged, with phosphate supplies also at risk. Much of global stock is tied to the Persian Gulf, and panic is spreading across major agricultural economies. Top exporters China and Russia are curbing some crop nutrient sales, while the U.S. is loosening shipping restrictions to facilitate domestic flows. India, the largest urea buyer, is scrambling for supply and weighing a tender. Greece and France have expanded financial support for farmers, and in Africa, Ghana has rolled out a free fertilizer program. “Rising fertilizer prices could push food costs higher, just as inflation in agricultural goods had started to ease after years of shocks — from the pandemic to the war in Ukraine and extreme weather,” said Bloomberg.
Another record-breaking heatwave coming out of the Southwest… The National Weather Service today said another record-breaking heat wave is underway across the Southwest. The heat will shift eastward over the next couple days, spreading into the Plains today, Midwest on Thursday, and Southeast on Friday. Heat should peak in intensity today into Thursday as temperatures reach 25-35 degrees above average for this time of year. High temperatures in the 90s will be possible from the central/southern Plains to the Mid-Mississippi Valley. Heat will relax a bit on Friday as the upper level ridge weakens, but high temperatures could still near 90 degrees in the Southeast. Numerous temperature records are expected to be tied or broken during this heat wave. Relief from the heat will gradually arrive from north to south as a strong cold front pushes across the nation tonight through Friday.
Poor U.S. Treasury auction hints of problematic inflation looming… U.S. Treasury prices sank Tuesday (yields rose) after investors spurned an auction of two-year Treasury notes amid concern that a potentially protracted war in the Middle East will lead to an oil-driven resurgence in inflation. “Losses deepened on Tuesday after a $69 billion sale of two-year notes drew unexpectedly weak demand and as the Wall Street Journal reported that the U.S. is planning to deploy about 3,000 troops to the Middle East,” said a Bloomberg report. Two-year yields rose by as much as 10 basis points to 3.96%, leading yields on all maturities higher as oil prices advanced. The auction “was unfortunately brought to market in a very difficult, unsettled, unsure period,” said David Robin, an interest-rate strategist at TJM Institutional Services LLC, said the Bloomberg report. “Why commit? Risk-reward is heavily skewed to risk versus reward,” he said. The two-year notes were awarded at 3.936%, higher than their yield in pre-auction trading just before the bidding deadline — a sign that demand fell short of expectations. The result was the highest two-year auction yield since last May.
Fed official: U.S. rates may need to remain steady for “some time”… Federal Reserve Governor Michael Barr on Tuesday said policymakers may need to keep U.S. interest rates steady for “some time” to address inflation that’s notably above the central bank’s 2% annually goal. “While I am hopeful that inflation will fall as the effects of tariffs on prices wane later this year, I would like to see evidence that goods and services price inflation is sustainably retreating before considering reducing the policy rate further, provided labor market conditions remain stable,” Barr said in remarks prepared for an event in Phoenix Tuesday, and as reported by Bloomberg.
Malaysian palm oil futures weaker… Malaysian palm oil futures hovered below MYR 4,500 per MT on Wednesday, retreating for a second straight session as a stronger ringgit and weaker edible oil prices in Dalian and Chicago weighed on sentiment. Crude oil also fell sharply on signs of a possible Middle East ceasefire, reducing biodiesel-linked demand support. Traders remained cautious ahead of export estimates for the first 25 days of March, due later today, with demand likely slowing after the Eid festive period. In top buyer India, refiners reportedly scaled back purchases of palm, soyoil, and sunflower oil, viewing the recent conflict-driven rally as temporary and planning to restock once tensions ease. India’s palm oil imports are projected at around 680,000 tons in March, down from 847,689 tons in February. Still, losses were capped by expectations that Indonesia, the world’s largest supplier, may raise export taxes in April and accelerate its B50 biodiesel mandate rollout.
Cattle futures bulls re-establish near-term price uptrends… April live cattle on Tuesday rose $0.075 to $235.375 and hit a three-week high early on. May feeder cattle gained $2.35 to $350.70 and also hit a three-week high. The cattle futures markets saw some fresh technical buying interest as the bulls have restarted price uptrends on the daily bar charts. Higher cash cattle prices fetched this week in very light trading also supported futures today. USDA Tuesday at midday reported very light cash cattle trading at $236.00. The agency on Monday reported cash trading last week averaged $235.08—up $0.25 from the week prior average of $234.83. In the Plains states, the extreme heat seen over the weekend and more expected later this week was and will be stressful to livestock in the region.
Lean hog futures see mild short covering… April lean hogs on Monday rose $0.25 to $91.05 and hit a nine-week low early on. The hog futures market saw mild short covering, following recent technical selling pressure that has produced near-term chart damage. The rally in the cash hog market has also stalled out and cash prices are starting to slip. The latest CME lean hog index is down 17 cents at $91.78. Today’s projected cash index price is down another 7 cents at $91.70. The national direct five-day rolling average cash hog price quote Tuesday was $69.09.