Good morning!
Grain futures mostly lower overnight… As of 6:00 a.m. CST, May corn was down 3 1/2 cents and hit a five-week low. May soybeans were 1 cent up after hitting a six-week low in early overnight trading. May soybean meal was up $3.10 and May bean oil was 231 points lower. Spread traders are now unwinding long bean oil, short meal spreads and meal may have more room to run on the upside in the near term. May SRW wheat was down 18 1/2 cents and May HRW wheat was 16 3/4 cents down, with both markets hitting five-week low. The steep drop in crude oil prices overnight has put downside price pressure on the grains futures markets. Forecasts for beneficial rains in U.S. wheat country are also price-bearish for wheat markets. Grain market bulls are hoping much-improved trader/investor risk appetite in the general marketplace at midweek, as well as a sharp drop in the U.S. dollar index, will soon start to take hold and support grain markets prices. The key outside markets see Nymex WTI crude strongly down and trading around $94.50 a barrel. The U.S. dollar index is sharply down and at a four-week low early today. The yield on the benchmark 10-year U.S. Treasury note is presently 4.234 percent.
Latest on the war in the Middle East…
--U.S., Israel and Iran all agree to two-week ceasefire and will discuss a deal to end war
--Israel continues combat in Lebanon
--U.S. to help with Strait of Hormuz shipping traffic
--Relief rallies sweep through global stock, financial markets; oil and gas prices tumble
--Pakistan says it will host talks Friday; U.S. has yet to confirm attendance
--Explosions reported earlier at Iran’s Lavan refinery; timing, source unclear
--Across Europe, Middle East, Asia, shipowners cautiously optimistic on opening Hormuz
--Global benchmark Brent crude trading 13% lower, near $95; Nymex oil also near $95
Details remain scant on how the reopening of the Strait of Hormuz will be carried out. “That won’t dispel the fears shipowners have been grappling with over the past six weeks, as Iran lobbed missiles and projectiles at vessels. Until now, owners have been making plans to have their ships on standby. They are also reaching out to insurers and security consultants for advice,” Bloomberg reported. Ships of all types were seen today clustered on either side of Hormuz, around Dubai in the Persian Gulf and Khor Fakkan in the Gulf of Oman, said the report. “We now have two weeks of respite,” said Vincent Juvyns, chief investment strategist at ING in Brussels. “It remains to be seen whether the crisis is really over but its impact on oil prices will remain. Whatever happens we’re heading towards slower global growth and higher inflation this year,” he said and as reported by Bloomberg.
Rain in the Plains makes grain… The National Weather Service today said high pressure continues to dominate much of the U.S., which will bring calmer conditions through today. There will be chances for mixed precipitation over parts of the Northern Plains, upper Midwest and Great Lakes early today. Farther south over the central Plains into the Ohio Valley and Great Lakes, warm Gulf moisture will help promote thunderstorms and showers this afternoon into Thursday. There is a marginal risk for severe thunderstorms and isolated large hail across parts of Kansas today and parts of southern High Plains into Kansas and the mid-Missouri Valley Thursday. Chances for thunderstorms and showers develop over the southern Rockies/Plains Thursday. There is a marginal risk for excessive rainfall for parts of the central Plains and Midwest Thursday. Much of U.S. will continue to experience mostly 5-10 degrees above normal high temperatures through Friday, with the exception of the Northern Plains and east Coast, where 10-15 degrees below-normal temperatures persist through Thursday.
Fed’s FOMC minutes out this afternoon… The Federal Reserve’s minutes from its last Open Market Committee meeting (FOMC) held in mid-March are out early this afternoon. Traders and investors will closely scrutinize the minutes for fresh clues on the Fed’s thinking on inflation, U.S. monetary policy trajectory and the Middle East war’s impact on the U.S. and global economies.
U.S. consumers expecting higher inflation: N.Y. Fed survey… Near-term U.S. inflation expectations jumped in March as consumers anticipated higher gas and food prices with the onset of war in the Middle East. U.S. consumers expected an inflation rate of 3.4% over the next 12 months, up 0.4 percentage points from February, according to the New York Fed’s monthly Survey of Consumer Expectations. Households expressed more pessimism over their finances, with a larger share reporting a worse financial situation compared to a year ago and expecting their finances to deteriorate over the next year.
Grain traders await Thursday’s monthly USDA supply and demand (WASDE) report… The agency is expected to show only small changes in U.S. corn, soybean and wheat stockpiles from the March report. However, U.S. corn stocks in March are expected to be significantly higher than in March of 2025. U.S. wheat and soybean stocks are seen modestly above levels seen at the same time last year. Meantime, traders expect the agency to estimate Brazil and Argentina corn and soybean production levels to be very close to what it estimated in the March report. U.S. cotton production, ending stocks and export numbers are all expected by USDA to be very little changed from its March report.
USTR Greer proposes U.S.-China board of trade… Top U.S. trade official Jamieson Greer has promoted the creation of a U.S-China board of trade, while downplaying the possibility of a similar group focused on bilateral investment, a sign of what could be at the center of talks when Chinese President Xi Jinping and President Trump meet next month, Bloomberg reports. “We’re looking at that kind of mechanism where we can work with the Chinese to figure what are the non-sensitive goods we should be trading with each other, get a handle on that, figure out what those flows should look like,” said Greer Tuesday during an event at the Hudson Institute in Washington. “Then you’re in a better position to talk about stickier issues,” he added. The Trump-Xi summit was initially scheduled for March 31-April 2, but was delayed after the start of the Iran war in late February. Trump is now planning to travel to Beijing from May 14-15.
USDA announces new “proving grounds” network for ag technology efficiency… USDA on Tuesday announced the launch of the National Proving Grounds Network for AgTech, a nationwide initiative designed to “rigorously evaluate agricultural technologies under real-world U.S. farming and ranching conditions.” Undersecretary for Research, Education, and Economics Dr. Scott Hutchins said that “by establishing a coordinated national research network to objectively validate new and emerging technologies, especially digital and AI-driven technologies, we are helping ensure row crop, specialty crop, and livestock producers all have access to reliable performance data for their investment decisions with a goal to accelerate adoption of AgTech innovations.” The new initiative is designed “to accelerate the U.S. farmer’s confidence to adopt innovations that improve profitability and strengthen the long-term resilience and competitiveness of American agriculture,” said a USDA press release.
Malaysian palm oil futures prices slump… Malaysian palm oil futures slid around 3% to below MYR 4,630 per MT Wednesday, continuing their recent decline and marking the lowest level in almost two weeks. The slump followed a sharp fall in crude oil prices, which dampened risk appetite after President Trump announced a two-week ceasefire in the Iran conflict, reducing palm’s appeal as a biofuel feedstock. Weaker edible oils on the Dalian and Chicago markets also pressured sentiment. Further, caution also grew ahead of key data from the Malaysian Palm Oil Board later this week. Demand worries added pressure, with imports in top buyer India down 19% in March to a three-month low as high prices curbed buying. Still, losses were capped by supply-side support, as Reuters forecast Malaysia’s steepest inventory draw in three years during March. Meantime, Indonesia, the world’s largest producer, posted strong February exports ahead of its B50 rollout in July, while Thailand reportedly tightened crude palm oil export controls.
Cattle futures markets see routine profit taking… June live cattle on Tuesday fell $1.225 to $245.80. May feeder cattle lost $3.725 to $366.625. The cattle futures markets saw routine profit-taking pressure and needed downside price corrections Tuesday following recent gains that pushed June live cattle to a contract high and May feeders to a 5.5-month high on Monday. A downtick in trader/investor risk appetite in the general marketplace Tuesday also limited buying interest in cattle futures. Still, cash cattle and beef market fundamentals remain solid. USDA at midday Tuesday reported no cash cattle trading yet this week. The agency on Monday reported cash cattle trading last week averaged $244.96. That’s $9.27 higher than the week-prior’s average of $235.69.
Lean hog futures also see modest profit taking… June lean hogs on Tuesday fell $0.65 to $107.05. The hog futures market saw mild profit-taking pressure from the shorter-term futures traders following Monday’s solid gains. An uptick in trader/investor risk aversion Tuesday also limited buying interest in hog futures. Still, the bulls have some momentum on their side after Monday’s good price gains. The latest CME lean hog index is down 8 cents at $89.93. Today’s projected cash index price is up 13 cents at $90.06. The national direct five-day rolling average cash hog price quote Tuesday was $68.75.