Good morning!
Grain futures firmer overnight… As of 6:00 a.m. CDT, July corn was up 3 3/4 cents after poking to a five-week low overnight. July soybeans were up 7 3/4 cents. July soybean meal was up $1.00. July bean oil was up 51 points. July SRW was 2 1/4 cents higher and HRW wheat futures were down 1 1/2 cents—with both markets hitting three-week lows overnight. The grain markets have seen selling pressure from the drop in crude oil prices the past week and a half, amid the somewhat improved prospects for a U.S.-Iran peace deal. However, we believe that any further declines in oil prices would likely see the grain markets reacting less bearishly. Grain traders will have to wait until Friday morning for the weekly USDA export sales report, which is delayed one day by Monday’s holiday. The key outside markets today see the U.S. dollar index up, while Nymex WTI crude oil prices are higher and trading around $91.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.5%.
Latest on U.S.-Iran war…
-- U.S. strikes Iran targets near Hormuz with no peace accord in sight
-- Strait of Hormuz traffic fades to a crawl after supertankers exit
-- Oil gains as renewed Gulf attacks threaten fragile ceasefire
The U.S. struck Iranian military targets for the second time this week and Kuwait said it responded to missile and drone threats, highlighting the fragility of the ceasefire. U.S. forces shot down Iranian drones fired at a commercial ship and hit a launch unit near the Strait of Hormuz, according to a U.S. official, who said the attacks were defensive and the ceasefire remains intact. President Trump asserted that no one nation would control Hormuz, which has emerged as one of the key obstacles in resolving the conflict, and said the strait’s going to be open to everybody.
Summer-like heat in Northern Plains, upper Midwest … The National Weather Service today said a stark temperature contrast will remain in place across the Lower 48 this week. Hot, summer-like heat will persist across the northern Rockies, northern Plains, and upper Midwest due to the influence of an Omega blocking pattern. Daytime highs soaring into the 80s and 90s will range from 25 to 35 degrees above seasonal averages. Some locations across eastern Montana and western North Dakota may approach 100 degrees. In contrast, temperatures will remain well below average under the influence of the deep upper-level low out West, with highs generally confined to the 50s and 60s outside of the Desert Southwest. Near-seasonal temperatures in the 70s and 80s will prevail farther east from the south-central U.S. to the East Coast.
Key U.S. inflation data out today… The U.S. PCE price index, due out this morning, is expected to rise 0.5% month-over-month in April, following a 0.7% increase in March, which marked the sharpest gain since June 2022 amid a surge in energy costs triggered by the war. The core PCE index, which excludes food and energy, is projected to increase 0.3%, matching the pace recorded in the previous month. On an annual basis, headline PCE inflation is expected to accelerate for a second straight month to 3.8% from 3.5% in March, reaching its highest level since May 2023 and aligning with headline CPI inflation. Core PCE inflation is also seen edging higher to 3.3% from 3.2%, marking its highest reading since late 2023. Overall, the report is likely to reinforce the view that inflationary pressures remain elevated and well above the Federal Reserve’s 2% target. TradingEconomics.com
More inflation warnings from Federal Reserve… Federal Reserve Vice Chair Philip Jefferson says he expects inflation to cool later this year as the effects of tariffs and higher energy costs wear off, though he warned inflationary risks remain tilted to the upside. In the text of a speech he’s scheduled to deliver Thursday morning in Tokyo at a conference hosted by the Bank of Japan, Jefferson said he is watching for signs that higher energy costs stemming from the Iran war are dragging on consumer spending. He also cautioned that he continues to see signs of labor market weakness. Jefferson repeated his view that the central bank’s current policy setting is well positioned to respond to any developments. Meantime, Federal Reserve governor Lisa Cook on Wednesday said inflation is headed in the wrong direction and she would be prepared to raise interest rates if that persists. Cook said the risks remain tilted toward higher inflation and that five years of inflation above the Fed’s 2% target poses the risk that price pressures will become embedded into price- and wage-setting behavior. The Fed’s June 16-17 meeting will be the first led by the new chair, Kevin Warsh.
Australia beef industry braces for new China tariffs… “Australia’s red meat industry expects strong beef demand in the U.S. and Southeast Asia will largely offset the impact of a new 55% tariff by major customer China, which could come into effect as soon as mid-June, Bloomberg reports. The Chinese government announced a new quota system for beef imports targeting major international producers including Australia and Brazil in late December, saying the policy would protect domestic farmers and producers. “Beijing warned in May that Australia was currently sitting at 80% of its annual quota of 205,000 tons of beef shipments, after which the 55% trade impost will come into effect. Analysts and industry figures contacted by Bloomberg said they expect Australian exports to hit the limit as early as mid-June at the current pace,” said the report. “Huge appetite for Australian meat in the U.S. comes as the American herd is sitting at its lowest in decades. Export data from the first three months of 2026 showed the U.S. remained Australia’s largest overseas market, making up 29% of sales, followed by China at 21%,” said the report.
Heavy rains damaging China’s crops… “Heavy rains are arriving earlier and lasting longer across several parts of China this year, raising risks for agriculture and disaster management,”Bloomberg reported. Key grain-producing provinces including Henan, Hebei and Anhui are set to see heavy rainfall in late May and early June, the report said, citing the National Meteorological Center. “Southern China is also forecast to face intense rain, with possible damage to early-season rice, vegetables and fruit trees,” the center said in a report this week. Meteorologists say the unusually early and intense precipitation is linked to an earlier-than-normal northward expansion of the western Pacific subtropical high, which is transporting warm, moisture-heavy air into China. Frequent cold air moving south has collided with the humid flow, triggering repeated downpours across large areas,” said the report.
World’s biggest palm oil producer sees stock price tumble… Wilmar International Ltd. fell the most in almost six years Thursday after the Indonesian government named the palm oil titan as one of the companies being probed for suspected export abuses, Bloomberg reports. Shares traded in Singapore slid as much as 11% on Thursday, the biggest intraday drop since 2020, before paring losses to trade at S$3.38 a piece by 12:36 p.m. local time. Wilmar, the world’s biggest palm oil refiner with plantations in Indonesia, and Musim Mas Group, are among 10 palm producers being investigated for suspected under-invoicing and transfer pricing of exports, Finance Minister Purbaya Yudhi Sadewa told reporters in Jakarta on Tuesday. Those practices were among the reasons President Prabowo Subianto gave last week when he said the government would take greater control of the country’s key commodity exports. Prabowo’s announcement has rattled investors and whipsawed the palm market, with industry participants desperate for more clarity on how the new export framework would work. Indonesian state-linked crude palm oil tenders, which serve as a benchmark for domestic prices and export offers, have ground to a halt since the announcement, while several processors have avoiding buying fruit from small farmers while they wait for more clarity, said Bloomberg.
Malaysian palm oil futures rally… Malaysian palm oil futures rose for a second straight session, hovering above MYR 4,500 per MT as trading resumed Thursday after a holiday break. Support came from a weaker ringgit, concerns over softer Malaysian output, and firmer edible oils in Dalian and Chicago markets. Simultaneously, crude oil prices surged as Washington–Tehran tensions escalated, despite ongoing peace talks, adding upside support to palm oil through its biodiesel link. Meanwhile, top producer Indonesia plans to channel key commodity exports, including palm oil, through a state-run firm starting in September, a move that could benefit Malaysian palm oil shipments. However, gains were capped by an uncertain demand outlook from India, the world’s largest importer, after the country’s palm oil imports plunged 26% in April to a four-month low. Weak export demand also weighed, with cargo surveyors noting that Malaysian palm oil exports during May 1–25 fell between 14.5% and 18.0% from the same period in April.
Cattle futures post strong price rebounds… June live cattle on Wednesday rose $3.20 to $251.425. August feeder cattle rallied $5.175 to $354.625. The cattle futures markets posted solid rebounds on short covering and perceived bargain hunting, led by feeders. Key for the bulls will be to show continued strength, or at least stability, in the coming sessions. It could well be that feeder futures will lead live cattle in the near term. USDA at midday Wednesday reported very light cash cattle trading so far this week, averaging $256.00. The agency reported cash cattle trading last week averaged $258.77, down $4.08 from the week prior’s record high of $262.85.
Lean hog futures see corrective bounce… June lean hog futures on Wednesday rose $1.475 to $97.60, near the daily high. The hog futures market saw short covering and perceived bargain hunting. Solid gains in the cattle futures markets Wednesday also spilled over into some better buying interest in hog futures. Buying interest was limited as the near-term technical posture for June hogs remains firmly bearish. Prices are still in a steep downtrend on the daily bar chart. The latest CME lean hog index is down 18 cents at $90.70. Today’s projected cash index price is down 12 cents at $90.58. The national direct five-day rolling average cash hog price quote Wednesday was $94.25.