Good morning!
Grain futures prices higher overnight… As of 6:00 a.m. CST, May corn was up 5 1/2 cents and near a six-week high. May soybeans were 17 3/4 cents up and close to a 10-month high. May soybean meal and bean oil were also higher. May SRW wheat was 7 1/4 cents higher and May HRW wheat was up 9 cents. The grain markets are so far seeing a “Turnaround Tuesday” rally following Monday’s selling pressure. However, the overnight gains in grains may be challenged in the daytime session, as the gold and silver markets are getting hammered early today. The key outside markets today see the U.S. dollar index solidly up and hitting a six-week high, with Nymex crude oil prices sharply higher, hitting a nine-month high, and trading around $76.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.1 percent.
Latest developments on war in the Middle East…
--China urges “all sides” of the U.S.-Israel war with Iran war to safeguard the Strait of Hormuz
--Iran says Strait of Hormuz is closed to shipping traffic; U.S. denies that claim
--Europe’s natural gas prices jump as much as 33%
--Two drones attack U.S. embassy in Riyadh, Saudi Arabia
--Sec. of War Hegseth rejects “endless” war, while Trump insists no fixed timeline
--Global stock markets lower and trader/investor anxiety increasing
--Iran launched new missile wave on U.S. interests in Qatar, Bahrain, Oman
Iran appears to be deliberately trying to exhaust U.S. air defense systems and missile stocks, according to Marion Messmer, international security program director at Chatham House. The U.S. has been purchasing fewer interceptor missiles annually than it has been using, creating a potential vulnerability, she said in an interview and as reported by Bloomberg. Iran has also threatened to attack any ship entering the Strait of Hormuz.
Middle East war driving up global inflation… Inflation around the world is seen picking up due to the U.S.-Israel war with Iran, according to a global survey of economists by Bloomberg News. “The biggest inflationary threat from the war stems from increased oil and gas prices, as well as knock-on effects from things like higher airfares and distribution costs. The majority of respondents predict the war will have a minimal impact on gross domestic product in either the U.S., eurozone or China, but much will depend on how long the conflict lasts,” said the report.
European Union natural gas prices soar… European natural gas futures extended their rally Tuesday, climbing nearly 40% on the day and at the highest level since 2023, after surging almost 35% on Monday, as escalating tensions in the Middle East heightened concerns over potential disruptions to LNG supplies to Europe. QatarEnergy on Monday halted LNG production after Iranian drones struck the Ras Laffan and Mesaieed facilities, which are responsible for roughly one-fifth of global LNG output. This interruption could affect about 15% of Europe’s LNG imports, tightening global supplies and intensifying competition for alternative sources. These supply risks come at a time when EU gas storage is low, standing at 31%, below the 40% recorded at this time last year. TradingEconomics.com
Oil producers hedge higher prices… Oil producers have locked in crude prices for future sales as the oil market soared Monday after the U.S. and Israel launched strikes on OPEC member Iran, Bloomberg reported. This suggests the producers reckon that the present higher crude oil prices are not sustainable. “AEGIS Hedging Solutions LLC’s oil-focused clients were on standby for the market open, with some ready with limit orders and others queuing up transactions to be executed Monday morning. The surge of hedging activity involved swap contracts, which can be more quickly executed than collar structures, and contributed to steepening backwardation in the futures curve, said the report. “Nearly a quarter of AEGIS Hedging Solutions LLC’s oil-focused clients were on standby for the 6 p.m. ET market open on Sunday, according to the firm, which helps about 350 oil producers with hedging. Some were ready with limit orders, when buyers and sellers set specific price levels for trades, while others queued up transactions to be executed Monday morning,” said Bloomberg.
Stormier weather across much of U.S. as week progresses… The National Weather Service today said an active weather pattern is in store for many locations between the southern Plains and Northeast over the next several days. Only some of this expected precipitation is forecast to contain a wintry mix as the large-scale weather pattern turns warmer and more springlike. Showers and thunderstorms are anticipated to develop from the southern Plains to the Ohio Valley. Strong to severe thunderstorms are possible from the Texas panhandle to central Missouri. By Wednesday a cold front will push southeast across the southern Plains and clash with warm humid air lifting northward from the western Gulf of America. Thunderstorms forming along and ahead of this cold front could be severe from north Texas to the Ozarks. Meanwhile, additional rounds of showers and isolated thunderstorms are forecast throughout the Ohio Valley, Mid-Atlantic, and Northeast into Thursday, ahead of the next storm system ready to enter the central U.S. by the end of the week.
U.S.-China trade officials to meet in mid-March, pre-summit… U.S. and Chinese trade negotiators are slated to meet in mid-March to discuss business deals that could stem from a planned summit between Presidents Donald Trump and Xi Jinping, Bloomberg reported. “Among the issues that could be addressed are a possible Chinese purchase of Boeing Co. planes, commitments to buy U.S. soybeans and the future of U.S. fentanyl tariffs. The meeting marks the first sit-down between high-level U.S. and Chinese officials since the Supreme Court dealt a blow to Trump’s global tariff strategy, forcing him to pursue more restrictive and complicated means to impose trade levies,” said the Bloomberg report.
Pro Farmer crop consultant’s weekly South America corn, soybean report… Pro Farmer’s Michael Cordonnier’s latest weekly South American corn and soybean crops report saw him leave his 2025/26 Brazil soybean estimate unchanged at 178.0 million tons with a neutral-to-lower bias. Brazil’s soybeans were 39% harvested as of late last week compared to 50% last year, according to AgRural. This is the slowest harvest pace in five years. Cordonnier also left his Brazil corn estimate unchanged this week at 135.0 million tons, with a neutral-to-lower bias. Safrinha corn in Brazil was 66% planted as of late last week compared to 80% last year, according to AgRural.The planting remains the slowest since 2022. Cordonnier’s Argentina soybean production estimate was left unchanged this week at 47.0 million tons, with a neutral-to-lower bias, “but if rainfall during March ends up dryer-than-normal, the production estimate will decline,” he said. His Argentina corn crop estimate was left unchanged this week at 53.0 million tons, with a neutral-to-lower bias. Corn in Argentina was 3.6% harvested as of late last week.The late-planted corn will continue to need additional moisture through the months of March and April, said Cordonnier.
Malaysian palm oil futures gain… Malaysian palm oil futures edged higher on Tuesday, hovering around MYR 4,150 per MT and marking the third straight session of gains. A weaker ringgit and firmer edible oil markets in Dalian and Chicago supported sentiment. Also, crude oil’s rally amid escalating U.S.–Israeli tensions with Iran added further support. In top buyer India, February palm oil imports rose 10.1% mom to a six-month high of 844,000 MT, due to restocking demand. Meantime, Indonesia, the world’s largest producer, reported January crude and refined palm oil exports surging 77.1% year-on year, while raising crude palm oil export levy to 12.5% of the reference price to fund its biodiesel mandate. On the export front, however, cargo surveyors noted that February shipments fell between 21.5% to 22.5% from January, despite seasonal demand ahead of the Eid al-Fitr celebration. Caution also lingered ahead of PMI data in China, the key buyer, with concerns that Spring Festival disruptions weighed on business activity.
Cattle futures bears may now be near-term exhausted… April live cattle on Monday rose 87 1/2 cents to $233.10 and hit a two-month low early on. March feeder cattle gained $1.85 to $357.275 and also hit a two-month low early on. The cattle futures markets early Monday saw follow-through selling pressure from late last week’s downdrafts. However, prices rebounded late and the high-range daily closes begin to suggest the bears may be near-term exhausted. A risk-off trading day in the general marketplace Monday, amid the U.S.-Iran war, also kept the cattle market bulls timid. Solidly lower cash cattle trading last week was also a negative for futures. USDA at midday Monday reported last week’s cash trading averaged $242.71. That’s down $4.20 from the prior week’s average.
Lean hog futures market pauses… April lean hogs on Monday fell 15 cents to $95.575, nearer the daily low. The market saw mild selling pressure amid keener risk aversion in the general marketplace. Firming cash hog prices did limit the downside in hog futures Monday. The latest CME lean hog index is up 32 cents at $89.44. Today’s projected cash index price is up another 25 cents at $89.69. The national direct five-day rolling average cash hog price quote Monday was $68.47.