Good morning!
Grain futures prices mixed overnight… As of 6:00 a.m. CST, July corn was up 3/4 cent. July soybeans were up 3 1/4 cents. July soybean meal was up $0.10 and July bean oil was 76 points higher. July SRW wheat was up 9 1/4 cents and July HRW was 14 cents higher.On tap today is the monthly USDA supply and demand report. (See item below.) Wheat traders will also be watching results of this week’s annual HRW tour sponsored by the Wheat Quality Council. The key outside markets today see the U.S. dollar index higher, while Nymex WTI crude oil prices are solidly higher and trading around $101.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.43%.
Latest on U.S.-Iran war…
- Shipping in Strait of Hormuz remains at standstill; ceasefire shaky
- Emerging-market currencies, stocks fall as Iran peace hopes dim
- Nymex WTI crude back above $100 a barrel
- Supply-chain stress that soared during covid heads higher again
Shipping traffic in the Strait of Hormuz remained at a standstill on Tuesday, with oil rising after President Trump rejected Iran’s latest counter-offer on a peace plan. Trump called Iran’s response to his proposal a “piece of garbage” and said the ceasefire was on “life support” as he prepares to meet Chinese President Xi Jinping in Beijing. The U.S. sanctioned a dozen entities and individuals over the sale of Iranian oil to China, stepping up economic pressure ahead of Trump’s visit to meet Xi. Trump fell short of signaling the U.S. would resume military attacks on Iran, as he previously threatened, and said reaching a diplomatic solution is “very possible.”
Wind and red flag warnings for Dakotas, SW Minnesota, NW Iowa, central Nebraska … The National Weather Service today issued red flag, high wind warnings for the aforementioned areas. “Near-critical to critical fire conditions are expected this afternoon and early evening. Expect breezy northwest winds gusting 30 to 40 mph and very dry air,” said the NWS. Meantime, rain with embedded thunderstorms will spread across the Great Lakes and into the Ohio Valley on today, then move into the Northeast and Mid-Atlantic on Wednesday and into Thursday. A second front moving onshore over the Pacific Northwest overnight will produce scattered rain with a few embedded thunderstorms over the Northwest on Wednesday morning, then move into the northern Rockies by Thursday. Light rain will develop over parts of the Northern Plains/upper Mississippi Valley by Thursday morning. Elsewhere, a front will linger across the Southeast, producing showers and thunderstorms through Wednesday night.
Weekly USDA crop progress report highlights… U.S. corn and soybean planting continued at a solid pace last week, with USDA Monday afternoon reporting 57% of corn in the ground across 18 key states as of May 10. That matched the average estimate from a Bloomberg survey of analysts and was up from 38% a week ago and was ahead of the five-year average for this time of year at 52%. Soybean planting was 49% complete, also in line with the average estimate and up from 33% a year ago and 36% on the five-year average. U.S. spring wheat planting was 53% finished as of Sunday, just slightly ahead of the average estimate of 51% and reflecting a pickup from 32% a week ago. The five-year average stands at 51%. Cotton planting was 29% complete, up from 21% a week ago and in line with the five-year average of 28%.
U.S. winter wheat condition continues to deteriorate… Last week’s rains in the western Plains didn’t help overall conditions when it comes to the long-suffering winter wheat crop. USDA Monday afternoon said the percentage of the crop rated “good” or “excellent” fell to 28% from 31% a week ago, defying forecasts for improvement to 32%. Of the 790 crop progress reports that have contained winter wheat condition ratings since 1986, only 20 weeks have seen a “good” to “excellent” rating less than the current standing. The lowest value seen in the data series was 20% during the week ending May 7, 1989. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop declined 10.90 points to 253.00. The SRW crop notched a very minor increase of 1.07 points to 364.66. Weather in SRW country has helped the crop from deteriorating much further given the milder temperatures and relatively more widespread rains compared to those in the Plains.
USDA monthly supply and demand report on deck… Today’s monthly USDA supply and demand report will be a highlight of the grain-trading week. Corn traders are expecting the agency to significantly reduce this year’s U.S. corn production level, from that seen last year. Traders are also expecting a slight rise in U.S. and global corn stocks, compared to the April USDA S&D report. Soy complex traders expect a modest rise in U.S. soybean production, compared to last year. Traders expect a slight dip in U.S. soybean stocks but a slight rise in global stockpiles, compared to the April USDA S&D report. Wheat traders expect Tuesday’s report to show a significant decline in U.S. all wheat production this year compared to last year. Global wheat stocks are seen near unchanged from last year. For cotton, analysts expect U.S. cotton production to come in slightly lower than the April USDA estimate.
Trump quickly pulls back plan to lower beef import tariffs… The Trump administration is delaying a just-announced plan to suspend tariffs on imported beef, according to The Wall Street Journal. The plan had aimed to address short-term supply issues in the U.S. beef market by expanding imports and supporting a rebuilding of the country’s domestic cattle herd. However, the delay followed an outcry from U.S. cattle ranchers and some congressional Republicans, as increasing imports comes with political risks, including undercutting American farmers’ business, said the Journal.
Pro Farmer consultant leaves Brazil corn production estimate unchanged… Pro Farmer’s South American crop consultant, Dr. Michael Cordonnier, left his Brazil corn production estimate unchanged at 134.0 million tons, with a neutral bias. Recent rainfall will benefit the safrinha corn, but isolated light to moderate frosts are also expected especially in the higher elevations, he said. The cold temperatures are expected to persist for most of the week and could negatively impact any late planted safrinha corn that is still in vegetative development, pollinating, or in early grain fill. “A larger concern for safrinha corn is dryness in central Brazil in the states of Goias, southeastern Mato Grosso, northern Mato Grosso do Sul, Sao Paulo, Minas Gerais, Bahia, and Tocantins,” said Cordonnier. “Collectively, approximately 30% to 35% of the safrinha corn is in areas that need rain.”
Key U.S. consumer price index report out this morning… The annual inflation rate in the U.S. likely accelerated to 3.7% in April 2026, marking the highest reading since September 2023, up from 3.3% in March. Inflation is expected to have risen for a second consecutive month as the oil shock triggered by the war with Iran continued to push prices higher. On a monthly basis, consumer prices are estimated to have increased by 0.6%, easing from the 0.9% rise recorded in March, which was the largest monthly gain since June 2022. The surge in inflation comes as the U.S. national average gasoline price climbed nearly 50% since the war with Iran started, rising above $4 per gallon for the first time in more than three years. Meanwhile, core inflation is also expected to have edged higher, albeit at a more moderate pace, to 2.7% year-on-year, the highest level in six months, from 2.6% in March. On a monthly basis, core consumer prices likely increased by 0.3%, up from 0.2% in both February and March. TradingEconomics.com
Bond traders fading prospects for lower U.S. interest rates… “Not long ago, the Treasury market thought it had the Kevin Warsh trade figured out: Simply bet on the multiple interest rate cuts that the nominee had been expected to deliver if he got the job to lead the Federal Reserve. Now, with days left before Warsh steps into the central bank’s top role, a different view is emerging. Instead of rate cuts, wagers in the $31 trillion bond market are leaning toward tighter monetary policy, the upshot of robust U.S. growth and war-driven inflation worries,” said a Bloomberg report. Yields on 30-year Treasuries are closing in on 5%, while bets on a steeper yield curve — an outgrowth of the market’s earlier easing expectations — have largely been undone. “It’s not that investors think Warsh has suddenly abandoned his belief in the need for both rate cuts and Fed balance sheet reduction. Rather, they sense that the incoming chair will find himself just as bound to the economy’s twists and turns as his predecessors.”
Malaysian palm oil futures weaker… Malaysian palm oil futures fell over 1% to trade below MYR 4,500 per MT Tuesday, pressured by weaker palm olein prices on the Dalian exchange. Sentiment was also weighed by monthly data from the industry regulator, which showed inventories rose in April for the first time in four months as production grew while exports fell. Demand concerns also lingered after India, the world’s largest palm oil buyer, reported a 27% mom drop in April imports to a one-year low. Still, losses were limited by a softer ringgit and firmer crude oil prices, as negotiations to end the conflict between the U.S. and Iran appeared increasingly fragile. On the policy front, Malaysia will raise its biodiesel mandate to B15 from B10 starting June 1, a move aimed at reducing fuel imports. Meanwhile, export data for early May was mixed. Cargo surveyor Intertek Testing Services estimated exports of Malaysian palm oil products during May 1–10 rose 8.5%, while AmSpec Agri Malaysia noted that shipments declined 10.8%.
Cash cattle prices continue to rise… June live cattle futures on Monday rose $0.50 to $249.40. August feeder cattle lost $1.925 to $362.30. The live cattle futures market saw mild profit-taking pressure in early trading Monday but rebounded on the news of the solidly higher cash cattle trading price average last week. Feeders also profit taking but also weak long liquidation and fresh technical selling featured today. August feeders are facing the prospect of a bearish double-top reversal pattern on the daily bar chart. USDA at midday Monday reported average cash cattle trading last week taking place at $258.52, up $3.50 from the week prior. Cattle futures bulls have the overall near-term technical advantage but are fading.
Lean hog futures see short covering… June lean hog futures on Monday rose $1.60 to $100.225. The lean hog futures market saw short covering in a bear market. The near-term technical posture for June hogs remains bearish as prices are in a downtrend on the daily bar chart. The latest CME lean hog index is down 23 cents at $90.79. Today’s projected cash index price is down another 38 cents at $90.41. The national direct five-day rolling average cash hog price quote Monday was $95.11. June lean hog futures bears still have the overall near-term technical advantage. Prices are in a downtrend on the daily bar chart.