Good morning!
Grain futures see some follow-through selling overnight… As of 6:00 a.m. CST, July corn was down 1 1/2 cents. July soybeans were 3/4 cent lower. July soybean meal was up $3.00 and July bean oil was 41 points lower. July SRW wheat was down 1 3/4 cents and July HRW was off 5 3/4 cents. The grain futures markets bulls have been spooked by the big downdraft in crude oil prices. However, it could be that grain traders have overreacted. Falling crude oil prices can actually be argued as being price-friendly for grains from a global demand perspective. Lower oil prices translate into likely increased global economic growth, which would then suggest better global demand for grains. On tap today is the weekly USDA export sales report. The key outside markets today see the U.S. dollar index mildly lower, while Nymex WTI crude oil prices are lower and trading around $93.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.33%.
Latest on U.S.-Iran war…
-- U.S., Iran deliberate peace deal with nuclear breakthrough still distant
-- Israeli army carries out first strike on Beirut since ceasefire
-- French container ship makes rare crossing of Strait of Hormuz
The U.S. is waiting on Iran to respond to its proposal to reopen the Strait of Hormuz and end the war. Iran is expected to give an answer in the coming days, though its leaders have previously shown little sign of yielding on their nuclear program and accepting a moratorium on enriching uranium. The U.S. proposal calls for a moratorium on Iran’s uranium enrichment program and the removal of sanctions on Iran, with all conditions reversible if a wider nuclear deal can’t be reached.
Scattered showers, thunderstorms in Corn Belt today … The National Weather Service today said a surface low-pressure system that developed over the Northern Plains and Rockies will progress southeastward through the Midwest and Great Lakes region through the remainder of the week. As the associated cold front migrates southward into the Northern Plains and Rockies, showers and thunderstorms are expected across the Corn Belt and into parts of the Mid-Atlantic by Friday morning. In the wake of a significant late-season winter storm in the Rockies, a cooler air mass will remain entrenched over the central and eastern portions of the country. Below-average temperatures are expected across the Midwest and Mid-Atlantic. Temperatures will gradually begin to moderate into the weekend.
Fertilizer companies racking up big profits… Fertilizer makers CF Industries Holdings Inc. and Nutrien Ltd. each reported nearly 20% jumps in sales for the latest quarter, showing the extent of the U.S.- Iran war’s upheaval on supply chains for the key crop nutrients. “The windfall comes as the North American (fertilizer) producers have benefited from higher prices for nitrogen fertilizers, which are applied across U.S. corn and soybean fields to support crop yields. Illinois-based CF Industries reported earnings per share that more than doubled from a year ago. Canada-based Nutrien’s adjusted per-share earnings more than quadrupled, though they fell short of analyst estimates,” Bloomberg reported. “Prices for the inputs were already elevated prior to the start of the war due to a tight supply balance, prompting concerns from farmers and antitrust scrutiny from the Trump administration.”
Big U.S. economic data dump late this week… Today is a busy one for U.S. economic data releases, including the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, construction spending, the monthly retail chain store sales index and consumer credit. The U.S. data point of the week, if not the month, occurs Friday morning with the April employment situation report from the Labor Department. The U.S. unemployment rate is expected to come in at 4.3%, which is the same as in the March report. The key non-farm payrolls number in April is seen up 55,000 workers versus a rise of 178,000 in the March report, according to a Dow Jones Newswires survey.
Federal Reserve official warns of higher inflation… Federal Reserve Bank of Chicago President Austan Goolsbee struck a note of caution about inflation that has not only failed to continue cooling to the U.S. central bank’s 2% annually target, but has moved up since the start of the U.S. war with Iran. Goolsbee, speaking to reporters Wednesday, called the labor market stable and signaled that the Fed’s more dominant problem right now is likely inflation that’s too high. “That’s why I’m attuned to these inflation risks — precisely because it has not yet been a stagflationary direction shock,” Goolsbee said. “It’s just been an inflationary shock. The longer that continues, the more nervous that makes me,” he said, according to Bloomberg. While the hiring rate is low, so is the rate of layoffs, pointing to health in the labor market, he added.
EU does not finalize trade deal with U.S., despite Trump warning… The European Union failed to finalize a long-delayed U.S. trade deal during overnight talks, despite warnings from President Trump that he would soon impose fresh tariffs. “Negotiators from the European Parliament and EU countries met Wednesday night to discuss potential amendments to the transatlantic deal, which was initially struck in July. But they didn’t make any conclusive decisions, according to Cyprus, which holds the EU’s rotating presidency,” Bloomberg reported. Talks will continue in the coming weeks. EU officials are “committed to moving swiftly,” Cypriot Energy Minister Michael Damianos said in a statement. The EU is under mounting pressure from the U.S. to ratify the trade pact. Trump last week threatened to increase duties on EU cars and trucks to 25% from 15%, accusing the EU of not moving fast enough to adopt the agreement.
Baltic Dry Index rises to highest level in 2.5 years… A key measure of bulk-shipping rates jumped to the highest level since December of 2023, driven by rising demand for Capesize vessels along with tightening supply of ships that haul bulk commodities. The Baltic Dry Index surged 5.6% to 2,991 points Wednesday, extending gains for a fourth session. The gauge tracks freight rates for Capesize, Panamax, and Supramax ships transporting raw materials such as iron ore, coal and grain. The Capesize market has “strengthened sharply over the past two weeks” on tightening ship availability in the Pacific, disruptions to iron ore exports from Brazil, and hedging of future freight rates, said Pranay Shukla, the head of dry bulk freight and commodities research at S&P Global Energy and as reported by Bloomberg.
Malaysian palm oil futures prices continue slump… Malaysian palm oil futures slipped below MYR 4,600 per MT Thursday, extending losses on a stronger ringgit and weakness in edible oils on Dalian and Chicago markets. Sentiment was further pressured by reports that the U.S. and Iran are working on a memorandum to establish a framework for talks aimed at ending the war. Such developments could ease crude oil prices, hurting biofuel economics and reducing demand for palm oil as a biodiesel feedstock. At the same time, demand concerns deepened, with imports by top buyer India down 27% mom in April to a one-year low. Meanwhile, cargo surveyors noted April 1–25 exports fell 15.7%–16.8% from March, reflecting post-festive softness. Still, losses were capped after Malaysia confirmed its B15 mandate will take effect June 1, up from B10, to curb fuel imports. Separately, palm oil prices may climb around 12% to MYR 5,200 by mid-July, analyst Dorab Mistry says, as biodiesel demand strengthens and supply tightens on energy-driven gains in vegetable oils.
Cattle futures bulls keeping a firm grip… June live cattle on Wednesday rose $0.25 to $253.475. August feeders gained $0.575 to $372.40. The live cattle futures markets bulls were back in business at mid-week, following early-week losses. USDA at midday Wednesday reported very light cash cattle trading taking place at an average price of $255.00 for steers and $255.88 for heifers. USDA Monday reported last week’s average cash cattle trading price at $255.02. That’s $8.84 above the prior week’s average cash cattle price. World Weather Inc. said variable temperatures in the Northern Plains the next seven days could still stress some livestock.
Lean hog futures see technical selling resume… June lean hog futures on Wednesday fell $1.725 to $99.70 and closed at a 4.5-month low close. The hog futures market saw technical selling kick in again at mid-week. The near-term chart posture for June hogs has deteriorated to suggest still more selling from the speculators in the near term. Prices are in a downtrend on the daily bar chart. The latest CME lean hog index is up 7 cents at $91.10. Today’s projected cash index price is up 9 cents at $91.19. The national direct five-day rolling average cash hog price quote Wednesday was $94.75.