Good morning!
Grain futures prices mixed overnight… As of 6:00 a.m. CDT, July corn was up 3/4 cent. July soybeans were up 2 1/2 cents. July soybean meal was up $2.50 and hit a four-week high. July bean oil was 5 points higher. July SRW wheat was up 2 cents and hit a for-the-move high. July HRW was 16 cents higher and also pushed to a for-the-move high. Grain market bulls have shifted into a higher gear. Also, the daily-limit-gains in winter wheat futures on Tuesday have grabbed the attention of the general investing marketplace, with those traders and investors wondering if the grains are going to be the next precious metals markets, regarding major bull moves. The key outside markets today see the U.S. dollar index firmer, while Nymex WTI crude oil prices are near steady and trading around $102.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.46%.
Latest on U.S.-Iran war…
--Trump says Iran needs to make a good peace deal or face devastation
-- Iranian oil shipments show first prolonged halt since start of war
--Chinese oil supertanker seen attempting Strait of Hormuz exit
-- WTI crude oil holds near $102 with Mideast impasse, world inventories drop
President Trump repeated his military threats against Iran ahead of a visit to China, saying Iran will either “make a good deal” with the U.S. or face devastation. A ceasefire between the U.S. and Iran has lasted over a month but is fragile, with Trump describing it as being on “massive life support” and Tehran continuing to resist U.S. demands. The closure of the Strait of Hormuz is deepening the impact on the energy market, with the International Energy Agency saying oil inventories are falling at a record pace and will continue to drop for months.
High winds coming to the Northern Plains… World Weather Inc. said in a special report that strong wind speeds have been a frequent occurrence in the U.S. Plains and a part of Canada’s Prairies this spring and another bout of that is coming Thursday. Wind gusts of 50-75 mph and possibly a little stronger will impact Montana, south-central and southwestern Saskatchewan and portions of eastern, central and southern Alberta, causing some power outages and possible structural damage as well as being a threat to high profile vehicles moving across the region. Some windy conditions are also expected in Wyoming, western Nebraska and in a swath from interior western Texas to eastern parts of the Dakotas and western Minnesota. Meantime, the National Weather Service today said there will be rain with embedded thunderstorms across the lower Great Lakes/Ohio Valley and the Northeast today. On Thursday the Plains and the Mississippi Valley will see showers and severe thunderstorms over the central Plains. There is a slight risk of severe thunderstorms over parts of the central Plains from Thursday into Friday morning.Showers and thunderstorms will move into parts of the upper/middle Mississippi Valley and the Ohio Valley Thursday afternoon into Friday morning.
U.S.-China talk trade before Trump-Xi summit… Trade negotiators led by U.S. Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng held talks in Seoul to prepare for this week’s summit between Presidents Trump and Xi Jinping. “The war in Iran and the latest developments in bilateral trade were likely among the topics topping the agenda during talks lasting about three hours, which concluded around 3:50 p.m. local time,” said a Bloomberg report. The two sides “held candid, in-depth and constructive exchanges in South Korea on economic and trade issues of mutual concern, as well as on further expanding practical cooperation,” the official Xinhua News Agency reported. No US readout of the discussions has been provided yet, said the report.
China’s ag ministry: less soybean imports this year… China, the world’s top soybean importer, expects purchases to slump in the coming season as its hog herd declines, heightening competition for market share just as the U.S. seeks to ramp up sales. The country’s purchases in the season that starts in October are seen dropping 7.6% from the prior year to 95.5 million tons, the agriculture ministry said in its monthly China Agricultural Supply and Demand Estimates report on Tuesday and as reported by Bloomberg. That would be at least a second straight annual decline in a market global farmers have historically counted on for steady growth. Consumption in 2026-27 will also fall by about 6%. China’s forecast bucks an estimate from USDA’s global crop report, issued the same day, which pegged China’s soybean imports to climb to 114 million tons. Soybeans, as well as other crops including corn, are expected to be featured in talks as President Trump meets his Chinese counterpart Xi Jinping meet in China this week.
U.S. PPI inflation report out this morning… U.S. producer prices are expected to have increased by 0.5%, month-on-month, in April, matching the pace recorded in both February and March, as energy costs continue to face upward pressure amid the ongoing conflict with Iran. Core producer prices, which exclude the volatile food and energy components, are forecast to rise 0.3%, following a more modest 0.1% increase in the previous month. On an annual basis, headline producer inflation is projected to accelerate sharply to 4.9%, marking a third consecutive monthly increase and reaching its highest level since January 2023, up from 4.0% in March. At the same time, the annual core producer inflation rate is expected to climb to 4.3% from 3.8% in both February and March, which would represent its highest reading since February 2023. TradingEconomics.com
World rice output set to decline for first time in 11 years… “Global rice production is set to decline for the first time in a decade, tightening supplies of one of the world’s major food staples,” says a Bloomberg report. “Output in the coming 2026-27 season is seen at about 538 million tons, the first decrease in 11 years, the United States Department of Agriculture said in a global crop report on Tuesday. The largest declines are seen in India, Myanmar and the U.S., where the harvest is seen falling 15% from last year as farmers plant less. Combined with record consumption and trade, that will curb global stockpiles.” The fall comes as a spike in fertilizer and energy costs — driven by the war in Iran — are disrupting operations for farmers in Asia. Some growers are considering skipping plantings of the new crop, which is known for being fertilizer-intensive grain.
Global crude oil inventories dropping at record pace… Oil inventories are falling around the world at a record pace and will continue to drop for months as the disruption to Middle East supplies from the U.S.-Iran war intensifies, according to the International Energy Agency. Global observed oil inventories declined at a rate of about 4 million barrels a day in March and April, according to a monthly report from the agency, which is coordinating the release of emergency fuel stocks by major economies like the U.S., Japan and Germany. The market will remain “severely undersupplied” until October even if the conflict ends next month, it said. The hit to exports is deepening as the conflict continues to effectively shutter the Strait of Hormuz. Global supplies slumped by another 1.8 million barrels a day last month, taking total losses since February to 12.8 million barrels a day, according to the IEA report. The crisis is also taking a deeper toll on demand, prompting the agency to slash projections for a third month since the conflict began. World oil consumption is set to plunge by 2.45 million barrels a day this quarter, the steepest drop since the 2020 Covid pandemic, as product flows are cut off and prices soar.
Goldman Sachs sees stronger greenback… U.S. dollar strength will build further over the near term as the energy-price shock will keep yields elevated as economic growth remains relatively resilient, according to Goldman Sachs Group and as reported by Bloomberg. “The combination of rising inflation and relatively resilient growth has already meant higher-for-longer yields, and any further concern about the duration of the energy shock should continue to drive relative returns consistent with shifting terms of trade,” Karen Reichgott Fishman, a strategist at the bank, wrote Tuesday. “That scenario should also fuel broad U.S. dollar strength across Group of 10 currencies.” The greenback has found support in haven flows after the U.S. and Israel attack on Iran in late February upended energy markets. Along with the US being the world’s top oil producer, the greenback has benefited as elevated oil prices threaten to keep inflation at levels that could push the Federal Reserve to hike interest rates next year.
Malaysian palm oil futures sell off… Malaysian palm oil futures tumbled around 1.5% to below MYR 4,450 per MT Wednesday, extending to the downside since early May and hovering near their lowest level in nearly a month. Prices came under pressure from a stronger ringgit, weaker palm olein prices on the Dalian exchange, and softer soyoil markets in Chicago. Adding to the bearish sentiment, China projected soybean imports for the 2026/27 crop year at 95.5 million metric tons, down 7.6%, year-on-year, signaling softer demand across the broader oilseed complex as soymeal consumption weakens amid a shrinking sow herd. Meanwhile, export estimates for the first 10 days of May remained mixed. AmSpec Agri Malaysia noted shipments fell 10.8%, while cargo surveyor Intertek Testing Services estimated exports rose 8.5%. Still, losses were partly limited by expectations that demand from top buyer India could rebound in May after the country’s palm oil imports plunged 27%, month-on-month to a one-year low in April, raising prospects of restocking activity.
Cattle futures market bulls are fading… June live cattle on Tuesday fell $1.70 to $247.70. August feeder cattle lost $5.75 to $356.55 and closed at a six-week low close. The cattle futures markets saw profit-taking pressure and weak long liquidation. A positive for live cattle futures was a report in the WSJ that said the Trump administration is now not planning to temporarily lower tariffs on beef imported into the U.S., after receiving blowback from ranchers and legislators. However, other news reports said the Trump administration is still looking for ways to lower retail beef prices. August feeders see a bearish double-top reversal pattern on the daily bar chart. Selling interest in live cattle futures was also limited by higher cash cattle prices. USDA at midday Tuesday reported light cash trading so far this week, with steers fetching an average price of $259.71 and heifers $260.00. Last week’s average cash cattle trade was $258.52, up $3.50 from the week prior.
Lean hog futures see bearish technicals… June lean hog futures on Tuesday fell $1.80 to $98.425 and hit a five-month low. The lean hog futures market saw renewed technical selling as the near-term technical posture for June hogs remains firmly bearish. Prices are in a downtrend on the daily bar chart. The latest CME lean hog index is down 38 cents at $90.41. Today’s projected cash index price is up 7 cents at $90.48. The national direct five-day rolling average cash hog price quote Tuesday was $94.85.