Good morning!
Grain futures steady-mixed overnight… At 6:00 a.m. CDT, December corn was unchanged. November soybeans were 1 1/2 cents lower. September soybean meal was up $0.70. September bean oil was 15 points lower. September SRW wheat was up 3 1/2 cents and September HRW wheat prices were 2 1/4 cents higher. The grain markets paused overnight as the bulls work to stabilize prices. Weather in the Midwest still leans bearish for corn and soybeans but the recent big drop in the U.S. dollar index has likely limited the downside in the grain markets. On tap today is the weekly USDA export sales report, with soybean bulls hoping for a big bean number, including sales to China. The key outside markets today see the U.S. dollar index slightly up. September Nymex WTI crude oil prices are slightly up and trading around $75.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.623%.
Iran says it reached agreement with Oman on Strait of Hormuz shipping route… Iran said it has reached an agreement with Oman on a proposed route for shipping through the Strait of Hormuz, a potential step toward a reopening of the critical waterway for energy supplies. “A joint statement from Tehran and Muscat is under review and in the final drafting stage, Iranian Foreign Ministry spokesman Esmail Baghaei told reporters on Wednesday, according to a post on Telegram,” said a Bloomberg report. Negotiations between the two countries are “forward-moving” and a deal would be struck “if certain third parties do not obstruct this process,” he said. Iran and Oman have been in discussions for several days about a management plan for the Strait of Hormuz, which has emerged as the focal point of the ongoing war between the U.S. and the Islamic Republic. “Baghaei didn’t mention any role for Washington, except to say the closure of the strait was a result of attacks by the U.S. and Israel. The White House didn’t respond to a request for comment on the announcement,” said the report.
Scattered rains persist across central U.S., Plains into Saturday… The National Weather Service today said moisture-rich air over the eastern part of the country will aid in producing showers and thunderstorms from the northeast into the Great Lakes, southeast to the middle Mississippi Valley and into the central/southern Plains through Saturday.A second front moving southward out of central Canada will move into parts of the upper Midwest and Northern Plains overnight into Friday and into the lower Great Lakes/Ohio Valley on Friday into Saturday. The boundary will trigger scattered showers and thunderstorms over those regions this evening into Friday.
Total New World screwworm cases detected in U.S. at 45… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is now reporting 45 total New World screwworm detected cases in the U.S. There are now five active cases, all in Texas.
Russia, Ukraine continue attacks on each other’s infrastructure… Ukraine struck two of Russia’s oil refineries overnight, the Yaroslavl refinery and Bashneft’s Novoil facility. The Yaroslavl region repelled its largest-ever drone attack, with unmanned aerial vehicles destroyed overnight, and the tanks at the oil refinery were damaged due to fallen debris, said a Bloomberg report. Ukraine has intensified strikes on Russia’s downstream industry, with at least nine attacks on eight of Russia’s crude-processing plants in recent days, once again putting domestic supplies of gasoline and diesel at risk and threatening higher prices. Overnight, Russia shot down 605 Ukrainian drones over its regions, the Black Sea and the Sea of Azov, with number of repelled unmanned aerial vehicles near a record-high, according to nation’s Defense Ministry. At the same time, Russia has been attacking regions across Ukraine, including that nation’s Black Sea ports and vessels calling there.
U.S. Treasury yields stabilize this week… The yield on the 10-year U.S. Treasury note hovered around 4.6% today, down about 10 basis points so far this week as the partial reopening of the Strait of Hormuz continued to pressure oil prices, easing inflation concerns and reducing expectations for more aggressive Federal Reserve tightening. Markets have pared expectations for Fed interest rate hikes this year, now pricing in just one increase by year-end, down from two as recently as last week. Meanwhile, Fed Governor Lisa Cook reiterated that she is prepared to raise rates if inflation does not continue to ease. Separately, San Francisco Fed President Mary Daly said she supported the central bank’s decision to leave rates unchanged last week, while cautioning that persistently elevated inflation may require a more forceful policy response. TradingEconomics.com
U.S. diesel fuel exports hit record high… The U.S. shipped a record amount of distillate fuel overseas last week as domestic stockpiles fell again. Exports of distillate fuel rose to 1.9 million barrels a day last week, according to the U.S. Energy Information Administration. The U.S. is one of the world’s few producers of diesel with ample capacity to produce fuel and ship it abroad, with exports in the last two weeks most frequently going to northwestern Europe. “The new record capped off five weeks in a row with exports over 1.5 million barrels a day, drawing down the country’s fuel supplies even as refiners go all-out to produce diesel,” said a Bloomberg report.
Copper futures hit record high overnight… Copper futures held above $6.80 per pound and at a record high early today as tightening global inventories and persistent supply risks in top producer Chile continued to support prices. “Development at the Andes Norte section of Codelco’s flagship El Teniente mine could remain suspended for as long as two years, adding to supply tightness in the global copper market. Across the mining industry, producers are extending operations deeper underground as mature ore bodies become depleted, exposing them to greater geotechnical challenges like those affecting El Teniente,” said a report from TradingEconomics.com. Meanwhile, analysts flagged an increasing risk of a short-term squeeze on the London Metal Exchange, driven by scarce on-warrant inventories, falling visible stockpiles in China, and robust US buying ahead of a possible tariff announcement. Data showed that more than 200,000 tons of copper arrived at US ports in July, marking the largest monthly inflow in over a decade, said the report.
Malaysian palm oil futures weaker… Malaysian palm oil futures on Thursday slipped below MYR 4,700 per MT, reversing recent gains as a stronger ringgit and weaker Chicago soyoil prices dampened sentiment. Meanwhile, crude oil prices retreated, further weighing on palm oil as lower energy prices reduce biodiesel demand prospects. Market pressure also stemmed from Reuters forecasts that Malaysia’s palm oil inventories climbed to a five-month high in July, reflecting seasonally stronger output. Traders stayed cautious ahead of China’s July trade data, which may offer fresh demand signals from a major palm oil consumer. Still, losses were tempered by firmer edible oil prices on the Dalian exchange and solid export momentum. Cargo surveyors estimated Malaysia’s July palm oil shipments rose 12.1%–19.5% from June. In top buyer India, edible oil imports hit a 10-month peak in July as refiners stepped up palm oil and soyoil purchases to rebuild stocks before the festive season amid tightening domestic supplies.
Cattle futures markets at three-week highs… October live cattle on Wednesday rose $1.575 to $229.475 and hit a three-week high. September feeder cattle gained $2.225 to $348.375 and also hit a three-week high. The cattle futures markets saw fresh technical buying as bulls have momentum and have established fledgling price uptrends on the daily bar charts. Good gains in the stock market recently and a weaker U.S. dollar index that favors the monetary policy doves are also supportive to the cattle markets, from the perspective of better consumer confidence. USDA at midday Wednesday reported light cash cattle trading so far this week, with steers averaging $235.00 and heifers $234.22. The agency Monday reported cash cattle trade last week averaged $233.06, which compares to an average of $230.48 fetched the week prior.
Lean hog futures bears remain in control… October lean hogs on Wednesday fell $1.325 to $83.025 and closed at a four-week-low close. The hog futures market saw technical selling from the speculators featured as prices saw a downside breakout from a bearish pennant pattern on the daily bar chart. The cash hog market is also trending down, to keep buyer interest in futures limited. The latest CME lean hog index down 51 cents to $97.17. Today’s projected CME index price is down 22 cents at $96.95. The national direct five-day rolling average cash hog price quote for Wednesday was $99.54.