Good morning!
Grain futures weaker overnight… As of 6:00 a.m. CDT, July corn was down 2 cents. July soybeans were off 4 cents. July soybean meal was down $0.30. July bean oil was 40 points lower. July SRW was 4 3/4 cents down and hit a five-week low. HRW wheat futures were 7 3/4 cents lower and hit a six-week low. Mostly good early season growing weather for the U.S. corn and soybean crops is price-bearish, while U.S. winter wheat regions have received some beneficial rains the past couple weeks. (See USDA crop progress item below.) The big fund traders were all bulled up on the grains in early May, but many have been forced into weak long liquidation the past two weeks. However, technical oscillators for corn and winter wheat, including the Relative Strength Index, are now at or near oversold readings that have coincided with near-term price bottoms being in place over the past 12 months. The key outside markets today see the U.S. dollar index slightly down, while Nymex WTI crude oil prices are lower and trading around $91.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.437%.
Latest on U.S.-Iran war…
--Trump aims to calm Lebanon tensions to keep peace talks alive
-- Analysts tell OPEC+ Hormuz disruption to last through year end
President Trump says he thinks the U.S. can reach an interim peace deal with Iran soon, with discussions continuing “at a rapid pace.” Iran’s negotiators are discussing their “final text” to send to the U.S., but are wary of the U.S. due to previous breached pledges. A ceasefire in Lebanon is a key part of the potential memorandum of understanding between the U.S. and Iran, with Iran insisting on a stop to fighting as part of the deal.
Unsettled weather over the Plains, Midwest, Southeast … The National Weather Service today has highlighted parts of North Dakota with a slight risk of excessive rainfall, with a marginal risk extending downward across the Plains into Texas and New Mexico. In addition to flash flooding concerns, there is a slight risk of severe thunderstorms over the Northern Plains and a marginal risk across the central to southern Plains and parts of the Southeast. Temperatures today will mostly be near normal or slightly above normal across the continental U.S.
Trump administration to lower tariffs on ag equipment… The White House says it will reduce tariffs on agricultural equipment, such as combines and harvesters, in order to reduce costs for U.S. farmers and manufacturers. Under a proclamation issued late Monday, those tariffs would drop to 15% from 25%. Foreign companies could qualify for a lower 10% duty rate if capital equipment contains at least 85% U.S. steel or aluminum, Bloomberg reported, citing a White House fact sheet. The concession takes effect June 8 and would run through the end of 2027. Shares of Kubota Corp., the Japanese industrial machinery manufacturer, rose as much as 7.9% in Tokyo after the announcement. Trump cited rising costs as a justification for the move. “Among other things, the Secretary has informed me that recent circumstances have affected and are affecting domestic industries that use agricultural equipment, industrial equipment and machinery, and other related products,” the president’s proclamation read.
U.S. corn, soybean crop condition ratings slightly below expectations… Corn and soybean crop conditions came in a bit below market expectations in USDA’s first weekly assessment of the 2026 growing season. The agency’s weekly crop progress data showed 67% of the corn crop rated good or excellent as of Sunday. Analysts surveyed by Reuters, on average, looked for a good-to-excellent rating of 70%. The soybean crop was rated 66% good or excellent, versus expectations for 68%. Corn planting was nearly complete at 93% across top-producing states, matching the average estimate. Soybean planting was 87% finished versus expectations for 89%. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the corn crop came in at 371.33, compared with 374.60 at the same time last year. The soybean CCI was 368.10 versus 369.74 last year. For a full rundown of the latest crop progress, conditions and CCI ratings, click here.
Australian winter wheat crop seen down 26%... Australia’s winter wheat crop is forecast to fall by more than a quarter in the 2026/27 season due to unusually dry weather, low global prices and higher input costs resulting from the war in the Middle East. The current-season harvest is estimated at 26.7 million tons, according to the Australian Department of Agriculture’s first survey of the crop and as reported by Bloomberg. That would be down 26% from a year earlier and below both the 5- and 10-year averages. “The decline is attributable in part to a forecast 12% reduction in the planted acreage. At 10.9 million hectares, the area is the smallest since 2019/20, a reflection of weak global prices and diminishing margins for wheat relative to other crops, particularly as the throttling of trade via the Strait of Hormuz has caused fuel and fertilizer prices to spike. Australia is one of the world’s largest wheat exporters and a major supplier to the growing economies of Southeast Asia and the Middle East, as well as China,” said the report.
U.S. threatens 25% tariffs on Brazil… The Trump administration has proposed a new punitive tariff of 25% on many imports from Brazil, after deciding its practices were unfair on a range of issues from digital trade to illegal deforestation, top trade official Jamieson Greer said on Monday, according to Reuters. The measures, under the Section 301 trade legislation, cover areas such as electronic payment services, preferential tariffs, intellectual property protection and ethanol market access as well, the Office of the USTR said.
U.S., Canada trade officials meet today… The office of Canada-U.S. Trade Minister Dominic LeBlanc stressed the importance of “maintaining the highly integrated North American energy market” ahead of talks in Washington with U.S. Trade Representative Jamieson Greer, Bloomberg reported. LeBlanc and Energy Minister Tim Hodgson met with leaders from Canada’s oil and gas sector to discuss preserving the tightly linked energy market “that supports jobs, economic growth and energy security on both sides of the border.” Companies pointed to opportunities for Canada and the U.S. to build on their longstanding energy partnership to support competitiveness across North America, and outlined priorities for the USMCA review. LeBlanc and Janice Charette, Canada’s chief negotiator to the U.S., are scheduled to meet Greer today before returning to Ottawa the same day. U.S. and Mexican negotiators began formal talks last week on potential changes to the U.S.-Mexico-Canada Agreement.
Commodity markets in “super-bull” cycle: HSBC… HSBC Holdings says commodities are in a “super-squeeze” that will worsen if the Strait of Hormuz remains effectively shut, according to Bloomberg. “The longer the strait is closed, the more inventories are run down, the more likely it is that we reach ‘tipping points’ in the markets for some commodities,” analysts said in a report. Raw materials hit a record in mid-May, before paring gains as the U.S. stepped up efforts to extend a truce in its war with Iran. Beyond the Middle East, HSBC’s broad outlook also highlighted other bullish factors for commodities, including rising consumption for base metals and a looming El Niño weather event that may hurt crop supplies. The overall commodities cycle remains in a so-called super-bull phase, but “this is very different to earlier ‘super-cycles’, because it is driven by supply disruptions,” the analysts said. “Rather than a ‘super-cycle’, we have been calling it a ‘super-squeeze’,” they said.
Euro zone inflation above 3% annually… Euro zone inflation topped 3% for the first time in more than 2 1/2 years, cementing expectations for an interest-rate hike when the European Central Bank meets next week. Consumer prices rose 3.2% from a year ago in May, up from 3% the previous month, Eurostat said Tuesday. That’s in line with the median estimate in a Bloomberg survey. Core inflation, which excludes volatile items like food and energy, quickened more than anticipated to 2.5%, while the closely watched services gauge jumped to 3.5%.
EU lawmakers approve U.S. trade deal… European Union lawmakers have given their preliminary approval to a U.S. trade deal, clearing a path for final ratification before President Donald Trump’s threatened deadline to impose new tariffs. The European Parliament’s trade committee greenlit the agreement today, just days after EU negotiators overcame lingering disputes to finalize the text. The vote was expected after trade committee chief Bernd Lange signaled his support. The full European Parliament is now scheduled to vote on ratification on June 16. EU member states are expected to give their final assent shortly after that. The EU is under a tight deadline to implement the transatlantic trade pact, as Trump has vowed to hit the bloc with new levies if it doesn’t approve the agreement by July 4.
Malaysian palm oil futures extend gains… Malaysian palm oil futures hovered around MYR 4,550 per MT, extending recent gains amid firmer edible oil prices on the Dalian Exchange and concerns over softer Malaysian output. Sentiment remained supported by top supplier Indonesia’s plan to route key commodity exports, including palm oil, through a state-run trading firm starting in September, a move that could potentially benefit Malaysian shipments. However, contracts are on track for a second monthly decline, weighed down by sluggish exports. Cargo surveyors noted exports during May 1–25 fell between 14.5% and 18.0% from April, partly due to the absence of festive buying. Meanwhile, demand outlook from India, the world’s largest palm oil importer, remained uncertain after the country’s April palm oil imports plunged 26% to a four-month low.
Feeders lead cattle futures markets higher… August live cattle on Monday rose $1.55 to $240.60. August feeder cattle gained $3.125 to $351.55. The cattle futures markets saw short covering and perceived bargain hunting, with feeders leading the way. New World Screwworm has been found in a young sheep in Mexico within 31 miles of the U.S. border, USDA reported last Friday. USDA at midday Monday reported cash cattle trading last week averaged $256.86. That’s down $3.63 from last week’s average.
Lean hog futures continue to see chart-based selling… August lean hog futures on Monday fell $0.75 to $97.60 and hit a six-month low. The lean hog futures market saw continued technical selling pressure. Near-term charts remain firmly bearish. Prices are still in a steep downtrend on the daily bar chart. The latest CME lean hog index is up 48 cents at $91.40. Today’s projected cash index price is down 4 cents at $91.36. The national direct five-day rolling average cash hog price quote Monday was $94.17.