Good morning!
Grain futures lower overnight… As of 6:00 a.m. CDT, July corn was down 1 1/2 cents. July soybeans were off 2 1/4 cents. July soybean meal was down $2.60. July bean oil was down 24 points. July SRW was 6 cents down and HRW wheat futures were 7 1/2 cents lower. Prices are up from overnight lows as crude oil has erased its earlier losses and rallied. The grain bulls are losing steam late this week but prices are now very near key technical support levels that could stop the bleeding. Technically bearish weekly low closes in the grains on Friday would be ominous signals. On tap today is the weekly USDA export sales report. The key outside markets today see the U.S. dollar index firmer, while Nymex WTI crude oil prices are higher and trading around $101.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.6%.
Latest on U.S.-Iran war… Crude oil quickly erased overnight losses and rallied on news just out that Iran’s supreme leader said he does not want its enriched uranium sent abroad. That runs counter to a main U.S demand in the current peace negotiations. Iran earlier in the day said the latest proposal from the U.S. has partly bridged the gap between the warring sides, as they seek to turn a fragile ceasefire into a peace deal. “Tehran is in the process of responding to a text submitted by the U.S., which ‘has narrowed the gaps to some extent,’ the semi-official Iranian Students’ News Agency reported on Thursday, without saying where it got the information,” Bloomberg reported. “Further narrowing requires an end to the temptation for war on Washington’s part,” said the agency. The exchange of messages is based on Iran’s 14-point text from several weeks ago, the Iranian foreign ministry said separately. That plan essentially suggests a short-term deal that would see Iran reopen the Strait of Hormuz and the U.S. lift a blockade of Iranian ports, with the warring sides then going into deeper negotiations over Tehran’s nuclear program. The developments follow renewed threats of escalation between the U.S. and Iran as their stand-off drags on.
El Nino implications for the Corn Belt, Plains and global competitors... If the National Weather Service’s Climate Prediction Center forecast that the El Nino weather phenomenon will form as early as next month is correct, U.S. farmers in the drought-stricken Southern Plains may get some relief later this year. The weather pattern shouldn’t adversely affect the Corn Belt this summer but could make for tougher conditions in South America and elsewhere. With 60% of the U.S. in some stage of drought, the appearance of El Nino and the potential for more rain could be an “overall positive” for U.S. farmers, says Brad Rippey, meteorologist for the U.S. Department of Agriculture. Check out a special report on the potential for a “Super El Nino” and what it means for global ag markets on ProFarmer.com.
Stormy, wet weather coming to Midwest, Plains… The National Weather Service today said multiple rounds of strong to severe thunderstorms will spread over the central to southern High Plains over the next couple of days. These thunderstorms appear most active today across Oklahoma and Texas followed by a lull on Friday. However, the next round of strong thunderstorms could resume Friday night across the southern High Plains. Meanwhile, the eastern U.S. is entering a period of wet weather through the next couple of days. Beneficial rainfall will occur into the eastern U.S. but the timing of the rain will be during the Memorial Day weekend.By Friday, a compact low-pressure system will bring a round of rain and some embedded thunderstorms across the northern and central Plains.Much of the rain will reach into the upper Midwest by Saturday morning.
Fed’s FOMC minutes lean hawkish… A majority of Federal Reserve officials warned the U.S. central bank would likely need to consider raising interest rates if inflation continued to run persistently above their 2% target. Wednesday afternoon’s minutes from the last FOMC meeting showed many FOMC members called for the Fed to drop its easing bias and signal its next move could be an interest-rate increase. The vast majority of members noted an increased risk that inflation would take longer to return to the FOMC’s 2% annually objective than they had previously expected. While several policymakers said they believed U.S. rate cuts would eventually be warranted, most of the meeting’s participants instead stressed that “some policy firming would likely become appropriate if inflation were to continue to run persistently above 2%,” minutes of the April 28-29 FOMC meeting showed. It appears incoming Fed Chairman Kevin Warsh does indeed have his work cut out for him.
Crude oil prices will remain elevated the next 12 months… Oil market participants expect Brent crude oil to average $81 to $100 a barrel over the next 12 months due to demand slowing down to counter supply losses caused by the U.S.-Iran war, according to a Bloomberg survey of energy analysts. A majority of respondents see oil carrying a lasting risk premium of $5 to $15 a barrel for years to come, with a few expecting it to exceed $20, indicating geopolitical risks are seen as persistent. The survey identified “demand destruction” as the most likely mechanism to offset supply deficits over the next year, followed by rerouted trade flows, OPEC+ policy adjustments and releases from strategic reserves. U.S. shale is still expected to add barrels, though few believe production growth will be strong enough to meaningfully rebalance the crude oil market.
JP Morgan’s Dimon: interest rates going still higher… Jamie Dimon said interest rates may climb much higher from current levels, a warning to bond investors at a time when yields have touched multi-year highs. “They could be much higher than they are today,” the chairman and chief executive of JPMorgan Chase & Co. said in an interview with Bloomberg. “We may have gone from a saving glut to not enough savings.” Dimon’s view comes as long-dated government bonds have come under pressure on concern that higher oil prices may compel central banks to raise interest rates. “Bond rates can go up,” Dimon said. “The notion that somehow people say they will never go up is the wrong notion. Companies like us prepare for higher rates, lower rates.” Yields on 30-year U.S. Treasuries this week rose to levels last seen in 2007, while the rate on two-year notes climbed to the highest since February of 2025.
More dim economic news from European Union… Business activity in the eurozone shrank at the quickest pace in 2 1/2 years due to the Iran war and surge in energy costs. The composite purchasing managers Index fell in May, with manufacturing growing due to precautionary stock-building, while the services sector slumped. Price pressures continued to build, with input costs and goods and services prices surging at the fastest rate in more than three years, hinting at inflation running close to 4% in the coming months. The composite purchasing managers index compiled by S&P Global fell to 47.5 in May from 48.8 in April, holding below the 50 threshold separating growth from contraction for a second month. Analysts had anticipated an unchanged reading.
Worries about “the Asian contagion”… The U.S.-Iran war is piling pressure on emerging Asian markets, pushing some currencies and bond yields toward levels once considered unlikely. “As the conflict drags on, some analysts are mapping out more extreme bearish scenarios. That includes India’s rupee weakening to 100 per dollar, the Indonesian rupiah sliding to 18,000, and the Philippine peso depreciating to 65 as high energy prices fuel inflation and weigh on import-dependent economies. Bond markets are also feeling the strain. Benchmark yields in India may test peaks last seen in 2022, while the head of the money market association in the Philippines say yields may climb toward 8%, a multi-year high,” Bloomberg reported. Asia is reeling from a more than 40% surge in crude prices since the war broke out late February. The pain is being felt most acutely in India, Indonesia and the Philippines, which rely on foreign capital to fund current-account deficits. Indonesia has already moved to defend the rupiah, with the central bank surprising markets on Wednesday with a larger-than-expected rate hike and a pledge to step up currency intervention.
Cargill locks out 1,700 workers at Fort Morgan, Co. beef plant… Cargill stopped paying about 1,700 employees at a beef-packing plant in Fort Morgan, Colorado, on Wednesday in an escalating labor dispute, after suspending cattle slaughtering at the facility a month ago, the workers’ union said, according to Reuters. “The U.S. beef industry is in a period of upheaval as prices have set records this year, with strong demand from consumers even as the nation’s cattle herd is the smallest in 75 years. Meatpackers are processing fewer cattle due to tight supplies and reporting losses in their beef businesses because soaring cattle costs have outpaced gains from higher meat prices. Cargill and rival JBS, which resolved its own labor dispute last month, have pushed back against employees seeking higher pay. Workers, faced with a rising cost of living, have dug in against billionaire owners,” said the report.
Malaysian palm oil futures weaker… Malaysian palm oil futures on Thursday slipped about 1% to below MYR 4,600 per MT, sustaining a muted trend as weaker edible oil prices on the Dalian and Chicago exchanges weighed on sentiment. Weak exports added pressure, with cargo surveyors estimating shipments during May 1–20 fell 13.9%–20.5% from the prior month. Demand worries deepened after April imports from top buyer India plunged 26% in April from March to a four-month low, reflecting softer institutional buying and a narrowing discount versus rival oils. Still, losses were cushioned by firmer crude oil, which bolstered biodiesel demand expectations and underscored global supply risks. Support also came from Indonesia’s plan to centralize commodity exports from the world’s largest producer, including palm oil, raising concerns over supply disruptions. Jakarta will also lift its biodiesel mandate to B50 from B40 in July, while Malaysia is set to raise its blending requirement to B15 from B10 in June.
Cattle futures see routine profit taking… June live cattle on Wednesday fell $1.275 to $253.275. August feeders rose $2.125 to $365.775. The live cattle futures markets saw routine profit-taking pressure. Feeders saw some technical buying featured. Live cattle futures prices are still not far below the recent contract/record highs. USDA at midday Wednesday reported light cash cattle trading so far this week, with steers averaging $263.74 and heifers $264.00. Last week’s average cash cattle trade was a record-high at $262.85--up $4.33 from the week prior. Cattle traders are awaiting Friday afternoon’s USDA monthly cattle-on-feed report. The report is expected to show cattle on Feed as of May 1 at 11.558 million head, which would be 101.6% of the level seen one year ago at the same time. Placements in April are seen at 103.4 percent of last year, at 1.668 million head. Marketings in April are seen at 90.7% of one year ago, at 1.655 million head. These numbers are from a Reuters survey of analysts.
Lean hog futures bears remain in firm control… June lean hog futures on Wednesday fell $0.65 to $97.275 and hit a five-month low. The hog futures market saw still more technical selling pressure. The near-term technical posture for June hogs remains firmly bearish as prices remain in a downtrend on the daily bar chart. The latest CME lean hog index is up 5 cents at $90.55. Today’s projected cash index price is up 44 cents at $91.00. The national direct five-day rolling average cash hog price quote Wednesday was $93.10.