Good morning!
Grain futures mostly weaker overnight… As of 6:00 a.m. CDT, July corn was down 3 1/4 cents. July soybeans were off 4 1/4 cents. July soybean meal was down $1.80. July bean oil was down 13 points. July SRW and HRW wheat futures were near steady. The grain markets wobbled a bit overnight on some concerns regarding China actually committing to buying $17 billion in U.S. ag products. (See item below.) The key outside markets today see the U.S. dollar index slightly up, while Nymex WTI crude oil prices are lower and trading around $101.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.64%.
China commerce ministry does not mention $17 billion in U.S. ag product purchases… In a statement today, China’s Ministry of Commerce confirmed there had been a “guiding target” set between the two countries with the goal of “expanding two-way agricultural trade,” but made no mention of the U.S. government’s claimed $17 billion number for U.S. ag product purchases from China, Bloomberg reported overnight. “With no official confirmation of the figure yet from the Chinese government, lingering concerns about the trade dispute between Washington and Beijing” are putting some downward pressure on grain prices, said Tobin Gorey, a strategist at Cornucopia Agri Analytics. “You can make promises about we’ll buy this, we’ll buy that, and it’s helpful. But people want to see it,” he said in the Bloomberg report.
Latest on U.S.-Iran war…
- Trump threatens Iran with ‘big hit’ if there’s no peace deal soon
- Iran threatens to extend conflict ‘beyond the region’ if U.S. and Israel resume attacks
President Trump threatened to resume strikes on Iran in the coming days as part of the push for a deal to end the war, according to Bloomberg. “I hope we don’t have to do the war, but we may have to give them another big hit,” Trump told reporters on Tuesday. When asked how long he would wait, he said: “Well, I mean, I’m saying two or three days, maybe Friday, Saturday, Sunday. Something maybe early next week — a limited period of time.” Meantime, the Republican-led U.S. Senate signaled opposition to continuing the war with a procedural vote on Tuesday evening that reflected deepening unease over a foreign conflict. Vice President JD Vance projected a slightly more positive tone on the negotiations, saying “we think that we’ve made a lot of progress; we think the Iranians want to make a deal,” but also threatened a resumption of strikes.
Iran’s paramilitary Revolutionary Guard on Wednesday put out astrongly worded statement threatening to extend the Middle East conflict “beyond the region” if the U.S. and Israel resume attacks against Tehran, CNBC reported. In the event the aggression against Iran is repeated, “the regional war that was promised will this time be extended beyond the region, and our crushing blows will bring you to ruin in places you cannot imagine,” Iran’s Revolutionary Guard said, according to a statement reported by the country’s semi-official Mehr news agency.
Frost, freezes in north-central U.S. … The National Weather Service today said a high-pressure system will keep temperatures below normal across the northern tier states to the central Plains. Freezes and frosts will occur in Minnesota, the Dakotas, Wisconsin, northeastern Nebraska and the northwest tip of Iowa. Rainfall overspreading the Ohio Valley, Mid-Atlantic and areas of New England should largely be beneficial as many of these areas are dealing with an ongoing drought. The West Coast will remain dry. Western Texas will likely see strong to severe thunderstorms today into tonight. Rain and high-elevation snow will occur across northern Rockies into the northern High Plains beginning later today through Thursday. Along the East Coast, another day of record heat is expected from the Mid-Atlantic to New England before the arrival of a cold front. The recent spell of heat will be replaced by wet and cool weather on Thursday for the northern Mid-Atlantic.
USDA says U.S. will boost its fertilizer production… The Department of Agriculture will revive and expand a Biden administration program to boost U.S. fertilizer production, USDA Secretary Brooke Rollins said Tuesday, according to Politico. At a news conference with EPA Administrator Lee Zeldin and Energy Secretary Chris Wright, Rollins said USDA will shift the fertilizer program away from the prior administration’s focus on reducing greenhouse gas emissions. “Those projects that were stalled because of climate requirements are now coming back online,” Rollins said. The Biden administration designed the program to address price shocks from Russia’s invasion of Ukraine, as well as to encourage production of fertilizer with lower carbon emissions. Rollins said “every tool in the toolkit has to be reviewed and analyzed.” She said the permitting process for a new ammonia plant, the Blue Point Project being built in Louisiana, could be finalized within 45 days through the Army Corps of Engineers. The plant is scheduled to be operational in 2029.
More signs of stability in U.S.-China trade relations… China has indicated it would accept some increase in U.S. tariffs to a level agreed upon last year and would continue talks to extend a trade truce. The Commerce Ministry in Beijing said trade teams from both countries would discuss extending the one-year agreement worked out at negotiations in Kuala Lumpur, said a Bloomberg report. “The ministry’s statement signals Beijing would accept U.S. tariffs provided they do not exceed the level agreed in Malaysia, and the U.S. should further remove unilateral tariffs upon follow-up talks,” said the report.
Global long-term government bond yields rise to two-decade highs… The sell off in longer-maturity government bonds has pushed up yields to levels last seen during the global financial crisis, and market participants are warning yields could rise even farther. A surge in global inflation expectations has brought the average yield on sovereign debt due in a decade or more to the highest since July 2008, a Bloomberg gauge shows. “Global long-dated bonds have been under pressure on concern the jump in energy costs will feed into everything from plastic bottles for soda to gasoline for tractors needed to harvest crops. Add in worries over government spending in Japan, the U.K. and the U.S., as well as an artificial intelligence boom supporting growth in the world’s biggest economy, and investors have been seeking greater compensation to own longer-maturity debt,” said the report.
European Central Bank could hike rates as soon as next month… The European Central Bank may raise borrowing costs next month if the Iran war doesn’t end, according to Governing Council member Pierre Wunsch and as reported by Bloomberg. Wunsch described market bets for interest rate increases as “reasonable” and said the ECB is at “the beginning of an inflation problem” with inflation already at 3%. “The ECB must consider higher inflation, a stagnating economy, and a bond selloff when deciding whether to raise interest rates, with some analysts suggesting a lift to 2.5% from 2%,” said the report.
EU finalizes text of trade deal with U.S. … The European Union finalized the text of its U.S. trade deal after months of negotiations, clearing a major hurdle to ratifying the pact before President Trump’s threatened deadline. The deal would see the EU erase levies on U.S. industrial goods in exchange for a 15% tariff ceiling on the bloc’s exports, and the European Parliament and EU countries will now vote to ratify the finished text. The agreement includes fresh language to address EU concerns over U.S. metals tariffs and allows the commission to suspend the trade deal if tariffs on products using steel and aluminum surpass 15% after 2026.
Malaysian palm oil futures rally… Malaysian palm oil futures jumped almost 2% to above MYR 4,650 per MT, extending recent gains to their highest level in two weeks. Sentiment was boosted by stronger edible oil prices on the Dalian and Chicago markets, alongside a weaker ringgit. Prices also drew support from reports that Indonesia, the top supplier, plans tighter oversight of commodity exports, including palm oil and coal, to boost state revenue. Supply concerns added momentum after rising input costs prompted Malaysian growers to scale back replanting, delaying a process vital for long-term output. Elevated vegetable oil prices have further discouraged replanting. However, upside was capped by weak demand signals. AmSpec Agri Malaysia estimated exports during May 1–15 fell 16.5% from April. Meanwhile, April imports by India, the largest consumer, dropped 26% from March to a four-month low, pressured by softer institutional demand and a narrowing price discount against rival oils.
Cattle futures supported by bullish charts… June live cattle on Tuesday rose $1.175 to $254.55. August feeders rose $4.80 to $363.65. The cattle futures markets saw better technical buying interest Tuesday and also support from last week’s sharply higher cash trade. USDA at midday reported very light cash cattle trading so far this week, at $262.50. Last week’s average cash cattle trade was a record-high at $262.85. That’s up $4.33 from the week prior.
Technical selling continues to press lean hog futures… June lean hogs on Tuesday fell $0.60 to $97.925 and hit a five-month low. The lean hog futures market saw more technical selling pressure. The near-term technical posture for June hogs remains firmly bearish as prices are in a downtrend on the daily bar chart. The latest CME lean hog index is up 4 cents at $90.50. Today’s projected cash index price is up 5 cents at $90.55. The national direct five-day rolling average cash hog price quote Tuesday was $94.15.