Good morning!
Grain futures mixed overnight… As of 6:00 a.m. CDT, July corn was down 1 cent. July soybeans were up 1 1/4 cents. July soybean meal was up $1.00. July bean oil was up 10 points. July SRW was 8 1/2 cents lower and HRW wheat futures were down 6 cents—with both markets hitting two-week lows. Solid losses in the crude oil market are helping to pressure the grain markets so far this week. Growing weather in the Corn Belt also leans price-bearish for corn and beans, with no threatening conditions at present. The Malaysian palm oil futures market was closed today for a holiday. The key outside markets today see the U.S. dollar index slightly down, while Nymex WTI crude oil prices are solidly lower and trading around $90.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.46%.
Latest on U.S.-Iran war…
--Oil dips as U.S. sees progress in Iran deal despite fresh tensions
--Israel increases attacks on Lebanon as U.S.-Iran peace talks crawl on
The U.S. is touting progress toward a peace deal with Iran to end the nearly three-month war, despite fresh hostilities and uncertainty over the Strait of Hormuz. One contentious issue under discussion is Iran’s $24 billion in frozen assets, with Tehran wanting half that amount released upon the signing of an agreement. Obstacles to a U.S.-Iran pact include Tehran’s reluctance to allow ships free passage through the Strait of Hormuz and Trump’s desire for Iran to commit to handing over or destroying its stocks of highly enriched uranium. Those are big obstacles.
Heat wave in Northern Plains, upper Midwest … The National Weather Service today said in contrast to the cooler-than-normal temperatures for parts of the West, unseasonably hot weather will remain entrenched across the northern Plains and upper Midwest. High temperatures are forecast to climb well into the 80s and 90s the next few days, with some locations across eastern Montana and western North Dakota potentially nearing or eclipsing 100 degrees. These early season summer-like temperatures could become stressful to livestock and humans. Meantime, a nearly stationary boundary will become a focus for heavy rainfall across portions of the Ohio Valley and the Central Appalachians this afternoon. Prior rainfall and increasingly saturated soils will raise the flash flood threat in spots. In addition to the heavy rain threat, severe thunderstorms will also be possible, mainly from the Ohio Valley eastward into the southern Mid-Atlantic.
USDA weekly crop progress updates… Corn planting is entering the home stretch, with less than 15% of the crop yet to be sown, USDA crop progress data showed Tuesday. The report pegged corn planting at 86% complete as of Sunday, just a percentage point shy of the average estimate of 87% seen in a Bloomberg survey of analysts. That’s up from 76% a week earlier and remains ahead of the five-year average of 83%. Soybean planting was 79% complete, matching the average estimate and up from 67% a week ago. It’s also well ahead of the five-year average of 68%. Spring wheat planting was 86% complete, also in line with the average estimate and up from 73% a week earlier. It’s also ahead of the five-year average of 79% for this time of year. The reports showed 60% of the corn crop had emerged, up from 38% a week ago and a five-year average of 58%. Soybeans were 49% emerged, up from 32% a week ago and a five-year average of 40%. Spring wheat saw 56% emergence, up from 39% a week ago and a five-year average of 51%. USDA said it is likely to begin including crop condition ratings for corn and soybeans in the crop progress report beginning next week.
Winter wheat conditions continue to downtick… The weekly USDA crop progress data showed the percentage of the U.S. winter wheat crop rated good to excellent as of Sunday fell a percentage point to 26%, versus analyst expectations for an uptick to 28%. The crop in the Plains has suffered a devastating drought as well as frosts and freezes. On our weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop declined 1.11 points to 240.53. Oklahoma saw the largest decline this week, as most of the state missed out on rains that slightly boosted the crop rating elsewhere in the southern Plains.
Russia mulls limiting diesel, jet fuel exports… Russia is considering limiting exports of diesel and jet fuel, Bloomberg reported, citing a report by Interfax, as refinery run rates fall to multi-year lows amid Ukraine’s escalating attacks. Oil companies were advised to curb sales of oil products to foreign markets following a Tuesday meeting with Deputy Prime Minister Alexander Novak on the domestic fuel market, the Russian news service reported, citing several people familiar with the situation. One of the people said that the decision to ban exports of diesel and jet fuel is at an advanced stage, but the date for the ban hasn’t yet been set, according to Interfax. If implemented, the ban will add pressure to global oil-product prices as Russia is a key exporter of diesel, selling roughly 40% of the produced fuel to foreign markets, said the Bloomberg report.
S&P 500, Nasdaq stock indexes power to record highs… The rally in U.S. stocks is set to stretch into a fifth day today as optimism around artificial intelligence, lower crude oil prices and easing bond yields spurred traders to grow increasingly bullish. Contracts on the S&P 500 rose 0.3% overnight, while those for the Nasdaq 100 climbed 0.4%, after the relentless advance in chipmakers fueled both gauges to another round of record highs this week. There is trader and investor optimism that the U.S. and Iran are nearing a deal to fully reopen the Strait of Hormuz, which has pressured oil prices.
Federal Reserve official: U.S. crude oil production can’t fill global deficit… Federal Reserve Bank of Dallas President Lorie Logan on Tuesday warned that the world’s supply of crude oil and natural gas may start to dwindle if shipping through the Strait of Hormuz doesn’t return to normal soon. Logan said U.S. production won’t be able to fill the gap in global oil supplies driven by the war in Iran due to capital, labor and other input constraints. Logan said that if shipping through the strait does not soon return to prewar levels, world oil and natural gas consumption could need to fall more meaningfully than it has so far.
U.S. moving ahead on “Board of Trade” with China… U.S. Trade Ambassador Jamieson Greer said his agency would issue a notice in the Federal Register “shortly” to seek public comments on a Board of Trade with China, a formal step to establish a new mechanism to manage economic relations between the two nations. “We’ll be putting out a Federal Register notice shortly,” Greer said at a Council on Foreign Relations event Tuesday, Bloomberg reported. “I’ve seen it, I’ve looked at it, I’ve red-lined it personally, and it will be setting up what we’re going to do on the U.S. side, which in the first instance is to put out a call for public comment.” The U.S. and China pledged to establish the Board of Trade and a separate Board of Investment during the summit earlier this month between President Trump and his Chinese counterpart, Xi Jinping.
Trump-backed candidate defeats sitting U.S. senator in Texas primary… Texas Attorney General Ken Paxton won the state’s Republican Senate runoff, defeating incumbent John Cornyn with approximately 63% of the vote. Paxton, who was backed by President Trump, will face Democrat James Talarico in the November election. Paxton clinched the nomination a week after securing an endorsement from Trump in one of the most expensive primaries in Senate history. Cornyn conceded shortly after polls closed Tuesday.
Cattle futures bulls work to stop the bleeding… June live cattle on Tuesday fell $1.075 to $248.225. August feeders lost $0.40 to $349.50. The feeder cattle futures market bulls are working to stop the bleeding after the recent steep price downdraft that drove prices to a two-month low last week. Live cattle futures Tuesday saw some technical selling. USDA at midday Tuesday reported cash cattle trading last week averaged $258.77, down $4.08 from the week prior’s record high of $262.85. In the Northern Plains, temperatures in the western half of the region will be extreme for this time of year today through Thursday, which will stress livestock.
Lean hog futures market pauses… June lean hogs on Tuesday rose $0.375 to $96.125. The lean hog futures market paused as bulls work to gain some footing. The near-term technical posture for June hogs remains firmly bearish as prices are in a steep downtrend on the daily bar chart. The latest CME lean hog index is down 19 cents at $90.88. Tuesday’s projected cash index price was not available. The national direct five-day rolling average cash hog price quote Tuesday was $93.46.