Good morning!
Grain futures firmer overnight… At 6:00 a.m. CDT, July corn was up 1 1/4 cents. July soybeans were up 3 cents. July soybean meal was up $3.20. July bean oil was down 12 points. July SRW wheat was up 1 1/2 cents and July HRW was 1 3/4 cents higher. The grain markets saw tepid short-covering gains overnight but the bulls are still on the ropes ahead of two big events next week: The June 30 USDA planted acreage and quarterly grain stocks report, which combined are arguably one of the biggest USDA data releases of the year for the grains. Secondly, the calendar turns to July next week, quickly followed by the U.S. Independence Day holiday next weekend. History shows that grain trading in the few days following the Fourth-of-July holiday can be pivotal and volatile, including existing price trends potentially being accelerated or reversed. These two major elements also suggest grain futures trading action the rest of this week and next Monday may be more subdued, ahead of Tuesday’s USDA acreage and stocks data. The key outside markets today see the U.S. dollar index modestly higher and hitting another 13-month high overnight, while August Nymex WTI crude oil prices are lower, hit a three-month low and are trading around $72.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.48%.
New World screwworm cases detected in U.S. rise to 19… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is now reporting 19 total New World screwworm detected cases, 16 of which are classified as active. All 16 active cases are in Texas.
Scattered, stormy weather conditions over central U.S. … The National Weather Service today said an active summertime weather pattern will maintain daily threats of scattered severe weather and flash flooding across parts of the central and south-central U.S. through mid to late week. The strongest severe storms will have the potential to produce damaging winds, large hail, and a few tornadoes from the High Plains into the Ozarks. In addition to the severe weather, intense rainfall rates in these storms could yield scattered instances of flash flooding over much of the same area. Through Friday, much of the Northern Plains and Great Lakes can enjoy unseasonably cool weather with the arrival of mild Canadian air. In contrast, parts of the West and southern Plains will continue to bake under intense heat the next two days. High temperatures across these heat-stricken regions will run from the 90’s into the triple digits, prompting numerous heat advisories and extreme heat warnings through today and Thursday.
Crude oil extends declines as oil tankers transit Strait of Hormuz… Crude oil futures prices extended their declines as more tankers openly cross the Strait of Hormuz, while the U.S. and Iran have signaled progress toward ending the war. Brent crude futures hovered around $76 a barrel after falling 1.1% in the previous session, and Nymex West Texas Intermediate was below $72. “Vessels are transiting the waterway with their satellite signals switched on, indicating growing confidence among shipowners. The International Maritime Organization also said it had received safety guarantees allowing hundreds of ships to exit the Persian Gulf,” said a Bloomberg report. Washington and Tehran have both flagged early progress in talks to end the war that began in late February, although negotiations are likely to be protracted and claims from the two sides have diverged. In a sign of how much oil has been leaving Hormuz in recent weeks, the International Energy Agency estimates that the United Arab Emirates is exporting oil at nearly 85% of pre-war levels, said the report. Oil prices are down about 40% from their high during the peak of the conflict.
Average U.S. diesel price drops below $5.00 a gallon… The cost of diesel in the U.S. fell below $5 a gallon for the first time since mid-March, offering some relief for one of the global economy’s most important fuels. The national average retail price declined to $4.98 a gallon on Wednesday, according to the American Automobile Association and as reported by Bloomberg. That’s down from a peak of $5.69 a gallon in April, though still well above the $3.76 a gallon recorded on the eve of the U.S.-Iran war. “There may yet be more upward pressure on diesel prices if Russia, typically a major exporter, decides to implement a ban on sending diesel out of the country,” said the report. Meantime, President Trump has ordered the Department of Justice to look into gasoline prices, which he says aren’t falling fast enough. Average nationwide gasoline prices surged to the highest level since 2022 early in the U.S.-Iran war but have since fallen and are now below $4 a gallon.
European heat wave intensifies; 112 degrees in France… France recorded its hottest ever night and day as the heat wave searing western Europe deepened, disrupting schools, transport and tourist sites. As the week-long heat wave continued, 112F was recorded in Pissos in southwest France. The average daily temperature across the country hit an all-time high on Tuesday, according to government forecaster Météo-France. That followed France’s hottest ever night. “France is at the epicenter of this month’s heat wave, as a high-pressure heat dome is reinforced by atmospheric shifts linked to a developing El Niño. The country has issued red heat alerts for a record 58 departments, while similar warnings are in place in the U.K., Germany, Spain and Switzerland,” Bloomberg reported. Drought and wildfire conditions are worsening across France, Spain and Greece, officials said. Soil moisture levels are approaching the driest ever observed in some regions, said the report. Read: Will the European heat wave move the needle on global wheat stocks?
Strong greenback pressuring Chinese yuan… China’s central bank on Wednesday set the daily guidance rate for the yuan at a weaker level for a fourth straight session, demonstrating flexibility in managing the currency amid the recent strength of the U.S. dollar. “The weaker official fixings reveal Beijing’s calm approach to calls from some European leaders for yuan appreciation, with analysts saying Chinese policymakers are unlikely to be swayed due to the People’s Bank of China’s preference for overall exchange-rate stability. The yuan’s appreciation pace may slow down in the near term due to the stronger dollar and rising odds that the Fed will hike rates, but the odds of China entering into any accord under German or EU pressure are considered to be very low,” said a Bloomberg report. The U.S. dollar index—a basket of six major global currencies weighted against the dollar--overnight hit another 13-month high.
Global central banks remain on inflation alert… Two Bloomberg headlines today read: “Australia’s core inflation accelerates, keeping RBA on alert” and “Bank of Japan
summary affirms rate hike stance as inflation risks mount.”
Malaysian palm oil futures firmer… Malaysian palm oil futures hovered above MYR 4,650 per MT Wednesday, recovering from earlier weakness amid a softer ringgit and firmer soyoil prices on the Dalian and Chicago markets. Strong exports also supported prices, with cargo surveyors noting June 1–20 shipments rose between 19.1% and 25% from the same period in May. Supply concerns persisted as the effects of El Niño continued to point to tighter output. In Indonesia, the world’s largest supplier, the B50 biodiesel mandate is set to take effect on July 1, boosting expectations for stronger domestic consumption. Meanwhile, India’s palm oil imports are projected to top 600,000 MT in June, up from 549,356 MT in May, highlighting resilient demand from the world’s biggest buyer. However, gains were capped by weaker crude oil prices as easing concerns over disruptions in the Strait of Hormuz weighed on the energy market. Separately, Malaysia trimmed its July crude palm oil reference price while keeping its export duty at 10%.
Cattle futures see routine profit taking… August live cattle on Tuesday fell $1.35 to $246.00. August feeders lost $2.275 to $368.15. The cattle futures markets took a pause after recent gains and saw some profit taking. The cattle bulls were somewhat squelched by Tuesday’s big sell off in the U.S. stock market, which if it extends would likely rattle U.S. consumer confidence. USDA at midday Tuesday reported light cash cattle trading so far this week, averaging $260.00. Last week’s cash cattle average trade was $259.63, up $3.55 from the week prior.
Lean hog futures see more short covering… August lean hog futures on Tuesday rose $0.50 to $97.225 and hit a two-week high. The lean hog futures market saw more short covering. While the near-term technicals remain overall bearish, a price downtrend in place on the daily bar chart is now in jeopardy. More price gains this week would negate the price downtrend to suggest a market bottom is in place. The latest CME lean hog index is down 53 cents at $91.64. Today’s projected cash index price is down 30 cents at $91.47. The national direct five-day rolling average cash hog price quote Tuesday was $97.09.