Good morning!
Grain futures prices lower to start trading week… As of 6:00 a.m. CDT, December corn futures were down 3 cents, November soybeans down 5 1/4 cents and winter wheat futures were around 2 to 3 cents lower. Price-bearish weather in U.S. growing regions is so far trumping the potentially bullish weekend news of a major U.S. trade deal being reached. The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are firmer and trading around $65.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.378 percent.
U.S., European Union reach trade deal… The United States and the European Union over the weekend agreed on a trade deal that will see the EU face 15% tariffs on most of its exports to the U.S., including automobiles, to avoid a trade war with the U.S. The deal was announced by President Trump and European Commission President Ursula von der Leyen, who said the deal would bring “stability” and “predictability.” The EU agreed to purchase $750 billion in U.S. energy products and invest $600 billion in the U.S., among other commitments, as part of the deal. “This is the biggest deal ever made,” said Trump. European stock markets rallied Monday following the news, with U.S. stock indexes also pointed to firmer openings when the New York day session begins. The U.S. dollar index was showing solid gains and the Euro currency solid losses in the wake of the trade deal.
China-U.S. trade talks resume this week… The U.S. and China are expected to extend their tariff truce by another three months, reported the South China Morning Post over the weekend. The world’s two largest economies will not impose additional tariffs on each other during the extension, according to the newspaper. The current pause was set to end on Aug. 12. The report comes ahead of trade talks between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, scheduled to start today in Stockholm, Sweden.
Extreme heat over parts of Midwest today, before heat wave breaks… The National Weather Service reports much of Iowa, southeastern Nebraska, eastern Kansas and southern Illinois will experience extreme heat today before the heat wave begins to break down late Tuesday. Today’s heat indexes in the aforementioned regions could reach around 105°F to 110°F, with some locations nearing 115 °. Heat continues in the South on Tuesday.Livestock stress in the regions is likely. World Weather late Sunday reported U.S. crop weather will turn notably cooler than usual later this week and a little warmer next week. “Alternating periods of rain and sunshine are likely in the Midwest through the next 10 days and possibly two weeks. The cool weather and occasional precipitation will ensure good soil moisture and crop development potential,” said the forecaster.
Federal Reserve’s FOMC meeting this week… The Federal Reserve’s Open Market Committee (FOMC) meeting begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. Bloomberg reports Fed officials “are determined to hold interest rates steady, though an increasingly contentious debate may bolster expectations for rate cuts in the fall.” Powell is “under intense pressure” from President Trump to lower interest rates. Still, the Fed is widely expected to leave its benchmark Fed funds rate range unchanged this week.
Natural gas prices fall to three-month low… Natural gas futures prices have fallen to the lowest levels since late April. Robust U.S. production has kept downward pressure on prices. Weather forecasts point to less-intense heat across North America, reducing demand for cooling and thereby limiting gas consumption. Production remains strong, with output in the lower 48 states averaging 107.2 billion cubic feet per day (bcfd) so far in July, surpassing June’s record of 106.4 bcfd.
Palm oil futures prices slip… Malaysian palm oil futures traded below MYR 4,250 per MT Monday, for the second straight session of price weakness. There were also declines in rival edible oils on the Dalian and CME exchanges. Reports said there are signs of weaker palm oil exports, with cargo surveyors noting shipments of Malaysian palm oil products for July 1–25 fell between 9% and 15% from June.
Price-friendly cattle-on-feed report… USDA’s monthly cattle-on-feed report, out Friday afternoon, showed cattle and calves on feed on large feedlots (greater than 1,000 head) totaled 11.1 million head on July 1, down 2% from year-ago and below market expectations. Placements in feedlots as of June 1 totaled 1.44 million head, down 8% from 2024 and also below market expectations. Net placements were 1.39 million head. Marketings of fed cattle during June totaled 1.71 million head, 4% below year-ago and close to market expectations. Marketings were the lowest for June since the reporting series began 1996.
Highlights from Friday afternoon’s USDA cold storage report… USDA estimated there were 839.4 million lbs. of red meat in frozen meat stocks at the end of June, down 39.2 million lbs. from May and 59.3 million lbs. below last year. Beef stocks totaled 395.7 million lbs., down 12.1 million lbs. from March and were above the five-year average decline of 8.1 million lbs. Beef inventories declined 3.7 million lbs. from last year and 35.8 million lbs. from the five-year average. Pork stocks totaled 422.3 million lbs., down 28.5 million lbs. from May. That was more than the five-year average decline of 16.9 million lbs. Pork stocks declined 52.7 million lbs. from June 2024 and were 59.0 million lbs. below the five-year average.
Cattle market bulls remain in the driver’s seat… Cattle futures ended last week on a positive note after the markets hit contract/record highs earlier in the week. Friday afternoon’s friendly cattle-on-feed report and bullish charts set the stage for more speculator buying interest early this week. The large discount live cattle futures are trading to the cash market will also continue to limit selling interest in futures. Cash cattle trade late last week was at lower prices than the week prior. USDA near midday today will release last week’s official average cash cattle trading price.
Lean hog futures catching bullish cattle tailwinds… August lean hog futures on Friday saw a technically bullish weekly high close. Prices are starting to trend higher on the daily chart, which will also tempt the speculative bulls to play the long side this week. Hog producers will be monitoring a heat wave over much of the eastern two-thirds of the U.S. early this week, which will likely produce livestock stress.
Today’s reports--Monday
10:00 a.m. Weekly Export Inspections — AMS
10:00 a.m. Food Expenditure Series — ERS
1:00 p.m. U.S. Bioenergy Statistics — ERS
2:00 p.m. Chickens and Eggs — NASS
3:00 p.m.Crop Progress — NASS