Good morning!
Grain futures mixed-lower overnight… As of 6:00 a.m. CDT, July corn was down 4 1/2 cents and hit a contract low. July soybeans were off 6 1/2 cents and sunk to a nearly four-month low. July soybean meal was down $0.40. July bean oil was 20 points lower. July SRW and HRW wheat were both 3/4 cent down and hit six-week lows. The corn and soybean markets are seeing speculator and fund long liquidation featured recently amid bearish charts and good U.S. weather early in the growing season. It could also be that grain traders are now also worried about the implications on consumer psychology and demand for beef as a case of New World Screwworm has been detected in Texas. (See item below.) On tap today for grain traders is the weekly USDA export sales report. The key outside markets today see the U.S. dollar index weaker, while Nymex WTI crude oil prices are weaker and trading around $95.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.48%.
New World screwworm detected in Texas… Late Wednesday, USDA Secretary Rollins posted on X that USDA’s APHIS confirmed the detection of a New World screwworm fly in a three-week old bovine in Zavala County, Texas. ”USDA and Texas Animal Health officials are taking immediate action to contain and eradicate NWS from the area,” said the post. Rollins said she has been in contact with Texas Governor Greg Abbott and emphasized that the U.S. food supply is 100% safe. A concern in the cattle industry is that U.S. consumers will be spooked by news media reports describing NWS. For example, the lead paragraph in a Bloomberg story overnight reads: “U.S. authorities are accelerating emergency measures after the flesh-eating New World Screwworm parasite was detected in a three-week-old calf in South Texas, the first animal case reported in the country in almost a decade.”
Latest on U.S.-Iran war…
--Israel, Lebanon agree to ceasefire
--Iran says no progress in U.S. talks as Lebanon sees more clashes
--Crude oil dips after Israel-Lebanon ceasefire even as clashes persist
--Republican-led U.S. House votes to stop Iran war, rebuking Trump
--Trump downplays threats of Hormuz mines, touts alternate route
Iran said there had been no recent progress in talks with the U.S. over an interim peace deal, while fighting persisted in Lebanon despite Washington’s declaration of a ceasefire between Israel and the country. The U.S. and Iran are struggling to finalize the details of a deal that is meant to see the sides extend their truce by two months and Iran reopen the Strait of Hormuz to commercial ships. Clashes continued in southern Lebanon overnight, with no reports of Hezbollah attacks into northern Israel since the ceasefire announcement, and no immediate indication whether Hezbollah had accepted the agreement. Still, both Iran and the U.S. broadly say the talks are ongoing and signal they want to reach a deal, which would lead to more and complicated discussions on Tehran’s nuclear program.
Storms, possibly severe, over the Northern Plains, Midwest today… The National Weather Service today said repeated rounds of showers and thunderstorms will occur in the Plains and Midwest, with a chance for localized flash flooding — especially across portions of eastern Nebraska and western Iowa. A smaller flooding risk encompasses much of the Plains into the upper Midwest today. There is a slight risk for severe thunderstorms from parts of the northern High Plains across South Dakota and northern Nebraska into southwest Minnesota. Additional threats with this storm system will be large hail, damaging winds and a chance for tornadoes.
Challenger reports U.S. job cuts, due mostly to artificial intelligence… U.S.-based employers announced 97,006 job cuts in May, the most since January, compared to 83,387 in April, according to this morning’s Challenger job-cuts report. It is the highest May total since 2020 and also marks the third straight month that cuts have risen. AI was the main reason for the cuts, leading for a third straight month. Technology announced 38,242 job cuts in May, the highest monthly total for the sector since August 2024. Transportation (6,909), services (6,288) and fintech (5,731) followed. “On top of the headline AI story, we’re seeing a sharp rise in cuts tied to acquisitions and mergers and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy,” said Andy Challenger from Challenger, Gray & Christmas. TradingEconomics.com
Russian wheat sowing slowed by persistent rains… Russian spring wheat planting continues to face delays as ongoing rains hinder growers, risking lower production. “Farmers had sowed wheat on about 7.1 million hectares as of May 26, 12% below last year, according to Agriculture Ministry estimates obtained from two local traders. Still, as planting nears completion, the gap has narrowed from the first half of May, the data shows, the traders said, asking not to be named because the information isn’t public,” said a Bloomberg report. Rainfall across regions that are key to the spring crop, including the Volga region and Siberia, has been 60% to 118% above seasonal norms, according to the country’s Federal Service for Hydrometeorology and Environmental Monitoring. That left the soil too wet for fieldwork and sowing.
USDA announces support for small U.S. meat processors… USDA Secretary Rollins on Wednesday launched the Small Processors Action Plan (PDF, 2.3 MB), a new set of actions to support small and very small meat and poultry processing plants, improve customer service and reduce unnecessary regulatory burdens while maintaining strong food safety protections for consumers, said a USDA press release. “Additionally, Secretary Rollins announced that USDA is accepting applications for the fourth round of the Meat and Poultry Processing Expansion Program to expand American meat and poultry processing.
Asian countries bolstering their currency defenses… Asian authorities are ramping up their currency defenses as high energy costs and bets that the Federal Reserve will raise interest rates pressure them. Authorities in countries such as South Korea, Indonesia and Japan are intensifying interventions to stabilize their currencies, which have dropped to record or near-record lows. “Regional central banks and authorities are on high alert due to tough and fast-market conditions, with a strong U.S. dollar and elevated oil prices pressuring regional foreign exchange,” said a Bloomberg report. The South Korean won fell to the lowest since 2009 even as the government pledged to curb excessive volatility, underscoring the pressure some Asian currencies face as the Iran war drags on.
Malaysian palm oil exports hurt by Indonesian supplies… Malaysian palm oil exports could tumble for a third straight month in June if buyers favor cheaper Indonesian supplies as Jakarta’s overhaul of commodity shipments sparks a push to move cargoes before the new rules fully take hold, Bloomberg reports. An Indonesian plan to take control of exports began on June 1, with producers expected to start submitting sales figures via newly formed state-owned firm PT Danantara Sumberdaya Indonesia. “The system is still in a transition phase, and companies are allowed to keep handling transactions until Danantara takes over specific export activities as early as September, or by Jan. 1 at the latest, senior officials said last week,” said the report. There were initial expectations the new Indonesian rules would divert demand to Malaysia, but that hasn’t happened so far because key importers, especially those in India, had already made ample purchases in the first quarter, according to Paramalingam Supramaniam, a director at Selangor-based brokerage Pelindung Bestari Sdn. “If Indonesia starts pushing out more exports until the new policy is fully implemented, that would intensify competition with Malaysia and weigh on its shipments,” he said.
Malaysian palm oil futures down… Malaysian palm oil futures traded below MYR 4,650 per MT Thursday, retreating from a recent rally as investors locked in profits after prices reached a two-week high. Sentiment was also dented by weakness in competing edible oils on the Dalian and Chicago exchanges, while lower crude oil prices reduced support for the vegetable oil complex. Fundamentals remained bearish as a Reuters survey projected Malaysia’s palm oil inventories to rise for a second straight month in May, with sluggish exports offsetting lower output. Cargo surveyors reported shipments fell 8.8%–15.5% in May from April, underscoring weak overseas demand. Meanwhile, palm oil purchases by India, the world’s largest buyer, increased slightly from April’s four-month low but remained below normal levels. Moreover, uncertainty over Indonesia’s export policies and stronger competition from alternative oils added pressure. Still, a softer ringgit helped cushion losses by improving the appeal of Malaysian exports.
Cattle futures sell off amid NWS uncertainty… August live cattle on Wednesday fell $1.80 to $237.85 and hit a nine-week low. August feeders lost $5.80 to $342.625 and scored a 10-week low. The cattle futures markets today saw follow-through technical selling pressure as both markets are still in downtrends on their daily bar charts. Speculative buyers were also becoming more anxious about the uncertainty of the New World Screwworm situation and its impact on U.S. consumer psychology. Then came news after the close that the parasite was detected on U.S. soil. Uncertainty is generally always bearish for a market, so don’t be surprised to see more selling pressure in cattle futures today. USDA at midday Wednesday reported very light cash cattle trading, with steers averaging $254.67 and heifers $254.86. Last week’s average cash trading price was $256.86-- down $3.63 from the prior week’s average.
More short covering in lean hog futures… August lean hog futures on Wednesday rose $0.60 to $99.575, near the daily high. The lean hog futures market saw more short covering and perceived bargain hunting following recent selling pressure. While near-term charts remain bearish, more gains in lean hog futures to end the trading week would begin to suggest a near-term market bottom is in place. However, the NWS uncertainty in the cattle futures market could spill over into selling in hog futures. The latest CME lean hog index is up 14 cents at $91.65. Today’s projected cash index price is up 60 cents at $92.25. The national direct five-day rolling average cash hog price quote Wednesday was $94.14.