Good morning!
Grain futures higher overnight… At 6:00 a.m. CDT, July corn was up 3 1/2 cents. July soybeans were up 4 3/4 cents. July soybean meal was up $2.20. July bean oil was 14 points lower. July SRW wheat was up 10 cents. July HRW was up 8 1/4 cents. The grain futures markets saw some short covering and perceived bargain hunting from the speculators overnight. The bulls are working on forging near-term price bottoms but have much more work to do to ensure they are indeed in place. Closes on Friday nearer their weekly highs would be early clues that the grain markets have put in near-term lows. The key outside markets today see the U.S. dollar index slightly weaker, while Nymex WTI crude oil prices are slightly lower and trading around $88.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.53%.
Latest on U.S.-Iran war…
-- U.S., Iran attack each other over Apache downed near Hormuz Strait
The U.S. and Iran exchanged strikes overnight after President Trump retaliated against Tehran for shooting down an American Apache helicopter. The U.S. military said it had completed an operation that saw fighter jets strike Iranian air defenses, ground control stations and radar sites near the Strait of Hormuz. Iran launched missiles on four American targets and fired drones at the main U.S. naval base in the Middle East, with no immediate reports of casualties in any of the attacks. The skirmishes further jolted a two-month-old truce and exposed the fragility of talks between the warring sides aimed at securing peace in the Middle East.
Severe weather across much of the Midwest the next 24 hours … The National Weather Service today said showers and severe thunderstorms are likely over parts of the Midwest, the upper/Middle Mississippi Valley and Great Lakes. There is an enhanced risk (level 3/5) of severe thunderstorms over parts of the region through Thursday morning. The hazards associated with these thunderstorms include frequent lightning, severe wind gusts, large hail, and the threat of tornadoes. On Thursday, the showers and severe thunderstorms move eastward over the Great Lakes/Ohio/Middle Mississippi Valleys. Meantime, daytime temperatures will be hot over the central U.S. today, with very high and even dangerous heat indexes due to high humidity.
NCBA: New World screwworm entering U.S. not a surprise… Colin Woodall, CEO of the National Cattlemen’s Beef Association, said his group was not caught by surprise by the news New World screwworm has been detected in Texas and New Mexico. “This is something that, quite frankly, we, as the cattle industry, have been expecting for several months now. Ever since New World screwworm made it out of Guatemala into Mexico right before Thanksgiving of 2024, we expected this to be inevitable,” he told the Ag Information Network. Woodall said the NCBA began planning right away. “But that gave us over 18 months to get prepared. What we have seen here since the confirmation by Secretary Rollins is that we’re ready. The plan is solid, it’s in place, and not only is the industry ready - when I talk about the industry, I talk about the Texas cattle feeders, Texas & Southwestern Cattle Raisers, and NCBA, but also the Texas Animal Health Commission and USDA - the response is going as planned.” Woodall said the way to eradicate the screwworm is through sterile insect technology. There are now a total of five cases in the U. S. It includes a goat in Gillespie County Texas, calves in La Salle and Zavalla counties in Texas, and a dog in Lea County, New Mexico. The dog was originally reported to be a Texas case, but officials said they’ve since learned the dog lives in New Mexico.
Mexico halts imports of live U.S. animals... Mexico’s agriculture ministry said the country will halt most imports of live animals from the U.S. after cases of New World screwworm were confirmed in Texas and New Mexico, Reuters reported. The suspension applies to cattle, horses, pigs, sheep, goats and several other species of animals, the ministry said, adding that the decision was made in coordination with USDA. The report said Mexico, which has seen over 28,000 cases of NWS since November 2024, cited the need to protect its cattle herd in the northern states of Baja California, Baja California Sur, Chihuahua and Sinaloa, where there are no current confirmed cases of screwworm.
Key U.S. inflation report on deck this morning… The annual inflation rate in the U.S. is expected to rise to 4.2% in May, marking its highest level since April 2023, from 3.8% in April. This would represent the third consecutive monthly acceleration in headline U.S. inflation, driven largely by higher gasoline prices following the energy shock triggered by the conflict with Iran. However, the broader pass-through to consumer prices is expected to remain relatively limited. On a monthly basis, consumer prices are projected to increase by 0.5% in May, following a 0.6% rise in April. Gasoline prices likely went up around 9%, but the fading impact of a one-off adjustment to rent data should have a moderating effect on inflation. Meanwhile, core inflation, which excludes volatile food and energy prices, is expected to edge up to 2.9% year-on-year, a fresh-high since September 2025, from 2.8% in April. On a monthly basis, core consumer prices are estimated to have risen by 0.3%, after increasing 0.4% in the previous month. TradingEconomics.com
USDA monthly supply and demand report out Thursday… USDA will release its latest updates to its grains balance sheets on Thursday, but a pre-report poll of analysts indicate little change is expected across crops. The June World Agricultural Supply and Demand Estimates (WASDE) report is due for release at 11 a.m. CDT Thursday. It is expected to include modest changes to the old-crop balance sheet as well as any changes to expectations for new-crop demand. Pro Farmer Economist Lane Akre reports that while there is precedent for USDA to adjust production in the June report, it is uncommon and given the lack of challenges the crop has seen so far this year, an adjustment to production is unlikely. U.S. export data for wheat indicated shipments slowed in the final month of the marketing year, encouraging analysts to lift their ending stock forecasts for old crop. USDA could lower the soybean export estimate as well due to relatively weak shipments and sales with just a couple months left in the marketing year. Corn exports are unlikely to see much change as recent data indicates USDA’s previous estimate is reasonable. “Our estimate for U.S. winter wheat production is in line with the average estimate from the survey of analysts. USDA was aggressive in cutting production in the May report. Analysis of conditions paired with production indicate a modest decline is to be expected in the June Crop Production report,” said Akre. “Markets have shifted significantly since the May reports despite little change on the fundamental side of the market. A catalyst in the grain markets, however small it may be, could be what the market needs. How prices respond to end the week will be telling to see if the downside is overdone,” he said. Click here for the full story.
El Nino weather phenomenon getting more press… An El Niño weather pattern has formed across the equatorial Pacific, “setting the stage for months of droughts, floods and temperature fluctuations that will threaten communities worldwide along with agriculture and energy,” said a Bloomberg report out overnight. The climate phenomenon comes for the first since 2023 — and could be one of the strongest on record. “This time it could be particularly powerful. There’s a 67% chance it may evolve into a strong or very strong event — what’s informally known as a ‘Super El Niño’ — heading into 2027, according to the U.S. Climate Prediction Center. The El Niño event is expected to intensify in the coming months, and become very strong later in the year, persisting into at least December, according to Japan’s meteorology officials. “El Niño is characterized by a warming of the Pacific Ocean that alters global weather patterns, which can damage crops and strain power grids. Even before the declaration, its impact has been felt across various regions, from a delayed start to the Indian monsoon to a temporary halt to Peru’s fishing season,” said the report. Impacts on weather around the world will likely spread and become more intense as El Niño reaches its peak in December or January. These may include a cooler, wetter winter across the southern U.S., and droughts and wildfires across parts of Australia. The Atlantic hurricane season could also be impacted.
Global shipping price rates declining… A key measure of bulk shipping rates saw prices dropping for an eighth consecutive day as demand in the larger-vessel segments cooled.
The Baltic Dry Index fell 3.4% to 2,818 points on Tuesday, marking its longest losing streak since mid-January. The fall in the Capesize market coincides with a rise in the number of ballasters, or vessels sailing without cargo, which can signal weakening demand relative to vessel supply. “It’s attributed to the recent loss of momentum in the Capesize segment, but we should note that it has still delivered the strongest first half of the year in the past three years,” said Maria Bertzeletou, a senior market analyst at Signal Group and as reported by Bloomberg. “The index has been on a tear this year, supported by strong demand and volatility linked to the conflict in the Middle East. The Capesize segment accounts for about 40% of the Baltic Dry Index and is the vessel class most exposed to iron ore, a key steelmaking ingredient,” said the report.
Malaysian palm oil futures trade near steady… Malaysian palm oil futures hovered near MYR 4,530 per MT Wednesday, steady after the prior session’s sharp losses. Support from a softer ringgit and firmer Chicago soyoil was offset by weakness in rival edible oils on China’s Dalian exchange. Traders stayed cautious ahead of official industry data, with a Reuters survey pointing to another inventory build in May as sluggish exports outweighed lower output. Demand from top buyer India recovered modestly from April’s four-month low but remained below historical norms. Meanwhile, Indonesia, the world’s largest palm oil supplier, introduced new technical rules tightening oversight of strategic commodity exports, including palm oil, raising concerns among exporters and potentially diverting some demand toward Malaysia. Still, export prospects stayed weak, with cargo surveyors estimating May shipments fell 8.8%–15.5% from April, underscoring persistent softness in external demand.
Cattle futures trading turns choppy… August live cattle on Tuesday rose $2.975 to $239.70. August feeder cattle gained $3.45 to $354.15. The cattle futures markets saw corrective rebounds from Monday’s losses. The potential ramifications of New World screwworm on the U.S. cattle industry, following five cases being found in Texas and now in New Mexico, may keep futures markets range-bound for the near term. USDA has now confirmed five cases of new world screwworm in the U.S., three calves and a goat in Texas, and one dog in New Mexico. USDA at midday Tuesday reported very light cash cattle trading early this week, averaging $253.39. The agency on Monday reported last week’s average cash cattle trading price was $256.53 — down 33 cents from the week prior.
Lean hog futures prices continue to slump… August lean hog futures on Tuesday fell $1.45 to $94.70 and hit a nearly seven-month low. The hog futures market saw still more technical selling pressure. Near-term charts remain firmly bearish as a price downtrend is in place on the daily bar chart. This means the path of least resistance for futures prices remains sideways to lower in the near term. The latest CME lean hog index is up 3 cents at $92.63. Today’s projected cash index price is up another 13 cents at $92.76. The national direct five-day rolling average cash hog price quote Tuesday was $95.80.