Good morning!
Grain futures mostly weaker overnight… Just before 6:00 a.m. CDT, July corn was down 1 1/2 cents. July soybeans were down a penny. July soybean meal was up $1.60. July bean oil was 1 point higher. July SRW wheat was down 1 1/4 cents and July HRW was 2 3/4 cents lower. Bulls are working to stabilize the grain markets and have some success this week. However, they have heavy lifting to do to reverse the price downtrends in place on the daily bar charts. It’s likely going to take a significant weather-market scare in the coming weeks to jumpstart price uptrends in the grains. On tap today are the weekly USDA export sales report and the monthly USDA supply and demand report. The key outside markets today see the U.S. dollar index firmer, while Nymex WTI crude oil prices are lower and trading around $89.00 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. steps up strikes against Iran
- Ship traffic thins in Persian Gulf as U.S.-Iran tensions intensify
- Trump vows more strikes on Iran today if it holds out on deal
The U.S. launched strikes against multiple targets in Iran for the second straight day after President Trump accused Tehran of dragging out talks on an interim peace deal. U.S. Central Command said it had begun “additional self-defense strikes” at 5:15 p.m. New York time on Wednesday, targeting surveillance systems, air defense sites and communications networks. Trump said in a Fox News interview that he had spoken with top Iranian officials Wednesday and they had asked him to halt the bombing, but he added the U.S. would hit Iran again if its leaders didn’t sign an agreement. At the same time, a growing number of oil tankers are moving through Hormuz, boosting the flow from a trickle to a stream. Those offsets have helped bring oil prices down by more than a quarter since the war began, even though a lasting peace deal has remained elusive.
One more day of stormy weather in central U.S. … The National Weather Service today said a front moving across the central U.S. will produce showers and severe thunderstorms in the Midwest and over parts of the Great Lakes into the middle Mississippi Valley today. There is an enhanced risk (level 3/5) of severe thunderstorms over parts of those regions, as well as the southern Plains, through Friday morning. Temperatures over the Midwest and Plains states will be moderating today and heading into the weekend, with cooler-than-normal temps forecast for the U.S. midsection early next week.
USDA monthly S&D report on deck… USDA will release its June World Agricultural Supply and Demand Estimates (WASDE) report today at 11 a.m. CDT. No significant changes are expected to the grains’ balance sheets. U.S. export data for wheat indicates 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. Corn exports are unlikely to see much change. USDA was aggressive in cutting U.S. wheat production in the May report. Analysis of conditions paired with production suggests a modest decline in today’s report. USDA cotton data today, including U.S. production, is also expected to show no big changes from the May S&D report. Click here for the full story.
USDA’s Rollins holding NWS news conference today in Texas… U.S. Secretary of Agriculture Brooke Rollins will be holding a roundtable today with ranchers at Chapparosa Ranch during her trip to south Texas. “A sterile fly dispersal will occur on the ground of the ranch and after the dispersal the secretary will have a media gaggle,” said a USDA press release late Wednesday. The scheduled time for today’s press conference is noon CDT. Rollins has pushed back on suggestions that staff cuts at USDA could slow the agency’s response to the outbreak of a deadly cattle parasite in the U.S. USDA has added more than 100 full-time employees to work on New World screwworm over the last 15 months in preparation for the parasite to arrive in the country, Rollins said.
Today’s U.S. producer price index seen running hot… U.S. producer prices likely increased by 0.7% month-over-month in May, following a 1.4% surge in April, which was the largest monthly gain since March 2022. Energy prices are expected to remain a major driver of inflation, particularly gasoline and jet fuel. Core producer prices, which exclude the more volatile food and energy components, are forecast to rise by 0.5% in May, moderating from the 1% increase recorded in April. On an annual basis, however, headline producer inflation is projected to accelerate for a fourth consecutive month to 6.4%, up from 6% in April and marking its highest level since December 2022. Meanwhile, annual core producer inflation is expected to edge up to 5.4% annually, from 5.2%, also reaching its highest reading since December of 2022. The PPI report follows Wednesday’s consumer price index report for May that also ran hot.
European Central Bank set to raise interest rates… The European Central Bank today is set to raise its interest rates for the first time since 2023 due to the upswing in inflation caused by the Iran war and spiking energy prices. Economists expect the deposit rate to be lifted by a quarter point to 2.25%, with new quarterly forecasts likely to suggest inflation will quicken further. Today’s ECB’s decision must balance the need to address rising inflation with the risk of sparking a recession, as economic expansion is already sagging.
An Asian currency contagion? … Asian central banks are increasingly facing currency pressures originating outside their borders, Bloomberg reported today. “From South Korea to India and the Philippines, policymakers have ramped up efforts to curb offshore forex speculation as high oil prices, foreign fund exodus and a strong dollar pressure regional currencies.” South Korea’s finance ministry said on Sunday it will step up oversight of offshore currency derivatives. The Philippines has asked banks to ensure non-deliverable forward contracts are limited to economic purposes, while India has tightened limits on banks’ net open position to $100 million. Indonesia, which unexpectedly raised interest rates on Tuesday, has said its central bank is active in currency markets “around the world, around the clock” to support the rupiah. “The warnings underscore concerns among Asian policymakers that offshore trading is adding to pressure on currencies. The oil-price shock from the U.S.-Iran conflict has worsened the problem, hitting the region’s energy-importing nations.
Malaysian palm oil futures rally… Malaysian palm oil futures rose for a second straight session Thursday, hovering around MYR 4,550 per MT, supported by a weaker ringgit and stronger edible oil prices on the Dalian and Chicago exchanges. Sentiment was further lifted by rising exports, with cargo surveyors noting that Malaysian palm oil shipments during June 1–10 rose between 3.5% and 4.9% from the prior month. Additional support came from the broader energy market, where oil prices surged amid heightened concerns over Middle East supply disruptions, boosting the outlook for biodiesel demand. However, upside was capped as industry data showed Malaysia’s stocks rose for a second month in May. Meanwhile, demand from top buyer India rose slightly in May from April’s four-month low, remaining below typical levels. In Indonesia, the world’s largest producer, the government launched new technical rules for key commodity exports, including palm oil, unsettling exporters and injecting fresh uncertainty into near-term trade flows.
Live cattle futures post gains for second day in a row… August live cattle on Wednesday rose $1.80 to $241.50. August feeder cattle gained $0.225 to $354.375, near mid-range. The live cattle futures markets saw speculator buying interest today as traders focused on the bullish elements of the New World screwworm being detected in the southern U.S. USDA confirmed five cases of NWS in the U.S., three calves and a goat in Texas, and one dog in New Mexico. Mexico has also closed its border to U.S. cattle imports. USDA at midday Wednesday reported very light cash cattle trading this week, averaging $254.15. 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 see short covering… August lean hog futures on Wednesday rose $0.725 to $95.425 and hit a nearly seven-month low early on. The hog futures market saw some short covering and some perceived bargain buying. Near-term technicals remain firmly bearish as a price downtrend remains in place on the daily bar chart. A close on Friday near the weekly high would be one chart clue that the bears have run out of gas and that a near-term market bottom is in place. The latest CME lean hog index is up 13 cents at $92.76. Today’s projected cash index price is up another 16 cents at $92.92. The national direct five-day rolling average cash hog price quote Wednesday was $96.38.