Good morning!
Grain futures higher overnight… At 6:00 a.m. CDT, December corn was up 1 1/2 cents. November soybeans were 7 cents higher. September soybean meal was up $1.00. September bean oil was 69 points higher. September SRW wheat was up 8 1/4 cents and September HRW wheat prices were 11 1/2 cents higher. Wheat led gainers overnight on renewed worries about shipping grain out of the Black Sea region. (See item below.) Position evening may be the feature in the grain markets early this week, ahead of Wednesday’s USDA crop production and monthly supply and demand report. Grain traders are anxious to see what USDA will estimate in its initial survey-based U.S. corn and soybean production/average yield forecasts. A Reuters poll of analysts puts U.S. corn production at 15.93 billion bushels, about 66 million below USDA’s July figure, with 2026-27 U.S. corn ending stocks near 1.73 billion. U.S. soybean production is expected at 4.47 billion bushels, with 306 million bushels in carryout. Average U.S. yield guesses see 182.4 bushels an acre for corn and 52.9 bushels an acre for soybeans. On tap today is the weekly USDA export inspections and weekly crop progress reports. The key outside markets today see the U.S. dollar index modestly up. September Nymex WTI crude oil prices are firmer and trading around $79.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.65%.
Trump now focusing on economic pressure on Iran… President Trump signaled he’s now prepared to let economic pressure on Iran build rather than launch fresh military strikes, saying the U.S. was only “semi-negotiating” with Tehran on the Strait of Hormuz. “We are just watching Iran with its huge inflation and the fact they have no money,” Trump told Axios in an interview on Sunday and as reported by Bloomberg, saying that a U.S. naval blockade of the country was deepening its financial woes. “We are low-keying it.” The president’s comments mark a shift from his repeated threats to escalate the bombing campaign against Iran and come amid lingering talks between the Islamic Republic and Oman to reopen the Strait of Hormuz to maritime shipping. Tehran has said it’s nearing a deal on the waterway while laying out a long list of demands for Washington before shipping can resume, including the lifting of sanctions and an end to attacks on Iran-backed groups across the Middle East. Tehran also elevated a hard-line former commander to its top security post over the weekend.
Rains across central U.S. early this week… The National Weather Service today said a frontal boundary meandering across the north-central U.S. will shift the focus for thunderstorms and heavy rainfall eastward into the Midwest, lower Great Lakes, and Ohio Valley over the next few days. Thunderstorms capable of producing severe wind gusts will be possible from parts of northern Illinois eastward into western Pennsylvania today, with isolated severe gusts and hail also possible from portions of the central and Northern Plains into the Midwest. Meanwhile, cooler than normal temperatures will be experienced across the Northern Plains, where low temperatures into the 50s are forecast for the next couple of mornings near the Canadian border. A broad ridge of high pressure remains dominant across the southern-tier states, especially over the Four Corners. This pattern will maintain widespread above-normal temperatures from much of continental U.S., with highs into the upper 90s and triple digits across the south-central High Plains for the next couple of afternoons. Along the periphery of the ridge, late-day showers and thunderstorms will occur from parts of the southern Plains and western Gulf Coast into the Southeast. Farther north, drier conditions will persist from parts of the Cascades eastward to the northern High Plains, supporting continued elevated fire weather concerns.
Turkey suspends, then resumes Black Sea shipping transits… Turkey temporarily halted Black Sea transits for its vessels over the weekend amid heightened security risks related to the Ukraine-Russia military actions in the region. However, Turkey resumed shipping in the region on Sunday, said Bloomberg. The country’s foreign minister, Hakan Fidan, called for a “moratorium” on attacks in the region. That followed an announcement Friday by Ukraine that its exports of agricultural products in the 2026-27 marketing year could fall by more than half compared with previous estimates, due to Russian attacks.
Major typhoon strikes China, risking crop damage… A typhoon that struck the Chinese coast on Sunday is steadily weakening after making landfall but is set to bring widespread heavy rain through this week that could threaten crops, said a Bloomberg report. Typhoon Dolphin has weakened to a tropical storm after making two landfalls in eastern China on Sunday evening, according to the China Meteorological Administration. Powerful winds and intense rains had triggered widespread transport disruptions, including the closure of Shanghai’s two main airports. The weather system is continuing to move northwards, posing a “potentially significant inland rainfall event” that could damage farmlands, said James Caron, director of meteorological operations for North America and Asia at Atmospheric G2. Heavy rain “at this point in the growing season” can be damaging rather than beneficial, he said. Key crops in the region like corn and barley begin their harvests in August, while soybean crops are harvested beginning September. “The strong winds and rain will cause crop flooding and lodging, fruit cracking and drop, and damage to agricultural and fishery facilities, hindering the harvesting of ripe fruits,” the weather agency said in a bulletin published on Monday morning.
Taylor Farms pulling more food from store shelves on salmonella concerns… Taylor Farms is pulling more than a dozen prepared food items containing jalapeños, including salsas and guacamole, from retailers due to concerns over salmonella, just weeks after federal health officials tied the produce company to a separate outbreak of cyclospora. The Salinas, California-based company said Sunday it has issued a voluntary recall of products with jalapeño peppers tied to an earlier recall by Coast Citrus Distributors. Taylor Farms said it was “no longer” sourcing jalapeños from a farmer in Sinaloa, Mexico, that supplied the peppers to Coast Citrus and was identified as the potential source of a salmonella outbreak. The recall affects products distributed to more than two dozen states, including Illinois, New York and Texas. Most were sold at major grocers such as Kroger Co., Target Corp., Trader Joe’s, Walmart Inc. and Amazon.com Inc.’s Whole Foods Market in a number of prepared foods, ranging from diced peppers to containers of pineapple mango salsa. “Taylor Farms is a juggernaut in the produce industry with a supply chain that spans several countries across North America and Europe. The outbreaks have exposed how consolidation in the produce industry can broaden the food system’s vulnerability to outbreaks, since lettuce grown in one part of the world can be processed and distributed widely very quickly,” said a Bloomberg report.
China inflation cools… China’s annual inflation rate eased to up 0.5% in July from a 1.0% rise in the prior month, falling short of market forecasts of up 0.8%. It was the lowest annual print since January, as food prices continued to decline while non-food inflation slowed further. Food cost fell for the fourth straight month (-1.5% vs -1.6% in June), weighed by a further drop in pork prices amid abundant supply and weak consumption. Meanwhile, non-food prices rose at a softer rate (0.9% vs 1.5%), with transport costs up more modestly (0.4% vs 4.1%) after a government fuel-price cut and easing global energy costs as Middle East supply disruptions subsided. Education costs also eased (1.3% vs 1.4%) while housing cost fell further (-0.3% vs -0.3%). In contrast, clothing inflation was stable (at 1.4%), and healthcare prices accelerated (2.9% vs 2.3%). Core inflation, excluding food and energy, rose 0.9% year-on-year, after June’s 1.0% rise. Monthly, consumer prices fell 0.1%, defying consensus for a 0.2% gain and following a 0.3% fall in June.
Key U.S. inflation data this week… Wednesday’s July consumer price index report (CPI) is the U.S. economic data point of the week. The marketplace consensus is for up 0.1% month-on-month and up 0.2% for the core CPI (minus food and energy). The annual rates are expected to show 3.4% headline CPI and 2.5% core CPI. That would mark a second month of improvement after June’s 0.4% decline — the largest monthly drop since April 2020. The Producer Price Index (PPI) report comes Thursday. July PPI is seen rebounding to a modest 0.1% rise, month-on-month, after June’s energy-led 0.3% decline, with core near 0.2%.
Total New World screwworm cases detected in U.S. remain at 45… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is still reporting 45 total New World screwworm detected cases in the U.S. There are still five active cases, all in Texas.
Malaysian palm oil futures rally… Malaysian palm oil futures were notably higher Monday, trading near MYR 4,720 per MT and snapping recent losses, as firmer edible oil prices in Dalian and Chicago supported sentiment. Strong export demand added momentum, with a monthly report from the Malaysian Palm Oil Board showing July shipments up 14.5% from June to 1.39 million MT. Demand prospects in top buyer India also improved, as edible oil imports hit a 10-month high in July, with refiners stocking up on palm oil and soyoil ahead of the festive season. However, a stronger ringgit capped the gain. Meantime, Malaysia’s palm oil stocks rose 3.32%, month-on-month to 2.63 million MT in July, while production grew 9.41% to 1.79 million MT, highlighting ample near-term supply. In China, a key palm oil consumer, both CPI and PPI inflation eased in July, underscoring persistently weak domestic demand. Traders now await export estimates for August 1-10 from cargo surveyors after July shipments rose 12.1%-19.5% from June.
Live cattle futures bulls faded late last week… October live cattle futures on Friday rose $0.35 to $225.275 and for the week were down $1.975. September feeder cattle futures rose $3.65 to $345.225, near the daily high and for the week up $3.125. The cattle futures markets in late trading Friday saw short covering to allow prices to finish above unchanged, after both markets earlier saw some follow-through technical selling from Thursday’s solid losses. October live cattle futures late last week saw a price uptrend on the daily chart negated. USDA at midday Friday reported active cash cattle trading, with steers averaging $235.22 and heifers $235.07. The agency last Monday reported average cash cattle trading the week prior at $233.06.
Lean hog futures bears remain in technical control… October lean hog futures on Friday rose $0.50 to $82.225 and hit a four-week low early on. For the week, October hogs were down $2.625. The hog futures market on Friday paused amid some mild short covering but the bulls had a dreadful week. Technicals remain firmly bearish as prices are in a steep downtrend on the daily bar chart. Declining cash hog prices also favor the futures bears. The latest CME lean hog index is down 29 cents to $96.66. Today’s projected CME index price is down 36 cents at $96.30. The national direct five-day rolling average cash hog price quote for Friday was is $99.37. The weakening CME lean hog index suggests a seasonal top in futures as summer demand softens and supplies typically build into fall.