Good morning!
Wheat rallly leads grain futures higher overnight… At 6:00 a.m. CDT, December corn was up 2 3/ 4 cents. November soybeans were 2 3/4 cents higher. September soybean meal was up $0.30. September bean oil was 33 points higher. September SRW wheat was up 24 3/4 cents and September HRW wheat prices were 27 1/4 cents higher. Winter wheat futures led the grains higher overnight as reports are saying grain shipping in the Black Sea region has been virtually halted right during harvest season in the region. (See item below.) However, the near-term technical postures for wheat, corn and the soybean complex futures have deteriorated this week, which have at least temporarily given the speculative bulls pause. On tap today is the weekly USDA export sales report. The key outside markets today see the U.S. dollar index modestly lower. September Nymex WTI crude oil prices are slightly lower and trading around $84.25 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.7%.
U.S. strikes Iran again as conflict widens across Middle East… The U.S. launched a fresh wave of strikes on Iran in response to an attack on American forces in Jordan, escalating a conflict that’s now spreading across the Middle East. Washington hit dozens of military targets in an operation early Thursday aimed at degrading Tehran’s ability to threaten U.S. troops, its Arab allies and commercial shipping in the region, U.S. Central Command said in a post on X and as reported by Bloomberg. Iran targeted a building in northern Kuwait, killing one worker and causing “significant” material damage, the Kuwait Army said, while Jordan said it intercepted five missiles from the Islamic Republic. Two liquefied natural gas vessels at an Egyptian port on the Mediterranean Sea were struck by drones, according to the North African nation’s cabinet, causing fires but no injuries. No party has yet claimed responsibility. Saudi Arabia and Iraq have now also been drawn into the fray, with Riyadh this week joining the US in attacking Tehran-backed militias in Iraq as a response to attacks on Saudi oil facilities. Iran-backed Houthi militants in Yemen have also attacked Saudi vessels in the Red Sea after announcing a blockade targeting the kingdom. “We’re going to be hitting them very hard because it’s our turn to hit them,” Trump told reporters at the White House on Wednesday. “They know what’s coming,” he said.
Cooler across Midwest; high heat continues in South… The National Weather Service today said there is a slight risk (level 2/4) of excessive rainfall across portions of the mid to lower Missouri/Mississippi Valley. Strong instability will also support scattered severe thunderstorms across portions of central and northern Plains. On Friday, a cold front over the Northern Plains will move southeastward into the Great Lakes and Midwest. An excessive rainfall and severe thunderstorm threat will slightly shift eastward into the upper Midwest and mid-Mississippi Valley. Monsoonal moisture will remain entrenched across the Four Corners region, supporting another daily cycle of scattered to numerous afternoon and evening thunderstorms through Friday. Upper ridging across southern U.S. continues to bring above normal temperatures through the remainder of the week. Temperatures are expected to reach mid-to-upper 90s across the region, with highs into the low 100s for portions of the southern Plains. High temperatures combined with high humidity will bring heat indices up to 105 to 115 degrees, resulting in widespread major, with isolated extreme heat risk levels. Dangerous heat will expand into the Southwest and portions of the intermountain West Thursday into Friday, and into the northern High Plains by Saturday.
Russia proposes armed grain ships as Black Sea routes halted: Russian officials have proposed arming grain ships with machine guns and mobile missile launchers to counter Ukrainian drone attacks, Bloomberg reported. The possibilities include temporarily equipping bulk carriers with armor plating, sandbags, and anti-drone mesh, and having soldiers escort the vessels for the first part of their voyage, the report said. Russia’s grain trade is being threatened by Ukrainian drone attacks, with trade suspended in the Sea of Azov, which has helped push wheat to a two-year high. Since last week, shipments from Ukraine’s Black Sea ports in Odesa have also been halted following Russian military strikes. Local Ukrainian farm groups are warning of widespread bankruptcies if maritime exports remain suspended. These disruptions coincide with the regional harvest, threatening peak-season shipments and encouraging importers to source wheat elsewhere.
Trump says he’d be unhappy with China shipping weapons to Iran… President Trump Wednesday said he would be “disappointed” in China if they provided weapons to Iran, repeating assurances he said Xi Jinping had made to him that Beijing would not sell arms to Tehran, according to a Bloomberg report. Trump was asked Wednesday about a report from Reuters that Iran is expected to receive a shipment of up to 400 Chinese-made shoulder-fired missiles within weeks. “That was surprising. I mean, things like that happen, but that would be surprising,” Trump told reporters in the Oval Office. “He told me very strongly he wouldn’t partake, but he knows I’d be quite disappointed. He’s coming here, I think, on Sept. 24th,” he added, referring to Xi’s plans to visit the US for a summit later this year. Trump has previously expressed concern about potential Chinese weapons sales to Iran during the war. In April, he said Xi had told him in a letter that Beijing was not providing arms to Iran. China does not directly ship arms to Iran but does provide it with dual-use technology. According to Reuters, deliveries of the portable air defense systems would transit through Pakistan to Iran, though the report did say if they would transit by air or land. China’s foreign ministry previously denied the Reuters report as “groundless.” Trump has previously threatened a 50% tariff on goods from countries that arm Tehran, a move that could upend the US-China economic relationship if he followed through, said Bloomberg.
Fort Morgan, Co. Cargill beef plant, union reportedly agree on tentative deal to end lockout… Fort Morgan meatpackers reached a tentative agreement with Cargill to end nearly 70-day lockout, the Colorado Sun reported Wednesday. The 1,700 beef-processing employees haven’t been allowed to return to work since May 20, as negotiations on a new contract hit a wall and workers walked off their jobs. “We reached a recommended settlement for a new labor agreement during the negotiation discussions. It is subject to ratification by union members, with a vote expected early next week,” said Cargill spokesperson Hli Yang, who declined to share details and as reported by the Sun. Officials with Teamsters Local 455 have not responded to requests for comment, said the report. .
Total New World screwworm cases detected in U.S. still at 42… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is still reporting 42 total New World screwworm detected cases in the U.S. There are now eight active cases, all in Texas.
Bond markets signaling Fed not doing enough to combat inflation… “The message from the bond market was clear: For all of Federal Reserve Chairman Kevin Warsh’s tough talk about taming inflation, he’s not rushing fast enough to deliver. After the Fed kept interest rates unchanged for a seventh consecutive month, investors dumped 30-year Treasury bonds, sending the yield shooting up as much as 14 basis points to nearly 5.23%, a 19-year high,” said a Bloomberg report. Investors are growing increasingly concerned that Warsh won’t manage to rein in inflation that has run above the Fed’s target for five straight years. “As a result, bond holders both pushed down yields on the most short-term Treasuries — a reflection of how they rapidly scaled back bets on immediate increases — and demanded higher payouts on longer-term bonds to compensate for inflation risks in the years ahead. The drop in two-year yields coupled with the rise in 30-year rates made for one of the biggest such steepenings of the yield curve after a Fed meeting since at least the mid-1990s. That steepening indicates Warsh’s “policy strategy lacks credibility,” said Ben Emons, managing director of fixed income at Highline Asset Management and founder of FedWatch Advisors, according to Bloomberg.
U.S. Q2 GDP, PCE inflation data on deck… The U.S. economy likely expanded at an annualized rate of 2.1% in the second quarter, matching the pace recorded in the first quarter and signaling continued resilience despite the conflict in the Middle East, elevated gasoline prices, and the impact of tariffs. Consumer spending is expected to have remained robust, accelerating from the previous quarter as larger tax refunds and the World Cup soccer tournament provided additional support. Business spending on equipment likely posted another quarter of double-digit growth, driven by continued investment in AI-related technologies. However, net trade is expected to have weighed on overall growth, possibly subtracting more than one percentage point from GDP. Also out this morning is the June personal income and outlays report, including its closely watched PCE inflation indexes. The PCE price index is seen coming in at up 3.7%, year-on-year.
Diesel squarely in the middle of global fuels supply squeeze… Diesel is “at the epicenter” of a supply squeeze in fuels as global refinery activity fell this month to its lowest seasonal level since the pandemic, Goldman Sachs Group analysts said, according to Bloomberg. The weakness in run rates was due to refinery outages in Russia and the Middle East from ongoing conflicts, along with subdued processing in China, analysts including Yulia Zhestkova Grigsby and Daan Struyven, said in a note on Wednesday. That cut global throughput by an estimated 6.5 million barrels a day from a year earlier, they said. “The slowdown is tightening fuel supplies just as demand heads toward the fourth-quarter peak season. Goldman said diesel inventories remain below seasonal norms while exports continue to decline, leaving the fuel especially vulnerable to further supply disruptions. Europe’s benchmark diesel futures have climbed this week to the highest in almost three months,” said the report. Global diesel exports have fallen by about 2.6 million barrels a day, or 35%, from a year earlier, while jet fuel exports have also slumped, further tightening middle-distillate markets, Goldman said.
Malaysian palm oil futures down… Malaysian palm oil futures fell to near MYR 4,650 per MT Thursday, reversing recent gains amid a stronger ringgit and weaker rival edible oils on the Dalian and Chicago exchanges. Meanwhile, crude oil prices eased as tanker traffic through the Middle East continued despite persistent regional tensions, reducing support for vegetable oil markets. Separately, European Union palm oil imports for the 2026/27 marketing year, which began in July, plunged by 39% yoy. Still, losses were capped by stronger exports, with cargo surveyors noting palm oil shipments for July 1–25 rose between 8.1% and 15.9% from the same period in June. Demand was also lifted by expectations that palm oil imports by top buyer India could increase between July and October ahead of the festive season. In Indonesia, the world’s largest producer, authorities have raised the 2026 palm oil-based biodiesel allocation to 16.75 million kiloliters to accommodate additional demand from the B50 mandate launched earlier this month.
Cattle futures bulls work on forging market bottoms… August live cattle on Wednesday rose $0.425 to $227.90 hit a two-week high early on. August feeder cattle gained $1.20 to $344.275. The cattle markets today saw more corrective bounces from their recent lows. For August live cattle, technical odds are increasing that a near-term market bottom is in place. Livestock stress continues in the Plains states and will stay elevated because of the oppressive heat. USDA at midday Tuesday reported very light cash cattle trade taking place so far this week, with steers averaging $229.00 and heifers $228.00. The agency Monday reported cash cattle trading last week averaged $230.48, which is down $7.80 from the week prior.
Lean hog futures see heavy profit-taking pressure… August lean hog futures on Wednesday fell $2.425 to $100.675 and hit a two-week low. The hog futures market saw heavy profit-taking pressure after prices hit a nine-week high on Tuesday. A price uptrend on the daily bar chart is now in jeopardy and bulls may be exhausted. Steadily rising cash hog prices will limit selling interest in futures in the near term. The latest CME lean hog index is up 12 cents to $98.35. Today’s projected CME index price is up another 10 cents at $98.45. The national direct five-day rolling average cash hog price quote for Wednesday was $101.08.