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Corn futures took a page out of the Fleetwood Mac songbook and went their own way Tuesday, shaking off a further slide in crude-oil prices as traders appeared to react to a historically steep drop in crop condition ratings.
That’s a relief for bulls, given that corn had recently been moving largely in sympathy with crude, following it higher as fighting between the U.S. and Iran intensified this month and sent Brent back above $100 a barrel for the first time since May and then retreating on profit-taking as a pause in the fighting sent oil into sharp retreat. Tuesday’s rally, with corn up 6 ½ cents and a finish near the daily high, comes as the oil charts begin to look dire for the energy bulls.
USDA on Monday afternoon said the U.S. corn crop was rated 63% good to excellent as of July 26, down 4 percentage points from the previous week. That was not only the biggest decline of the current growing season, but also the biggest decline for this time of year since 2007. The drop also ended a string of remarkably steady condition readings. Of note, not only did the good to excellent category decline, but the percentage of the crop rated poor to very poor rose to 12% from 9% the previous week, compared with 7% for this time last year.
But outside markets might have more to say very soon. Global investors are preparing Wednesday for the conclusion of a two-day Federal Reserve policy meeting. Uncertainty around the outcome is the highest in recent memory, and the stakes could prove high for the commodity sector, including agricultural futures (see next item below).
To hike or not to hike: Fed-funds futures traders have priced in a nearly one-in-three probability the rate-setting Federal Open Market Committee will opt for a 25 basis point rate hike on Wednesday. Betting markets don’t see the odds that high, with Kalshi reflecting a 25% chance of a hike. But that’s still a stark contrast from the near-consensus that has preceded Fed meetings for the past several years.
The Fed’s June meeting reflected a divided FOMC. Hawks don’t want the Fed to find itself behind the curve in the event that the bottlenecks resulting from the Iran war, which have sent prices for oil and fertilizer surging, lead to a reacceleration of inflation. Others argue there’s time to wait and see given crude’s retreat from its earlier highs and a lack of any sign the labor market will push prices higher.
- So what happens if the Fed delivers a hike? Tom Essaye, founder of Sevens Report Research, argued in a Tuesday morning note that a 25-basis point hike or a change in the statement that indicates a near-term hike is likely on the way would probably spark a steep selloff in stocks, with the S&P 500 likely down over 1%, while the 10-year Treasury yield is likely to surge solidly through the 4.7% level. That would also point to a surge by the U.S. dollar. Rising yields – which raise the opportunity cost of holding nonyielding assets – and a rising dollar – which makes assets priced in the greenback more expensive to users of other currencies – tend to be negative for commodities.
That’s not a central forecast. Weather, crop conditions and geopolitical developments may remain bigger market drivers over the near term, but it’s worth being prepared for potential volatility.
Thune backs $95B reconciliation package: Senate Majority Leader John Thune on Tuesday said a House-passed $95 billion reconciliation package, which includes $12 billion in additional farm relief, is the best way forward for a host of items sought by President Donald Trump, Agri-Pulse reported, citing remarks the South Dakota Republican made in a Fox News interview.
The package doesn’t include language that would allow year-round sales of the E15 ethanol blend, which Agri-Pulse said is a high priority for Thune. Republican senators are mulling a new version of E15 legislation. A standalone House measure that was approved in May is seen as a nonstarter in the Senate due to expected objections from oil- and refining-state lawmakers, the report noted.
Confined-spaces casualties decline: An annual report from Purdue University’s Agricultural and Biological Engineering Department released this month said there were no fewer than 48 injuries or fatalities in the U.S. associated with agricultural confined spaces last year. Any number above zero is, of course, too many, but the 2025 figures do mark a 5.9% decline from 2024 and remain substantially below the five-year average of 59.2 and the 10-year average of 60.2.
Purdue said the cases included 21 grain entrapments, 7 falls into or from grain storage structures, 10 asphyxiations due to oxygen-deficient or toxic environments, 8 equipment entanglements (such as those involving in-floor and sweep augers) occurring while working in or around agricultural confined spaces, and 2 incidents involving “miscellaneous circumstances.”
Despite ongoing prevention efforts and increased awareness, the frequency and severity of confined-space incidents remain a concern, the Purdue researchers said.
They wrote:
- The reason for annually releasing this incident data has remained unchanged. The primary aim is to reduce the frequency and severity of such incidents by keeping the public and agricultural producers and employers aware of the issues, contributing to the development of more effective, evidence-based prevention and injury reduction methods, and giving direction to policymakers and engineering organizations in developing improved safety and health workplace regulations and engineering standards for future construction of related facilities. Read the full report here.
India’s monsoon revival: Revived monsoon rains have allowed planting of summer-sown crops, including cotton, soybean and rice, to accelerate across much of India, Reuters reported, making up for an earlier planting deficit attributed to below-normal rainfall. The report noted that India is the world’s largest rice exporter, accounting for about 40% of global shipments and the biggest importer of vegetable oils such as palm oil, soyoil and sunflower oil. Summer crop sowing was nearly a quarter lower than a year earlier at the end of June, but the shortfall has since narrowed to less than 5%, Reuters said, citing data compiled by the Ministry of Agriculture and Farmers’ Welfare. Farmers had planted summer-sown crops on 78.7 million hectares as of July 24, compared with 82.6 million hectares a year earlier, the data showed, while rice area stood at 23.4 million hectares, down from last year’s 24 million hectares.
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