Good morning!
Grain futures lower overnight… At 6:30 a.m. CDT, December corn was down 1/2 cent. November soybeans were down 6 3/4 cents, August soybean meal was down $3.50 and August bean oil was down 180 points. September SRW wheat was 11 1/2 cents lower, while September HRW wheat lost 11 3/4 cents. The grain market bulls had a pulse on Thursday but need to show follow-through price strength today to begin to suggest near-term market bottoms are in place. The grain futures markets next week will be entering what is arguably the most important two-week trading period of the year. The USDA planted-acreage updates and quarterly grain stocks reports are out Tuesday, and just after that comes what grain markets’ price history shows can be a very important and pivotal trading period just after the Fourth-of-July holiday. The key outside markets today see the U.S. dollar index modestly lower after hitting a 13-month high Wednesday. August Nymex WTI crude oil prices are lower, near this week’s nearly four-month low and are trading around $69.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.378%.
Trump administration pushing harder on regenerative ag, including biofuels… President Trump Thursday signed an executive order advancing regenerative U.S. agriculture, with USDA Secretary Brooke Rollins simultaneously announcing a final regenerative feedstock rule, “that will help farmers voluntarily capture new value from regenerative agricultural practices through biofuel markets,” said a USDA press release. The executive order and USDA’s regenerative feedstock rule “provide the next critical step by ensuring producers have a practical pathway to benefit from those expanding markets.” The Regenerative Feedstock Rule establishes a framework to connect regenerative agriculture practices to new markets within the biofuel supply chain for corn, soybeans, sorghum, and spring canola. Read the full USDA press release here.
New World screwworm cases detected in U.S. rise to 25… The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is now reporting 25 total New World screwworm detected cases in the U.S. and all still in Texas and New Mexico, with the newest five all in Texas. There are 23 active cases, all in Texas.
Crude still moving through Hormuz despite attack on vessel… An attack on a container vessel sailing through the Strait of Hormuz has prompted some shipowners to review exit plans. However, traffic generally continued to flow in both directions through the strait on Friday, with vessels including fully laden tankers and empty very large crude carriers sailing along the Omani coast. The U.S. has said Iran must keep the strait toll-free and ensure ships aren’t charged any fees if it wants a permanent peace deal, with Secretary of State Marco Rubio warning that tolls could lead to “chaos.” The strike on the Ever Lovely on Thursday — the first since an interim U.S.-Iran peace deal was signed — has seen some owners and captains pull back, according to shipowners, who declined to be named. At least one company based in Asia revised earlier plans to exit and told staff that vessels in the gulf should stay put as executives reassess transit options, according to a message seen by Bloomberg News.
Stormy weather over central U.S.; heat in the West, South… The National Weather Service today said a cold front will push eastward across the Midwest and Great Lakes into the Ohio Valley, Mid-Atlantic and Northeast by Saturday. This will bring a corridor of showers and thunderstorms along and ahead of the front today, while some showers and thunderstorms occur across the Southeast. Concerns for localized excessive rainfall will increase There is a slight risk (level 2/4) of excessive rainfall from northeast Oklahoma to central West Virginia today, and for severe thunderstorms across portions of the Plains into the Ohio Valley. The flooding threat moves over eastern Ohio Valley into eastern Tennessee by Saturday. Over the northwestern U.S. a couple of frontal systems will bring showers and thunderstorms across the Pacific Northwest into Northern Plains today and will stretch into the upper Midwest by Saturday. The slow-moving system will bring flooding concerns across the Northern Plains.
Limited drought relief in Europe… A stunning heatwave across Western Europe has driven European corn futures to contract highs and lifted wheat futures, while delivering a horrific impact on human and animal health. Extreme temperatures ranging from 105 to 116 Fahrenheit have been seen across France, while southern England saw temperatures above 100 Wednesday afternoon and similar readings were recorded in western Germany, northern Italy and Spain, noted Drew Lerner of World Weather Inc. Lerner said in a note that the hottest weather will shift to the east later this week into the weekend before abating next week and the following weekend. “Unfortunately for the drought-stressed crops of France, southern parts of the United Kingdom and immediate neighboring areas, the scattered showers and thunderstorms anticipated as the heat abates will be much too erratic and light to change drought conditions leaving crops still at risk of greater production cuts,” he wrote. Keep in mind: Drought was already under way across France before the heatwave began and crop conditions that were rated favorably in late May and early June have deteriorated greatly, Lerner noted. Reads a Bloomberg headline overnight: “Extreme Heat Adds Pressure to Food Supplies Already Hit by War.”
Global stock markets wobble on tech worries… Technology stocks once again dragged global indexes lower as renewed selling in chipmakers and a report that OpenAI could postpone plans to go public hit sentiment. “Futures for the Nasdaq 100 fell 1.1%, compared with a 0.5% decline in S&P 500 contracts. Semiconductor and optical stocks traded broadly lower in premarket trading. A selloff in Samsung Electronics Co. and SK Hynix Inc. triggered a second trading suspension within days in Seoul. Oil resumed its slide, failing to lift stocks but offering a fillip to bonds. Markets are capping a volatile week in which shifting sentiment around the tech trade whipsawed equities, with investors parsing everything from spending plans to corporate earnings, said a Bloomberg report. “Technology remains a crowded trade, positioning is relatively tight, and that makes the sector more sensitive to negative news flow or sharp moves in individual names,” said Francisco Simon, European head of strategy at Santander Asset Management and as reported by Bloomberg. Reads a Bloomberg headline overnight: “Chinese Hedge Funds Warn the AI ‘Super Bubble’ Is Ready to Burst.”
USDA Quarterly Hogs & Pigs report shows smaller U.S. herd than expected… USDA’s quarterly Hogs & Pigs Report released Thursday afternoon showed the U.S. hog herd at 73.664 million head as of June 1, down 33,000 head, or 0.04%, from a year ago and 696,000 head less than the average pre-report guess. Market hog inventories rose 36,000 head, or 0.1%, while the breeding herd shrank 1.2% from a year ago. The spring pig crop was up 8,000 head, virtually flat, despite a 1% reduction in farrowings thanks to a 1% rise in pigs per litter to a record 11.87 head. Producers indicated they intend to farrow 2.2% fewer sows than a year ago. Fall farrowing intentions are down 0.6%. Slaughter is pegged to run marginally above year-ago through summer then decline around 0.5% in the fall.
USDA Cold storage report: U.S. beef stocks down, pork up… Thursday afternoon’s USDA’s Cold Storage report showed frozen U.S. beef and pork stocks saw much smaller declines relative to their seasonal averages in May, implying reduced demand, particularly given lighter cattle and hog slaughter levels last month. U.S. beef stocks at the end of May totaled 403.4 million pounds, down 2 million pounds from the previous month. The five-year seasonal average decline is 18 million pounds. U.S. pork stocks totaled 451.9 million pounds, up 900,000 pounds from April. The five-year average shows a 7.9 million-pound decline during the month.
Malaysian palm oil futures rebound… Malaysian palm oil futures hovered near MYR 4,600 per MT Friday, rebounding from recent declines as stronger vegetable oil prices on China’s Dalian Exchange lifted sentiment. Firmer export demand also lent support, with cargo surveyors estimating shipments rose 10.6%–11.1% in the first 25 days of June. Meanwhile, top supplier Indonesia moved to roll out its B50 biodiesel mandate from July 1, with a three-month transition period for retailers to clear existing stocks, reinforcing views of higher domestic consumption. Supply concerns also persisted as weather-related risks continued to cloud production. In India, palm oil imports are expected to top 600,000 MT in June, up from 549,356 MT in May, underscoring robust demand from the world’s largest buyer. However, the contract remained on track for a weekly loss of about 1%, reversing the prior week’s strong gains as a firmer ringgit and a sharp drop in crude oil prices, amid easing Middle East supply concerns, capped upside momentum.
Cattle futures see mild chart-based buying as tradersalso eyeing NWS cases… August live cattle on Thursday rose $0.70 to $247.225. August feeder cattle gained $0.375 to $373.30 and hit a six-week high early on. The cattle futures markets saw mild technical buying amid ongoing concerns about reduced beef supplies coming out of Texas due to the NWS detections in the state. High heat and humidity across all of the Midwest this weekend and next week will stress livestock. Cooling will return to the northern and eastern Midwest in the second week of July. Live and feeder cattle futures see price uptrends in place on their daily bar charts.
Lean hog futures pause… August lean hog futures on Thursday fell $0.10 to $96.60. The hog futures market saw a pause and very mild technical selling. Decent price gains today and a technically bullish weekly high close would negate a price downtrend to suggest a market bottom is in place. Thursday afternoon’s quarterly USDA hogs and pigs report leaned slightly price-bullish. The latest CME lean hog index is up 38 cents at $91.85.
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