LEADING OFF: Grains are mixed this morning as traders take a cautious stance ahead of this morning’s 11 a.m. CT USDA Supply and Demand report. Corn is down 2 to 3 cents, and soybeans are mixed. Wheat is down a penny. Cotton is up 70 to 90 points, and could get a lift this morning from strong weekly export sales and short-covering after falling each of the prior six days. Little change is expected to domestic balance sheets from the USDA report, and if that is in fact what happens the trade will quickly re-focus on Midwest weather and the June 30 acreage and stocks reports.
Outside markets are remarkably subdued given a wealth of fresh headlines this morning. Gold is down $30. U.S. stock futures indices are up 0.5% as investors track the enormous SpaceX IPO. The dollar index is up slightly. Crude oil is up only slightly, despite what appears to be a new phase of the war with Iran.
President Trump this morning on social media said the U.S. would be launching a fresh attack on Iran this evening, hitting the country “VERY HARD” and in the “not too distant future” taking “total control” of Iran’s gas and oil, as it has done with Venezuela. This comes after a second day of attacks between the two countries.
The Producer Price Index this morning provides another worrying data point on inflation. It was up 6.5% year-over-year in May, the biggest jump since November 2022. Core PPI, excluding volatile food and energy prices, as up 4.9%. Month-over-month, the headline PPI was up 1.1%, above the average analyst estimate of 0.7%, and core PPI was up 0.8%, versus 0.4% expected. The European Central Bank this morning raised interest rates, becoming the first major central bank to do so since the war with Iran started, and this morning’s PPI report only adds to expectations that the U.S. Fed will do the same this year.
CORN: Export sales for the week ended Friday were solid. USDA reported net sales of 1.004 MMT for 2025-25, with Japan, Mexico, Spain and Colombia accounting for most of the purchases. This was at the lower end of trade guesses that ran 700,000 to 1.6 MMT, and down 15% from the four-week average. But USDA also reported new crop net sales of 926,900 metric tons, topping trade guesses of 200,000 to 500,000. And corn export shipments of 1.916 MMT were up 19% from the four-week average.
The U.S. weather outlook remains mostly favorable, with the key point being that very high yield potentials will remain in place over the next two weeks according to World Weather Inc. Abundant rains and storms will hit the Midwest and the South over the coming days, and while in some cases this will be excessive, overall it’s not a threatening pattern to the crop. The other key feature over the next week will be below-average temperatures across much of the middle of the country. This will slow growth and drying, but is likely to become a significant problem only if it extends beyond the next 10 days.
We still do not expect any major changes in USDA’s U.S. corn balance sheets today. We see no reason for USDA to deviate from its trendline yield estimate for 2026 production, based on planting progress. USDA is expected to raise its 2025-26 and 2026-27 world corn carryout forecasts slightly – by about 1 MMT each. USDA seems likely to raise its estimate of Argentina’s 2025-26 crop further. Pre-report trade estimates of Argentina’s crop avg. 61 MMT, 2 MMT above USDA’s May estimate. USDA could also raise Brazil’s crop slightly.
SOYBEANS: Weekly soybean export sales were underwhelming at 211,300 metric tons for 2025-26, at the lower end of trade guesses that ran 150,000 to 400,000, and down 18% from the four-week average. New crop net sales of 141,500 metric tons were at the low end of trade guesses that ran 100,000 to 350,000.
One supportive factor for the soybean market may be growing concerns about Brazil’s next crop with the continued closure of the Strait of Hormuz keeping input costs high and limiting needed fertilizer imports. Purchases of fertilizer by Brazilian producers for the next growing season are lagging. However, USDA is unlikely to make any change to its forecast for Brazil’s next crop on Thursday. Only very minor changes are expected on USDA’s world soybean balance sheets.
WHEAT: After falling relentlessly for a couple of weeks, futures appear to have turned the corner this week, with support from the return of a heat wave in parts of western Europe, particularly France. But conditions is most of the rest of the world are favorable including in the northern U.S. Plains, and in the Black Sea region. Australia is set to receive more welcome rains, and areas of China that are excessively wet are drying out.
Weekly export sales of 666,300 metric tons for 2026-27 topping trade guesses of 200,000 to 600,000.
LIVESTOCK: In lean hogs, October and more deferred contracts have fallen for five straight days, with pressure from demand concerns and fund liquidation. But nearby July and August futures posted hook reversals yesterday off of new long-term lows, which could spur speculative short-covering and bargain hunting. Further cash market strength will be needed to generate sustained futures strength. July futures have nearby chart resistance at $97.65 and $98.18, with nearby support at $95.50. July could rally above $99.00 without reaching its 10-day moving average.
Live cattle futures had support yesterday from a firm tone to Plains cash markets, firmer wholesale beef prices and technically-driven buying/short covering. Traders continue to evaluate the impact of the New World Screwworm situation. Plains direct cash cattle markets stayed very quiet Wednesday with no packer bids established. Packers are likely to be more active in the market on Thursday, but it remains to be seen whether significant trade develops.
Some states have begun issuing new rules on livestock movement due to New World screwworm (NWS). Idaho on Wednesday announced addition state entry requirements restricting entry of animals from states with NWS infestations. Montana is requiring animals from infected areas to undergo veterinary inspections and treatment before arrival.
