Grains are quietly higher Tuesday morning with cattle and the financial markets lower, crude oil rallying.
Darin Newsom, senior market analyst with Barchart, says the energy markets are rallying on continued conflict between Israel and Iran threatening global supplies and he thinks the markets could continue to add premium.
Geopolitical uncertainty has also led to record highs in the gold market and a weakening of the U.S. dollar index recently as Newsom says the world is losing confidence in the U.S. currency. However, early Tuesday the dollar is seeing some strength return.
The FOMC starts their two day meeting today with this backdrop and so Newsom says the Fed is expected to keep interest rates at their current levels and the market is signaling no change in course until at least September.
Newsom says adding to the uncertainty is the lack of details in the so-called trade deals and unknown tied to the possible end to the 90-day tariff delay on July 9.
Grains are slightly higher after a mixed and quiet opening seeing some light short covering in the case of corn and wheat.
He says the grain markets have become tired of the lack of progress on trade and have been focused on weather, which for corn and soybeans has lacked any significant threat.
Crop conditions are also strong for corn at 72% good to excellent nationally, up 1% from last week and at par with last year.
The funds have continued to sell July corn on any slight rally in the market and even commercial interests have been selling corn and ignoring the strong demand fundamentals. Some of the weakness in July corn could be tied to option expiration on Friday.
Soybean ratings dropped 2%, to 66% good to excellent, which is supporting soybeans, while bean oil is correcting after two limit up days.
Winter wheat contracts are trying to bounce early Tuesday on short covering by the funds but Newsom says may be concerned about the threat of severe weather, most notably hail, in the Southern and Central Plains wheat areas.
Harvest has also been delayed slightly due to excessive moisture as it is 6% behind at only 10% done.
