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AG POLICY & MARKETS DAILY

WEDNESDAY, JULY 22, 2026   |   UPDATES: POLICY / NEWS / MARKETS

Grains Resume Rally as Black Sea Risks, Heat Stack Up; Wheat Leads the Charge

Trump, Rubio tie Iran strikes to Hormuz attacks | USTR Greer testifies today | Update on likely Xi visit to U.S. 

Link: Rollins Defends $11.1 Billion Farm Aid Request as Senators Press
         USDA on Disaster Gaps, Crop Insurance, SNAP and Consolidation

Link: Basis Boom Meets the Calendar: Eastern Corn Belt Strength
         Faces a Seasonal Reckoning
Link: Canadian Weaner Pigs Dodge Trump’s New 50% Tariff Hit
Link: USDA Agrees to Restore Prevented Planting Buy-Up Option,
         Completing a Rare Policy Reversal

Link: Video: Wiesemeyer’s Perspectives, July 19
Video show is now on You Tube,Spotify & Apple
Link: Audio: Wiesemeyer’s Perspectives, July 19

TOP STORIES

— Trump, Rubio tie Iran strikes to Hormuz attacks: The administration says U.S. strikes will continue until Iran stops attacking Strait of Hormuz shipping, with Trump threatening direct retaliation against Iranian infrastructure.
— Xi’s September U.S. visit still appears on track: Preparations continue for a likely Sept. 24 summit focused on agricultural purchases, trade, technology and managing broader U.S./China tensions.
— Greer faces Senate scrutiny over expanding tariff agenda: Senators are pressing U.S. Trade Representative Jamieson Greer on China’s purchase commitments, Canada and Brazil tariffs, USMCA negotiations and forced-labor duties.
— Hormuz fighting triggers new shipping fuel surcharges: CMA CGM and Maersk are imposing new fees as rising fuel, insurance and transportation costs begin spreading through global supply chains.
— Mexico fully reopens market to U.S. pork offal: Mexico removed its remaining pseudorabies restrictions, restoring an estimated $6 million to $7 million in weekly trade and improving hog carcass values.

FINANCIAL MARKETS

— Equities today: U.S. stocks opened lower as semiconductor weakness, uncertainty over AI spending and escalating U.S./Iran tensions pressured sentiment.
— Equities yesterday: The Dow gained 0.74%, the Nasdaq rose 1.29% and the S&P 500 advanced 0.89%.
— U.S. mortgage rates reach an 11-month high: The average 30-year rate rose to 6.69%, although purchase applications increased despite worsening affordability.

AG MARKETS

— Grains resume rally as Black Sea risks and heat intensify: Wheat led overnight gains as export disruptions, western Corn Belt heat and firm demand restored risk premiums across grain and soybean markets.
— Europe’s drought ignites Paris grain futures: Deepening crop losses lifted European wheat and corn sharply, potentially increasing EU demand for Black Sea, South American and U.S. grain.
— Black Sea turns from breadbasket to battleground: Disruptions at the Kerch Strait and Ukrainian ports are restricting Russian and Ukrainian exports and adding a persistent war premium to wheat.
— Agriculture markets yesterday: Grain futures were mostly higher, led by wheat and cotton, while soybeans, soybean oil and feeder cattle declined.

WOTUS

— WOTUS review meetings multiply as July deadline slips: White House consultations now extend through July 30, making August the earliest plausible release date for the revised water rule.

FERTILIZER

— Cheap gas fails to deliver cheap nitrogen: Roger A. McEowen says global pricing, industry concentration, transportation costs and crop returns outweigh low U.S. natural-gas production costs.

ENERGY MARKETS & POLICY

— Wednesday oil surge reflects threats to three export corridors: WTI approached $88 as markets priced escalating risks across the Strait of Hormuz, Red Sea and Black Sea.
— Tuesday oil rally pushed prices to five-week highs: Shipping threats lifted Brent above $91 despite no confirmed major reduction in Middle Eastern production.

TRADE POLICY

— U.S./Jordan deal deepens strategic alignment: Tariffs remain largely unchanged, but Jordan gains a possible forced-labor tariff off-ramp in exchange for broad commitments aligning with U.S. trade and security policies.

WATER POLICY

— Colorado River reservoirs hit record low: Declining storage at Lakes Mead and Powell is increasing pressure for agricultural conservation, mandatory water reductions and possible federal intervention.

CONGRESS

— Senate seeks bipartisan funding deal before August recess: Negotiators hope to avert a fall shutdown, but Senate changes involving spending, immigration enforcement and White House requests could complicate House passage.

POLITICS & ELECTIONS

— Thune opens GOP door to Fetterman: Republican outreach highlights Democratic divisions over Israel, although the Pennsylvania senator says he has no current plans to change parties.

WEATHER

— NWS warns of flooding, tropical weather and expanding heat: Flash flooding threatens the lower Mid-Atlantic, Tropical Storm Bertha affects the Gulf Coast and dangerous heat is spreading across the West and northern Plains.
— Cool U.S. break gives way to renewed heat and storms: Temporary Corn Belt relief will be followed by Plains heat, worsening northern Plains stress and potentially more thunderstorms during early August.

— Equities today: U.S. equities opened lower as renewed chip-sector weakness and rising geopolitical risks pressured sentiment. Micron, Intel and Sandisk fell nearly 4% premarket, with Nvidia down 1.5%, as investors awaited Alphabet’s earnings for clues on AI spending. Tesla also slipped ahead of its results. Meanwhile, escalating U.S./Iran tensions lifted oil prices and Treasury yields, adding to inflation concerns.

In Asia, Japan -0.2%. Hong Kong -1%. China +0.1%. India -0.9%.

In Europe, at midday, London +1.1%. Paris +0.9%. Frankfurt +0.6%.

— Equities yesterday: 

— U.S. mortgage rates reach highest level in nearly 11 months

Rising inflation risks squeeze buyers, but home purchase demand improves

The average contract rate on a 30-year fixed U.S. mortgage rose 4 basis points to 6.69% in the week ended July 17, its highest level since August 22, 2025, according to the Mortgage Bankers Association. The increase followed a rise in Treasury yields as renewed inflation concerns reduced expectations for near-term relief in borrowing costs.

Mortgage rates have climbed 0.60 percentage points since the U.S. and Israel launched attacks against Iran Feb. 28. The conflict initially drove global oil prices higher, adding to inflation concerns and placing upward pressure on government bond yields. Energy prices eased in June amid hopes for peace negotiations, but renewed hostilities have revived fears that elevated fuel and transportation costs could spread through the broader economy.

That backdrop strengthens the case for the Federal Reserve to keep interest rates higher for longer, even if underlying economic growth begins to weaken. Mortgage rates are tied more closely to longer-term Treasury yields than directly to the federal funds rate, meaning homebuyers may see little improvement until markets gain confidence that inflation is moving sustainably lower.

Despite the increase in borrowing costs, total mortgage applications rose 1.9% after two consecutive weekly declines. Applications to purchase homes increased 5.5%, suggesting that some buyers are returning to the market despite affordability pressures, potentially because of greater housing inventory, seasonal demand or concern that rates could rise further.

Refinancing applications fell 2.4%, reflecting the limited financial incentive for homeowners to replace mortgages secured at substantially lower rates. That divide underscores the unusual condition of the housing market: demand has not disappeared, but high rates continue to restrict affordability, discourage existing homeowners from selling and limit the potential for a broader recovery in housing activity.

— Grains resume rally overnight as Black Sea risks, heat stack up; wheat leads the charge

Overnight markets — Wednesday, July 22

Grain and soy futures pushed higher across the board overnight, shaking off Tuesday’s brief pause as a potent mix of Black Sea supply disruptions, a hot Corn Belt forecast, and firm demand signals put buyers back in control. Wheat is again the leader, with hard red winter contracts punching through $7.50 and SRW knocking on the $7.00 door.

Overnight prices:

September corn: $4.59, up 6 1/4 cents

August soybeans: $12.29 1/2, up 10 cents

August soymeal: $331.80, up $5.10

August soyoil: 74.40 cents, up 10 points

September SRW wheat: $6.98, up 20 cents

September HRW wheat: $7.50 1/2, up 17 1/2 cents

Wheat: Black Sea premium keeps building

• The wheat complex remains the engine of this rally, and the fuel is coming almost entirely from the Black Sea. Russia’s self-imposed closure of the Kerch Strait on July 10 — after Ukrainian drone strikes in the Sea of Azov made the waterway too dangerous for commercial traffic — has choked off a corridor that normally handles roughly a quarter of Russian grain and sunflower oil shipments. Don River ports are congested with backlogged cargo, and consultancy SovEcon has slashed its July Russian grain export forecast to around 1.5 million metric tons, half the normal July pace and the lowest since 2017.

The timing could hardly be worse for Moscow — or better for wheat bulls. Russia’s peak export window runs August through October at 5 million to 6.5 million tons per month, while its alternative deep-water ports can handle only an estimated 4 million to 4.5 million tons. With Russian shipments down sharply this month and threats of retaliation against Ukrainian ports like Odesa and Chornomorsk still live, world buyers are shifting business to competing origins at elevated prices — a flow that increasingly includes U.S. wheat. Futures are trading at or near two-year highs, and overnight action suggests traders are testing the recent contract highs in SRW near $7.58. HRW’s outperformance also reflects tightening global supplies of higher-protein milling wheat.

• Corn: heat premium meets big ratings. September corn’s 6 1/4-cent overnight gain to $4.59 keeps the contract comfortably above the $4.53 area analysts flagged as the technical trigger for follow-through buying, with the market now pressing toward its 100-day moving average — a zone that could invite additional fund short covering. The fundamental story is a tug-of-war: Monday’s Crop Progress report pegged corn at 67% good-to-excellent, a point better than trade expectations, but forecasts calling for oppressive heat across the Northern Plains and northwestern Belt this week — with above-normal temperatures potentially lingering into early August — are injecting weather premium during the tail end of pollination for later-planted fields. Rains are expected to favor the eastern Belt, leaving the western edge of the crop to bear the brunt of the heat.

Demand remains a quiet pillar of support. Corn export shipments are running about 57% ahead of a year ago, and any lasting disruption to Black Sea trade flows stands to push additional feed-grain business toward U.S. ports.

•Soybeans: China buying, crush strength underpin the complex. August soybeans added a dime overnight to $12.29 1/2, keeping the market within striking distance of the two-year highs set Monday. Chinese demand is doing much of the work: USDA announced flash sales of 246,000 MT of soybeans on Monday, following 474,000 MT late last week to China, unknown destinations and Colombia, and China’s June soybean imports set a record at 13.55 million metric tons.

The product markets are pulling their weight as well. August meal jumped $5.10 to $331.80 as robust crush margins keep processors bidding aggressively for supplies — farmers are largely sold out of old-crop beans, and interior basis levels continue to firm. Soyoil was the laggard of the complex, essentially flat at 74.40 cents, consolidating near recent highs after its energy- and biofuel-driven run.

•Outside markets add tailwind. The macro backdrop leans friendly. Crude oil extended its geopolitically driven surge overnight, gaining nearly 3% as continued U.S. strikes on Iran and disruptions around the Strait of Hormuz keep a war premium in energy — supportive for both corn-ethanol and soyoil-biodiesel values. The U.S. dollar index eased modestly, adding a mild tailwind for export competitiveness.

What to watch: Traders will key on Thursday’s weekly USDA export sales report for confirmation of the recent demand pace, midday weather model runs for any shift in the heat ridge, and — above all — Black Sea headlines. This rally is being built on supply risk in two places at once: the Kerch Strait and the western Corn Belt sky. Any de-escalation on either front would test the bulls quickly; further escalation could put SRW’s contract highs and $4.75-plus December corn in play in a hurry.

— Europe’s deepening drought ignites Paris grain futures

Another 10-day heat dome with scant rainfall sends Matif wheat up €8.75 and puts French corn — now $7.60 a bushel — within reach of Chinese domestic prices; palm oil drifts lower on weak crude 

EU weather is again the world’s bull story. The forecast has flipped back to extreme heat with limited rainfall across the next 10 days — the third major heat event since late May — and summer row crop yield prospects continue to erode by the day. Talk of an EU corn crop of just 46-49 MMT is gaining traction, a number that would undercut even Coceral’s early-July estimate of 52.7 MMT (already the smallest since 2007). France is the epicenter: FranceAgriMer crop ratings are the worst in at least 15 years, Expana pegs the French crop at 8.9 MMT (down roughly a third from last year), grower group AGPM sees a 30% drop, and some analysts warn output could slip below 8 MMT for the first time since the drought year of 1976. Farmers in western France are already cutting non-irrigated corn for fodder. Romania’s rains are helping at the margin, but not nearly enough to offset the west.

•Paris futures responded emphatically. Matif milling wheat jumped €8.75/MT to €243.50 — about $277.60/MT at today’s €1 = $1.14, or roughly $7.55/Bu — while Paris August corn gained €5.00 to €261.00, putting French corn at $7.60/Bu this morning. The transatlantic spread is now striking: with September Chicago wheat closing Tuesday at $6.78 (up 4¢) and September corn at $4.52¾ (up 3¼¢), Paris wheat carries a premium of nearly 80¢/Bu over Chicago, and French corn is more than $3.00/Bu over CBOT. That gap is Europe’s import bill talking — the EU is transitioning from corn exporter-adjacent to a structural buyer this season, and Black Sea and South American origins will fill the hole. U.S. corn should pick up incremental demand at these spreads, though cheap Black Sea feed grain (offered in the €180-200/MT range) remains the first port of call.

• China corn: comfortable and quiet — but Europe is converging on Chinese prices. Dalian corn futures eased about 0.5% early this week, with traders citing “more comfortable domestic supply” as wheat-for-feed substitution and state auction flows blunt the pre-new-crop squeeze. Most-active Dalian corn has recently traded in the low-2,300s yuan/MT — roughly $325/MT, or about $8.25/Bu in U.S. terms — still the world’s most expensive major corn market, but note the compression: French corn at $7.60 is now within 65¢/Bu of Chinese domestic values, a spread that was measured in dollars a year ago. Beijing continues to source cheap third-country supplies, with COFCO having chartered more than 600,000 MT of Argentine corn since April.

• Malaysian palm oil is the odd man out — drifting lower. The benchmark October FCPO contract fell 34 ringgit (0.73%) Tuesday to 4,609 ringgit ($1,127.72/MT) and slipped further at midday today, with October quoted around 4,597 ringgit and the August contract at 4,522 ringgit (about $1,105-1,122/MT, or roughly 50-51¢/Lb). Pressure came from a 1%-plus drop in crude oil (dimming biodiesel feedstock appeal) and weaker Dalian vegoils, while cargo surveyors sent mixed demand signals for July 1-20 — AmSpec down 0.9%, Intertek up 4.1%. The bigger picture is friendlier: palm’s discount to CBOT soybean oil (74.30¢/Lb, down 38 points Tuesday) is a hefty ~23¢/Lb, which should keep price-sensitive buyers (India, in particular) engaged, and El Niño heat risk to Southeast Asian production lends medium-term support.

Bottom line: The world grain market’s center of gravity has shifted to Europe. Until the EU forecast breaks — and there’s no break in the next 10 days — Matif leads, Chicago follows at a widening discount, and every MMT trimmed from the EU corn crop is demand handed to the Black Sea, South America and, at the margin, the U.S. Gulf.

— Black Sea turns from breadbasket to battleground — again

Ukraine’s closure of the Kerch Strait chokes a quarter of Russia’s grain exports while Russian strikes idle Odesa; the war premium is now stacked on top of the EU weather premium

The war has escalated squarely into the grain trade, from both directions. Ukraine’s drone campaign closed the Kerch Strait on July 10 after strikes on vessels in the Sea of Azov, effectively halting a route that carries roughly a quarter of Russia’s grain and sunflower oil exports — and about 30% of its wheat. The consequences are showing up fast: SovEcon on July 20 slashed its July Russian wheat export forecast to just 1.5 MMT — half the five-year average for the month and the weakest July since 2017 — after cutting estimates 13-20% in a single week. Don River grain movement has stopped entirely, and port elevators are reported full. Russian farmers, who should be selling new-crop wheat into harvest, have “no one to sell to,” as one agricultural holding executive put it — a squeeze that suppresses ruble prices at home even as world prices rally.

Russia is answering in kind against Ukraine’s coast. Early July brought 23 strikes on Ukrainian seaports and 17 attacks on civilian vessels, hitting Odesa, Chornomorsk and Pivdennyi. Vessel calls at Odesa’s ports have nearly stopped, some marine terminals have suspended grain intake, and Ukraine’s export capacity is down by roughly a third. War-risk insurance has climbed to around 1% of hull value, and some shipowners are refusing Ukrainian port calls outright. Analysts expect a one-to-two-month dent in Ukraine’s new-crop program — on the order of 3 MMT of wheat plus up to 1 MMT of barley and rapeseed — though the Danube ports (~2 MMT/month capacity) and rail/road routes mean a complete halt is unlikely.

The price fingerprints are all over the wheat market. The Black Sea escalation drove wheat up more than 10% in a week at its mid-July peak — Chicago to two-year highs, Paris to 17-month highs — before profit-taking set in early this week on weak U.S. export data. This morning’s €8.75 surge in Matif wheat to €243.50 ($7.55/Bu) is best read as the two bull stories compounding: the EU heat dome hitting yields at the same moment the world’s cheapest wheat, from both Black Sea combatants, is struggling to reach the water. That’s why Paris is leading Chicago — Europe sits closest to both the crop loss and the logistics choke.

The key distinction from 2022: this is a logistics crisis, not (yet) a production crisis. Global wheat supplies remain relatively comfortable, and the grain itself still exists — it’s the freight, insurance and port capacity that are impaired. That caps the panic, but it also means prices are hostage to headlines: every strike on a port or vessel adds premium, and any de-escalation would drain it just as quickly. In the meantime, the windfall flows to everyone else’s wheat — Romania and Bulgaria are booking business next door, and U.S., EU, South American and Australian exporters collect prices Russia’s blocked farmers can’t touch. If the Kerch closure and Odesa strikes persist into August — when Russia would normally ship 5 MMT of wheat — the world market will have to re-route serious tonnage, and the war premium in wheat becomes stickier than the weather premium in corn.

Of note: The EU drought makes Europe a bigger buyer of Black Sea corn just as Black Sea logistics get riskier — a tightening squeeze from both ends that ultimately lands at the U.S. Gulf’s doorstep as residual supplier.

— Agriculture markets yesterday:

— WOTUS review meetings multiply as July final rule target slips

OIRA sessions now run through July 30, with farm groups not yet listed

The White House review of the administration’s revised “Waters of the United States” definition is moving into a more active phase, with three industry meetings now scheduled as the Environmental Protection Agency and U.S. Army Corps of Engineers work toward completing the rule.

The Office of Information and Regulatory Affairs (OIRA), part of the Office of Management and Budget (OMB), lists meetings with the American Road & Transportation Builders Association on July 23, the Edison Electric Institute on July 28 and Zenolabs AI LLC on July 30. As of July 22, no national agriculture or homebuilding organizations are listed for meetings on the current draft.

The emerging lineup reflects the rule’s potential consequences well beyond agriculture. Road builders and electric utilities routinely encounter wetlands, streams, drainage systems and other water features when constructing highways, transmission lines, generating facilities and related infrastructure. The organizations are therefore likely to emphasize predictable jurisdictional tests that can be applied before projects enter lengthy Clean Water Act permitting reviews.

The rule was submitted to OIRA on June 30 and remains under review. The OIRA docket says there is no legal deadline for completing the review and classifies the submission as a “proposed rule,” even though the administration’s Unified Agenda identifies the action as being at the final-rule stage and projected publication during July 2026.

That stage discrepancy could simply reflect an administrative coding issue, but it introduces uncertainty over exactly what EPA and the Corps sent to OMB. It is unclear whether OIRA is reviewing the expected final regulation or whether the agencies are contemplating another proposed or supplemental action before issuing a final definition.

Either way, the administration’s July publication target is now effectively out of reach. With stakeholder meetings continuing through July 30 and the rule still officially listed as pending, there is virtually no time to complete the review, make any resulting revisions and publish the regulation before the end of the month. August now appears to be the earliest plausible release window, with a later date possible if OIRA or other agencies seek significant changes.

The absence of an agriculture meeting should not be interpreted as evidence that farm groups have been disengaged. The American Farm Bureau Federation submitted formal comments in January supporting the proposed rule while requesting a narrower and more precise definition of “relatively permanent,” additional clarity for wetlands and continued protection of exclusions for ditches and prior converted cropland.

Homebuilders have also participated extensively. The National Association of Home Builders provided comments during EPA and Corps listening sessions and previously met with OIRA in September 2025 while the administration was developing the proposal. NAHB has urged the agencies to place the proposed definition of “continuous surface connection” directly into the regulation rather than relying on less durable agency guidance.

The November 2025 proposal would narrow and clarify federal Clean Water Act jurisdiction following the Supreme Court’s 2023 decision in Sackett v. EPA. It would, for the first time, define several critical terms, including “continuous surface connection,” “relatively permanent,” “tributary,” “ditch” and “prior converted cropland.” It would also revise existing exclusions for ditches, prior converted cropland and waste-treatment systems while explicitly excluding groundwater.

Of note: Under the proposal, a wetland generally would need both to touch a jurisdictional water and to contain surface water throughout at least the wet season to satisfy the continuous-surface-connection test. That approach would reduce federal jurisdiction over wetlands connected to regulated waters only through groundwater, intermittently saturated soils or more distant hydrological relationships.

For agriculture, the final wording surrounding ditches and prior converted cropland could be as important as the broader definition of jurisdictional waters. Farmers want ordinary drainage ditches, subsurface drainage and land converted to crop production before federal wetland rules took effect to remain outside Clean Water Act jurisdiction. Uncertainty remains over when prior converted cropland could be considered abandoned and potentially become subject to federal regulation again if wetland conditions return.

Perspective: The OIRA meetings are likely to focus less on whether the administration should narrow WOTUS — the proposal already establishes that policy direction — and more on whether the final language can be consistently applied by EPA and Corps personnel in the field. Infrastructure, utility, farming and construction interests all want tests that can be evaluated from visible physical conditions rather than through expensive hydrological studies or case-by-case legal interpretations.

The lack of an agriculture meeting is therefore notable but not yet alarming. Meetings can still be added while the rule remains under review, and Farm Bureau and other agricultural organizations have already established their positions through written comments and earlier agency consultations. The more important signals will be whether agriculture groups seek a late OIRA session and whether the final rule preserves the proposed ditch, groundwater and prior-converted-cropland protections without adding new qualifications.

The growing meeting schedule nevertheless confirms that the final rule is not ready for immediate publication. OIRA is still collecting industry input on a regulation that affects farming, construction, transportation, energy development and land use across the country. That process may improve the rule’s practical implementation and legal durability, but it also means the administration’s July timetable has slipped.

— Cheap gas, costly nitrogen: why fertilizer prices stay elevated

Global markets, industry concentration and crop returns outweigh lower U.S. gas costs

Roger A. McEowen, writing in Agricultural Law and Taxation, examines a question that has long frustrated farmers: Why has the shale-driven decline in U.S. natural gas prices not produced a comparable decline in nitrogen fertilizer prices? His central conclusion is that fertilizer is priced according to what the market will bear—not simply what it costs to manufacture.

Natural gas is the principal feedstock for ammonia and accounts for an estimated 70% to 90% of the cash operating cost of ammonia production. The shale revolution therefore gave North American manufacturers a major cost advantage as Henry Hub prices fell from more than $10 per million British thermal units in 2008 to a prolonged range of roughly $2 to $4. But those savings lowered producers’ cost floor; they did not determine the market price charged to fertilizer buyers.

Nitrogen is traded in an interconnected global market. High natural gas prices in Europe or Asia can raise the marginal cost of global fertilizer production, allowing lower-cost U.S. manufacturers to price against international replacement values rather than their own domestic production expenses. Russia’s invasion of Ukraine, European energy disruptions, Chinese export restrictions, tariffs and shipping constraints have further limited supply and prevented inexpensive fertilizer from moving freely into U.S. markets.

Crop prices also influence what fertilizer suppliers can charge. Because nitrogen demand is derived from the value of the crops it helps produce, higher corn, wheat or cotton prices raise the potential return from an additional pound of nitrogen. McEowen argues that suppliers can capture part of that increased farm revenue through higher fertilizer prices, even when natural gas costs remain relatively stable.

Industry structure strengthens that pricing power. McEowen notes that the number of U.S. ammonia plants has declined while the share of capacity controlled by the largest companies has increased. New competition is difficult because a modern ammonia plant can cost $2 billion to $4 billion and require four to six years to permit and construct. Concentration does not eliminate normal market forces, but it can reduce the pressure on manufacturers to pass lower feedstock costs quickly through to farmers.

Transportation and seasonal demand create another disconnect. Anhydrous ammonia requires specialized railcars, pipelines and storage facilities, while river levels, lock closures and winter weather can sharply increase regional freight costs. Retailers must also position large volumes ahead of relatively narrow spring and fall application windows, adding storage expenses and risk premiums to farm-gate prices.

Perspective: McEowen’s argument helps explain why forecasts based only on Henry Hub natural gas prices regularly miss fertilizer-price movements. The more useful indicators include European natural gas prices, global ammonia and urea values, export restrictions, ocean and barge freight rates, grain prices and the timing of U.S. application demand.

For farmers, the practical message is that waiting for cheap natural gas to produce cheap fertilizer is not a reliable purchasing strategy. McEowen recommends locking in crop revenue and fertilizer expenses together when margins are favorable, while using soil testing, split applications and precision technology to improve nitrogen-use efficiency.

The analysis also has policy implications. Expanding domestic gas production alone is unlikely to guarantee lower farm input costs. Greater competition, additional production and import capacity, more resilient river and rail logistics, and fewer trade bottlenecks would be more likely to narrow the gap between manufacturing costs and retail fertilizer prices.

Upshot: McEowen expects nitrogen prices to remain volatile as U.S. liquefied natural gas exports connect domestic gas markets more closely with international demand and geopolitical developments continue to affect fertilizer trade. The shale revolution delivered substantial savings, but much of that advantage has accrued to fertilizer manufacturers’ operating margins rather than automatically flowing through to farmers.

— Wednesday: Oil surges as supply threats spread across key export corridors

WTI nears $88 as Hormuz, Red Sea and Black Sea risks converge

Crude oil jumped more than 4% Wednesday to a six-week high, extending its rally to four consecutive sessions as markets priced in the growing possibility that military escalation could disrupt several major energy-export routes simultaneously. West Texas Intermediate crude approached $88 per barrel, while Brent climbed above $94.

The immediate catalyst was President Donald Trump’s rejection of near-term negotiations with Iran and renewed warnings that the U.S. could broaden its military campaign, potentially including an attack on Pickaxe Mountain, a deeply buried nuclear facility under construction near Natanz. The U.S. military continued strikes against Iran as Washington sought to reduce Tehran’s ability to threaten commercial shipping through the Strait of Hormuz.

Risks are also mounting along the Red Sea route. Trump pledged retaliation if Iran-backed Houthi forces interfere with shipping, while tanker operators have begun reconsidering routes through the Bab el-Mandeb Strait. Disruptions there would be especially significant because Saudi Arabia uses the Red Sea as an alternative export corridor when passage through Hormuz becomes more hazardous.

The supply threat has widened beyond the Middle East. The Caspian Pipeline Consortium halted Black Sea loadings and stopped accepting additional Kazakh crude after repeated attacks on tankers near its terminal. The system carries about 80% of Kazakhstan’s oil exports, meaning an extended shutdown could force producers to reduce output as terminal storage reaches capacity.

Upshot: The market is therefore responding less to a single confirmed supply loss than to the convergence of risks across Hormuz, the Red Sea and the Black Sea. As long as those three corridors remain threatened, crude prices are likely to retain a substantial geopolitical premium, increasing pressure on gasoline, diesel, freight and agricultural production costs. A prolonged interruption at any one of the routes could push the market from precautionary buying into a more severe physical-supply squeeze.

— Tuesday: Middle East tensions push oil to five-week highs

Shipping risks add premium despite no major production losses

Oil prices climbed about 2% Tuesday to their highest levels in five weeks as escalating military tensions in the Middle East renewed concerns about global energy supplies and shipping security. Brent crude settled at $91.01 per barrel, up 2%, while West Texas Intermediate rose by the same percentage to $84.91.

The rally reflected growing fears that renewed U.S./Iran military exchanges and threats against Saudi energy exports could disrupt two critical shipping corridors: the Strait of Hormuz and the Red Sea. Reports that some tankers altered their routes following security warnings reinforced concerns about delays, higher freight and insurance costs, and tighter access to Middle Eastern crude.

Saudi export facilities remained operational, suggesting the market is pricing the risk of transportation bottlenecks rather than significant production losses. That distinction is important: Oil supplies have not yet been materially reduced, but a prolonged disruption affecting tanker traffic could quickly restrict global availability and push prices higher.

Expected declines in U.S. crude inventories provided additional support. Continued stockpile draws would leave the market with a smaller cushion against geopolitical disruptions, helping offset lingering concerns about economic growth and petroleum demand.

The near-term outlook will depend heavily on whether shipping conditions deteriorate in the Strait of Hormuz or Red Sea. Without a physical supply interruption, prices may remain volatile; however, confirmed export delays or facility damage could produce a much sharper move higher.

— U.S./Jordan deal keeps tariffs steady but deepens strategic alignment

Amman gains a tariff opening while accepting broad U.S. policy alignment

The U.S./Jordan trade agreement signed Tuesday is less a conventional tariff-cutting pact than a strategic update to the countries’ 25-year-old free trade agreement. Existing bilateral tariff rates remain largely unchanged, but Jordan receives a potential path to favorable treatment under future U.S. tariff actions in exchange for extensive commitments covering forced labor, agricultural standards, digital trade, export controls, sanctions and investment security.

Jordan will continue providing duty-free access for almost all qualifying U.S. goods under the bilateral free trade agreement that entered into force in December 2001. The U.S., meanwhile, promises preferential treatment for Jordanian-origin goods in future tariff actions, except for antidumping and countervailing duties under Title VII, Section 232 national-security tariffs and Section 201 safeguard measures.

That language does not guarantee Jordan an exemption from the Trump administration’s forthcoming Section 301 tariffs related to forced-labor policies.

Instead, the tariff annex says the U.S. intends to consider Jordan’s implementation of its new commitments when deciding whether to impose forced-labor duties. Jordan therefore receives a negotiating advantage and possible off-ramp, rather than an ironclad tariff shield.

Jordan was among the economies facing a proposed 12.5% additional tariff because USTR concluded that it lacked an adequate prohibition on imports made with forced labor. U.S. Trade Representative Jamieson Greer said Tuesday that the broader Section 301 action would be announced “soon,” although mandatory consultations with Congress remain unfinished and no firm date was provided. The administration has been seeking to complete the process around the July 24 expiration of its temporary 10% global tariff under Section 122.

Forced-labor commitments provide the immediate trade payoff. Jordan agreed to recognize U.S. Customs and Border Protection determinations involving companies linked to forced labor and to presumptively prohibit their goods. Within five years of the agreement taking effect, Jordan must establish a broader ban covering imports mined, produced or manufactured wholly or partly through forced or compulsory labor.

The sequencing is important. Washington is effectively offering Jordan the possibility of reduced tariff exposure now in return for legal and enforcement changes that will be implemented over several years. That approach could become a model for other countries covered by the forced-labor investigation: tariff relief may be available, but only after governments accept measurable U.S.-defined standards and enforcement obligations.

Agricultural gains depend more on regulation than tariffs. For U.S. agriculture, the deal does not produce a major new round of tariff reductions because most trade was already covered by the existing free trade agreement. The more meaningful provisions require Jordan to use science- and risk-based sanitary and phytosanitary measures, recognize applicable U.S. or international standards and remove unjustified barriers that undermine reciprocal trade.

Of note: Those provisions could reduce delays, duplicative testing and regulatory uncertainty for U.S. meat, dairy, processed food and other agricultural exporters. Jordan also agreed not to restrict U.S. products solely because they use 40 specified cheese names and 10 meat terms, including parmesan, feta, gorgonzola, muenster, prosciutto and black forest ham. That represents a clear U.S. win in its continuing dispute with countries that seek to reserve common food names as protected geographical indications.

The agricultural opportunity should nevertheless be viewed as incremental. Jordan is not suddenly becoming a large new bulk-commodity market because of tariff cuts. The near-term gains are more likely to come from resolving individual SPS, labeling, licensing and product-standards disputes that previously made duty-free access difficult to use in practice.

Trade policy becomes a tool of strategic alignment. The agreement reaches well beyond commerce. Jordan agreed to consult with Washington when the U.S. restricts goods or services from third countries for economic- or national-security reasons. It also committed to align with U.S. unilateral export controls, prevent Jordanian companies from undermining those controls, cooperate on Treasury sanctions and consider creating an inbound investment-review system.

Jordan must also address companies controlled by countries that Washington determines jeopardize essential U.S. interests, strengthen protections against tariff evasion and transshipment, and avoid certain new trade, digital and nuclear-supply relationships with such countries. The unnamed language gives Washington considerable flexibility to apply these provisions to changing geopolitical competitors.

This is the agreement’s most consequential feature. The Trump administration is increasingly using preferential access to the U.S. market not simply to win tariff concessions, but to encourage trading partners to adopt U.S. export-control, sanctions, technology and supply-chain policies. Jordan, a strategically important U.S. partner in the Middle East, is accepting a particularly broad version of that bargain.

U.S. retains considerable leverage. The commitments are also asymmetric. Jordan accepts detailed obligations covering labor, agriculture, digital trade, state-owned enterprises and national security, while Washington preserves the authority to impose additional tariffs for unfair trade, import surges or security reasons. Either government may terminate the agreement with six months’ notice.

The pact does not take effect immediately. It will enter into force 60 days after both governments notify each other that their required domestic procedures are complete. Certain U.S. tariff provisions are scheduled to apply no earlier than Aug. 1 and only after the broader agreement has taken effect.

Bottom line: Jordan has not received a guaranteed exemption from the forthcoming forced-labor tariffs, but it has secured a favorable mechanism for avoiding or reducing them. In return, Amman has agreed to a sweeping alignment with U.S. rules on forced labor, agriculture, food names, digital commerce, sanctions and strategic trade. The deal’s commercial impact may initially be modest, but its importance as a template for converting tariff threats into broader foreign-policy concessions could be substantial.

— Colorado River reservoirs hit record low, forcing a western water reckoning

Mead and Powell’s decline raises risks for farms, hydropower and California

Lake Mead and Lake Powell, the Colorado River’s two main storage reservoirs, have fallen to their lowest combined level on record, marking a dangerous new stage in the West’s worsening water crisis. Los Angeles Times staff writer Ian James reports (link) that the reservoirs now hold less water together than during the previous low in 2023. Combined storage has dropped to roughly 12.7 million acre-feet, with Lake Mead about 27% full and Lake Powell near 23%.

The decline is not simply the result of one bad winter. It reflects a persistent imbalance between the amount of water flowing into the Colorado River system and the amount legally allocated to cities, farms, tribes and Mexico. James reports that Colorado River flows since 2020 have averaged 32% below the previous century’s average, while the Upper Basin experienced record-low snow this year. The Bureau of Reclamation projects total unregulated inflow into Lake Powell at only 36% of normal for the 2026 water year, with July inflow estimated at just 2% of its 30-year average.

The consequences extend well beyond reservoir shorelines. The Colorado River supplies at least part of the municipal water used by 35 million to 40 million people and supports about 5.5 million acres of agriculture. Farming accounts for roughly 70% of the river’s water use, making agriculture unavoidable in any plan capable of closing a shortage measured in millions of acre-feet.

Agricultural pressure will intensify. Because agriculture is the largest user, additional reductions are likely to involve more compensated land fallowing, reduced irrigation deliveries, rotational idling and shifts away from water-intensive crops. Lower Colorado River farms produce hay and forage for livestock as well as high-value winter vegetables, including lettuce and broccoli. Large or prolonged cutbacks could therefore reduce regional production, raise feed costs and increase reliance on supplies from other growing regions.

The market effect would depend heavily on how cuts are structured. Temporary, federally financed conservation programs can compensate farmers while protecting reservoir storage, but repeated fallowing can weaken rural economies, reduce demand for labor and agricultural services, and accelerate the permanent conversion of farmland. In the Upper Basin, ranchers and farmers also face pressure as drought reduces hay production, pasture conditions and local water availability. Reuters has reported that some western livestock producers are already reducing herds because of failed forage production and depleted water supplies.

California has a cushion — but not immunity. Southern California has diversified its supplies through conservation, recycling, groundwater recovery and deliveries from Northern California. That flexibility allowed the Metropolitan Water District of Southern California to agree to leave as much as 200,000 acre-feet in Lake Mead during 2026. The Bureau of Reclamation will pay the district $325 per acre-foot, or up to $65 million. According to the Los Angeles Times, the conserved water could raise Lake Mead by roughly 3 feet and temporarily delay more critical conditions.

But the transaction buys time rather than solving the river’s structural deficit. Southern California cities have received nearly one-fourth of their water from the Colorado River in recent years, and California agriculture holds some of the basin’s largest and most senior water rights. Any federal plan imposing reductions large enough to stabilize the reservoirs would therefore have major consequences for both metropolitan agencies and irrigation districts.

Hydropower risk is moving closer. Lake Powell’s decline also threatens electricity generation at Glen Canyon Dam. As of July 19, the reservoir was near elevation 3,524 feet, only about 34 feet above the minimum level required for normal hydropower generation. Reclamation earlier warned that Powell could fall below the 3,490-foot minimum power pool without emergency intervention. Its latest projections show the reservoir ending the 2026 water year at approximately 22% of capacity.

Loss of Glen Canyon generation would not by itself cause a regional blackout, but it would remove an important source of flexible electricity used to balance the Western grid. It would also reduce power revenues that help finance dam operations, environmental programs and other Colorado River projects.

State deadlock raises the risk of federal action. California, Arizona and Nevada have proposed conserving more than 3.2 million acre-feet through 2028, including at least 700,000 acre-feet of additional savings beyond previously planned annual reductions. The proposal is intended to prevent more severe unilateral federal restrictions while negotiators continue working on long-term rules.

The four Upper Basin states — Colorado, Wyoming, Utah and New Mexico — remain divided from the Lower Basin over how reductions should be calculated. The Upper Basin argues that its actual water use already declines naturally during dry years, while the Lower Basin wants measurable contributions from every state. Without an agreement, the Trump administration could impose mandatory reductions, inviting litigation over senior water rights, federal authority and the 1922 Colorado River Compact.

El Niño may improve the odds of precipitation in parts of the Southwest, but summer rainfall is unlikely to materially replenish Mead or Powell. Federal drought specialists say monsoon rainfall generally has little effect on Colorado River streamflow or major reservoir storage. Meaningful recovery would require sustained, above-average mountain snowpack followed by cool, efficient spring runoff — probably over multiple years.

Bottom line: The record-low combined storage is a warning that short-term conservation payments and emergency reservoir releases are no longer sufficient by themselves. The Colorado River system must either reduce demand to match a smaller, hotter river or continue drawing down its remaining reserves.

For California, the immediate threat is manageable because of diversified supplies and senior rights. The longer-term risk is much larger: compulsory agricultural reductions, higher water costs, reduced hydropower production and an interstate legal struggle over who bears the deepest cuts. The critical question is no longer whether Colorado River use will decline, but whether the states can negotiate the reductions before reservoir conditions force the federal government to dictate them.

— Senate seeks bipartisan funding deal before August recess

Stopgap talks could avert a fall shutdown but force changes to the House GOP bill

Senate leaders are working toward a bipartisan stopgap funding agreement that could receive a vote before lawmakers leave Washington for the August recess. The effort is intended to keep federal agencies operating beyond the Sept. 30 end of the fiscal year and remove the threat of a politically damaging government shutdown shortly before the midterm elections.

Senate Majority Leader John Thune (R-S.D.) said senior members of the Appropriations Committee are negotiating a continuing resolution, or CR, that can attract support from both parties. Because most Senate legislation requires 60 votes to advance, Republicans will need Democratic cooperation unless they pursue an unusual procedural strategy.

The Senate negotiations differ sharply from the House approach. House Republicans are moving ahead with a partisan CR that would extend funding into early December, but House Appropriations Committee ranking member Rosa DeLauro (D-Conn.) is urging Democrats to oppose it. Democrats want restrictions preventing additional stopgap funding from flowing to Immigration and Customs Enforcement and Customs and Border Protection. They also are seeking to block an Office of Management and Budget proposal that would change how federal grants are administered.

The White House has further complicated the negotiations by requesting more than $9.4 billion above currently enacted funding levels, along with extensions of expiring authorities and other technical adjustments known as “anomalies.” Those provisions are absent from the House measure, making it likely that the Senate would amend the bill and send it back to the House.

Senate Appropriations Committee Vice Chair Patty Murray (D-Wash.) said the House bill contains language that must be corrected and fails to include the administration’s requested anomalies. Appropriations Chair Susan Collins (R-Maine), however, said Democrats appear to be negotiating in good faith and share the goal of avoiding a shutdown.

Perspective: The Senate effort represents an attempt to settle the fall funding dispute before lawmakers leave for their summer break, rather than waiting until the final days of September. An early bipartisan vote could reduce shutdown risk, but it would not end the negotiations. Any Senate changes would still require House approval, where conservative Republicans may resist higher spending and Democrats may continue demanding immigration-enforcement and grantmaking restrictions.

The most difficult issue may be less the duration of the CR than what is attached to it. The White House’s $9.4 billion request, Democratic demands involving immigration agencies and OMB rules, and possible extensions of expiring programs could turn a supposedly “clean” funding measure into a broader policy negotiation.

Bottom line: Passing a Senate bill before August would nevertheless establish the bipartisan framework most likely to become law. It also would put pressure on the House to accept Senate revisions when lawmakers return, reducing — but not eliminating — the possibility of another late-September funding showdown.

— Thune opens GOP door to Fetterman as Israel rift tests Democrats

Republican outreach raises pressure, but a party switch remains unlikely

Senate Majority Leader John Thune (R-S.D.) said Republicans would welcome Sen. John Fetterman (D-Pa.) into their conference should the Pennsylvania senator leave the Democratic Party over its growing internal divisions regarding Israel.

“Yes, we would welcome him,” Thune said Tuesday, confirming that he and other Republican senators have previously discussed with Fetterman the difficulties he faces within the Democratic caucus. Thune portrayed Fetterman as a historically moderate Democrat whose views increasingly conflict with the party’s progressive wing.

The Republican invitation followed Fetterman’s warning at the Hill Nation Summit on July 15 that he would leave the Democratic Party if it formally became an “anti-Israel party.” Fetterman described support for Israel as a matter of moral clarity but emphasized that he currently has “no plans” to change parties.

That distinction is important. Fetterman is warning Democrats about the party’s direction, not announcing an imminent defection. He remains aligned with Democrats on abortion rights, organized labor, LGBTQ rights, marijuana legalization, nutrition assistance and several other domestic issues. In a May Washington Post opinion article, he argued that his values had not changed even as his relationship with the Democratic Party became increasingly strained.

Perspective: Thune’s comments are best understood as political pressure rather than evidence that a party switch is close. By publicly offering Fetterman a place in the Republican conference, Thune can highlight Democratic divisions over Israel, portray the GOP as receptive to disaffected moderates and encourage further speculation about Fetterman’s political future.

Fetterman also gives Republicans an unusually effective messenger. Unlike a Republican criticizing Democrats from outside the party, he can argue that the Democratic coalition is moving away from positions once considered mainstream within it. His criticism therefore carries greater political weight, particularly among Jewish voters, moderates and working-class voters whom both parties are competing to attract.

But joining the Republican Party would be a difficult ideological fit. Although Fetterman has broken with Democrats on Israel, immigration, government funding disputes and some criminal-justice questions, his positions on abortion, labor and social programs remain incompatible with much of the Republican agenda. Becoming an independent while continuing to work with Democrats—or declining to join either conference—would therefore be a more plausible path should he eventually leave the party.

Former Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona provide the closest recent precedents. Both left the Democratic Party to become independents while maintaining working relationships with Senate Democrats rather than joining Republicans.

The immediate legislative consequences of a Republican switch would be limited but meaningful. Republicans currently hold 53 Senate seats, compared with 45 Democrats and two independents who caucus with Democrats. Fetterman joining the GOP would increase the Republican majority to 54 seats, providing additional protection on nominations and party-line legislation, but it would not give Republicans the 60 votes generally needed to overcome a filibuster.

The larger significance would be electoral and symbolic. Fetterman is not scheduled to face voters again until 2028, giving him time to determine whether his disagreement with Democrats represents a single-issue dispute or a permanent political realignment. A switch would also scramble Pennsylvania politics by forcing both parties to reconsider their candidates, fundraising strategies and appeal to the state’s pivotal working-class electorate.

For Democrats, the greater near-term risk is not necessarily losing Fetterman. It is allowing disagreement over the Israeli government’s conduct and U.S. military assistance to become a broader argument over whether the party still supports Israel as an ally. Republicans are likely to keep amplifying that tension, and Thune’s open invitation ensures that every future Democratic dispute over Israel will renew questions about whether Fetterman still has a political home in the party.

— NWS outlook: Impactful flash flooding expected across the lower Mid-Atlantic today and tomorrow… …Tropical Storm Bertha is expected to generate isolated flash flooding, tropical storm conditions, and coastal flooding along the Gulf Coast… …Monsoonal thunderstorms continue over the Southwest, Four Corners, and Great Basin through tomorrow… …Hazardous heat continues over parts of the Southern Tier; builds over

the West and Northern Plains Friday.

— Cool break in U.S. gives way to renewed heat and storm chances

Corn Belt relief will be brief as Plains heat returns and rainfall shifts east

A sharp but temporary cooling trend will bring the Corn Belt its most comfortable temperatures in weeks, with highs largely confined to the 70s over the next one to three days. The northwest-flow pattern should reduce crop stress and slow moisture losses during a critical stage of corn and soybean development.

A developing storm system will also deliver potentially significant rainfall to Nebraska, northern Missouri, northeastern Kansas and southwestern Iowa. These areas stand to receive the greatest near-term benefit, particularly where crops have been drawing down soil moisture during recent heat.

The northern Plains remain the most vulnerable region. Little meaningful precipitation is expected during the next 10 days, while temperatures are forecast to exceed 100 degrees from July 25-28. The combination of persistent dryness and renewed extreme heat will accelerate spring wheat deterioration, reduce yield potential and likely pressure USDA crop-condition ratings lower.

Heat will rebuild across the Plains and western Corn Belt from July 26-30 as a strong upper-level ridge returns. Temperatures could climb more than 10 degrees above normal, increasing evaporation and crop stress. Corn that has completed pollination may be better positioned to tolerate the heat, but prolonged high nighttime temperatures could shorten grain fill. Soybeans entering pod development will become increasingly dependent on timely August rainfall.

The longer-range outlook offers a more favorable signal. As the upper-air pattern becomes less amplified during the 11- to 15-day period, ridge-rider thunderstorms are expected to become more frequent across the central and eastern Corn Belt. That shift could broaden rainfall coverage and limit the duration of the late-July heat threat, although thunderstorm rainfall will remain uneven and difficult to forecast.

Meanwhile, Tropical Storm Bertha is expected to continue weakening as it tracks westward along the Gulf Coast. Its agricultural impact should be largely confined to localized rainfall rather than a major disruption to the broader U.S. crop-weather pattern.

Perspective: The outlook creates a divided agricultural picture. The central Corn Belt receives immediate cooling and localized rain, while the northern Plains face worsening drought and heat damage. The emergence of a more active thunderstorm pattern in early August is potentially important for corn grain fill and soybean pod setting, but it must materialize quickly and with sufficient coverage to offset the renewed late-July heat ridge.