Paris Grains Surge as Europe Bakes and the Black Sea Becomes a Shooting Gallery

Crude climbs to one-month high as Hormuz standoff deepens | House Republicans released a spending blueprint for their third reconciliation bill, including $12 bil. to aid struggling farmers

Link: Video: Wiesemeyer’s Perspectives, July 12
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Link: Audio: Wiesemeyer’s Perspectives, July 12

TOP STORIES

— Crude climbs to one-month high as Hormuz standoff deepens: Oil prices rose as U.S./Iran hostilities, reduced tanker traffic and renewed threats to shipping restored a substantial Strait of Hormuz risk premium.
— House approves permanent daylight saving time, sending fight to Senate: The House-backed plan would eliminate seasonal clock changes, drawing qualified farm support for schedule consistency despite concerns about darker winter mornings.
— McGovern, Casar seek sweeping rewrite of seed patent rules: Reps. Jim McGovern (D-Mass.) and Greg Casar (D-Texas) propose limiting future seed protections and expanding farmers’ seed-saving and research rights, drawing likely industry opposition.

FINANCIAL MARKETS

— Equities today: The Dow opened 100 points higher as Asian markets mostly advanced and European equities weakened amid continued attention to U.S./Iran developments.
— Equities yesterday: The Dow finished nearly unchanged, while technology shares lifted the Nasdaq 0.9% and the S&P 500 0.38%.
— June producer prices retreat, but oil shock threatens reversal: Wholesale inflation declined as energy prices fell, but renewed oil strength could quickly reverse the improvement and complicate Federal Reserve policy.
— Beige Book to test business confidence amid renewed energy shock: The Fed report will show whether higher energy costs and geopolitical uncertainty are weakening hiring, investment and business sentiment.

AG MARKETS

— Wheat surges as Black Sea risk lifts overnight grain trade: Wheat futures rallied sharply on threats to Russian and Ukrainian exports, while weather concerns supported corn and soybeans remained nearly unchanged.
— Paris grains surge as Europe bakes and the Black Sea becomes a shooting gallery: European heat damage and Black Sea shipping risks pushed Paris corn to a contract high and strengthened the export outlook for U.S. grain.
— Ukraine takes the drone war to the Black Sea — and the world’s biggest wheat exporter is caught in the crossfire: Ukrainian attacks and Russian retaliation have disrupted both countries’ export corridors, increasing wheat prices, insurance costs and global food-supply risks.

FARM POLICY

— McConnell absence gives Democrats leverage over Senate farm bill: Sen. Mitch McConnell’s (R-Ky.) absence leaves Senate Agriculture Committee Chair John Boozman (R-Ark.) dependent on Democratic cooperation, likely requiring a compromise on SNAP cost sharing.
— Equipment gains now count toward SDRP farm income test: USDA will count equipment-sale gains as farm income for recent SDRP determinations, potentially allowing more producers to qualify for the higher $250,000 payment limit.

SCREWWORM

— Screwworm fight turns a corner as inactive cases overtake active ones: USDA reports 20 of 37 Texas cases are now inactive, indicating containment progress despite two additional livestock and pet confirmations.

TRADE POLICY

— India moves to curb forced-labor tariffs, but U.S. relief is uncertain: India established authority to block forced-labor imports, but USTR may still impose tariffs until New Delhi demonstrates effective enforcement.

CHINA

— China’s growth slips to 4.3%, falling below Beijing’s target for the first time since the Covid era: Weak consumer spending, investment and property activity outweighed strong manufacturing and exports, increasing pressure for additional economic stimulus.

CONGRESS

—House Republicans released a spending blueprint for their third reconciliation bill: Agriculture is instructed to spend $12 bil. for farmer aid, above the White House request but below what farm-state lawmakers are pushing.
— Senate Finance advances five ITC nominees: The committee advanced three Republican and two Democratic nominees in an effort to restore the U.S. International Trade Commission to full membership.

WEATHER

— NWS outlook: Excessive rainfall remains possible in the Texas Hill Country as extreme heat persists across the northern U.S. and monsoonal storms develop in the West.
— Corn Belt ridge weakens, opening door to eastern storms: Eastern Corn Belt rainfall could provide localized relief, while continued heat and dryness deepen crop stress across western production areas and the northern Plains.

TOP STORIES—Crude climbs to one-month high as Hormuz standoff deepensA third straight session of gains puts WTI crude oil back above $79 as U.S. strikes, a reinstated blockade of Iranian ports and collapsing tanker traffic rebuild the war premium markets had all but priced away in June U.S. crude oil pushed above $79 a barrel Wednesday, its third consecutive session of gains and the highest level in a month, as the unraveling of the U.S./Iran truce put the Strait of Hormuz — the conduit for roughly one-fifth of the world’s oil — squarely back at the center of the market’s supply anxiety. Brent, the global benchmark, has been trading in the mid-$80s after surging more than 9% at the start of the week, its sharpest one-day move of the conflict. The latest leg higher followed a seven-hour U.S. operation that struck dozens of military assets along Iran’s coastline and near the strait, an effort the Pentagon framed as degrading Tehran’s capacity to attack shipping. It came alongside President Trump’s reinstatement of a naval blockade on vessels moving to and from Iranian ports or carrying Iranian cargo. “I gave them a chance… they shot first. And that was a big mistake,” Trump said, pledging to intensify operations until Iran halts attacks on vessels and agrees to reopen the waterway. The escalation marks the effective collapse of the interim arrangement reached earlier this summer, which had paused the fighting and reopened the strait for a 60-day negotiating window. That deal had worked remarkably well for oil consumers: by late June, prices had retraced nearly all of their war premium. The reversal began when Iranian forces were accused of attacking a Cyprus-flagged container ship transiting the strait, prompting weekend U.S. strikes and retaliatory Iranian missile and drone attacks on Gulf neighbors, including the UAE, Qatar, Kuwait, Oman and Bahrain. A Kuwaiti offshore drilling platform was also damaged — the first direct hit on regional energy infrastructure in weeks. In a separate but telling development, Trump on Tuesday abandoned his day-old proposal to charge a 20% fee on all cargo transiting Hormuz in exchange for U.S. naval protection — a toll that could have run to roughly $32 million for a single loaded supertanker. The idea had drawn immediate opposition from the shipping industry and the UN’s maritime agency, and experts warned it would open a dangerous precedent for tolling international chokepoints. Trump said Gulf states would instead invest in the U.S. “at record amounts,” asserting that forgone toll revenue would be more than offset. “I don’t like the concept of a fee, but at the same time, it’s not fair that we’re protecting this strait for the entire world, for China and everyone,” he said. The retreat removes a layer of cost uncertainty for shippers, but the more fundamental problem — whether ships can safely transit at all — remains unresolved. Perspective: A physical disruption, not just a headline premium. What distinguishes this episode from most Middle East risk rallies is that the disruption is showing up in ship-tracking data, not just futures screens. Transits through Hormuz have collapsed from a pre-war baseline of roughly 130 vessels a day to single digits on some recent days, and Iran’s maritime authority has warned that vessels using “unauthorized routes” forfeit safe passage guarantees. Insurance costs and rerouting decisions are doing real work on physical supply even before any barrels are formally lost. Yet the market’s response — mid-$80s Brent rather than triple digits — reflects powerful offsetting forces. Global supply outside the Gulf is ample: forecasters entered the year projecting a surplus in excess of 3 million barrels a day, and OPEC itself just trimmed its 2026 demand-growth outlook to 800,000 barrels a day. BloombergNEF, which had penciled in Brent averaging in the $50s this year absent conflict, estimates that even a sustained, full removal of Iran’s roughly 3.3 million barrels a day of production would lift Brent only into the low $90s by the fourth quarter. The current war premium, by most estimates, remains a fraction of what markets built in after Russia invaded Ukraine in 2022. Analysts at IG captured the market’s dilemma: oil’s June retreat “reflected markets pricing in a best-case outcome for the fragile U.S./Iran arrangement; last week’s re-escalation exposes how fragile that assumption was.” The asymmetry, however, cuts toward higher prices. A workable truce is already largely priced in; a genuine closure of Hormuz is not, because no realistic amount of spare capacity or strategic-reserve release can replace 20 million barrels a day of flow for long. Saudi and Emirati pipelines that bypass the strait can move only a modest share of Gulf exports. That is why each incremental incident — a tanker hit, a platform strike, a blockade deadline — moves prices more than the barrels immediately at stake would justify. For the U.S. economy, the practical transmission runs through diesel and gasoline. Crude in the high $70s to mid-$80s is uncomfortable but manageable; the risk is duration. A Hormuz disruption that persists into the fall harvest and heating season would land hardest on freight, farm fuel and fertilizer costs — energy-intensive inputs where price pass-through is quick — and would complicate the inflation picture just as markets have been counting on further easing. The next markers to watch: whether the blockade now in force provokes direct Iranian retaliation against non-Iranian shipping, whether tanker transit counts recover or deteriorate further, and whether the promised Gulf investment framework evolves into an off-ramp for negotiations or proves to be a face-saving footnote to a widening conflict. —House approves permanent daylight saving time, sending fight to SenateFarm Bureau backs ending clock shifts, but rural mornings would stay darker The House delivered a bipartisan but not unanimous mandate. The Sunshine Protection Act, HR 139, passed 308-117, with 193 Republicans, 114 Democrats and one independent voting yes. Twenty-two Republicans and 95 Democrats opposed it, showing that resistance is driven more by geography, health concerns and preferences over morning versus evening light than by conventional party lines. The measure would “lock the clock” on daylight saving time. Most states would no longer turn clocks back to standard time in November. States could instead enact legislation to remain on permanent standard time, while Hawaii and most of Arizona could continue their current exemptions. The measure does not create additional daylight; it shifts an hour of winter sunlight from the morning to the evening. Of note: States could opt out if their respective legislatures act to do so before the bill’s enactment. The Senate would also have to pass the bill before it could be signed into law, but it’s unclear if it will do so. Detractors said permanent daylight saving time would lead to darker and potentially more hazardous winter mornings where children will be waiting for school buses and parents will be driving to work in darkness. Rep. Vern Buchanan (R-Fla.) has built considerable momentum behind the proposal. Buchanan’s bill has 33 bipartisan House cosponsors, while the Senate companion introduced by Sen. Rick Scott (R-Fla.) has 18 cosponsors. President Donald Trump has strongly endorsed eliminating the clock changes, and the White House argues the switch imposes unnecessary costs and inconvenience on households, businesses and governments. The Senate remains the real obstacle. Sen. Patty Murray (D-Wash.) is pressing Senate Majority Leader John Thune (R-S.D.) to schedule a vote, but leadership has made no commitment. Senate Majority Whip John Barrasso (R-Wyo.) responded only that senators would “see what happens,” while Sen. Tom Cotton (R-Ark.) previously blocked an attempt to pass the legislation by unanimous consent because of concerns about dark winter mornings. That opposition means supporters may need regular floor consideration rather than the quick procedure that carried a similar bill through the Senate in 2022. The strong House vote suggests the problem is scheduling and procedure rather than a clear shortage of Senate support. However, the 2022 precedent is somewhat misleading: that version passed by unanimous consent when some senators were not focused on the request. Cotton’s active opposition makes another surprise passage unlikely. With other major legislation competing for floor time, the bill could still stall even if a majority of senators favor it. Organized agriculture would generally welcome the House action. The American Farm Bureau Federation’s official 2026 policy supports “maintaining daylight saving time year-round” and eliminating the standard-time change. That provides a strong indication that Farm Bureau and many state affiliates would support final passage, although it does not mean every producer favors permanent daylight saving time. Farmers’ strongest argument for the bill is consistency. Dairy cows, livestock feeding systems, employees, milk haulers and processors operate on fixed schedules. Dairy farms often adjust feeding and milking gradually around each clock change because cattle respond poorly to abrupt changes in routine. Eliminating the twice-yearly transition would remove that disruption and simplify labor, transportation and family schedules. The principal agricultural objection would be darker winter mornings. Farmers frequently move machinery, feed livestock, load trucks and begin chores before conventional businesses open. Permanent daylight saving time would put more of those activities—and more rural school-bus traffic—before sunrise, particularly in northern states and communities near the western edge of a time zone. An earlier Georgia Farm Bureau survey found farmers broadly disliked changing clocks, but opinions were divided over whether daylight or standard time should become permanent. The farm-sector response would therefore be favorable but qualified. Most producers would probably value ending the clock changes, consistent with Farm Bureau policy. Livestock and dairy operations would gain the most from schedule stability, while farmers who prioritize early winter daylight would prefer permanent standard time. The biggest practical impact would be on labor, transportation, school and processor schedules — not crop or livestock productivity, since the amount of actual sunlight would remain unchanged.  History remains the warning for supporters. Congress imposed year-round daylight saving time during the 1974 energy crisis, but dark winter mornings produced a public backlash and lawmakers reversed course later that year. That experience could again become politically important if the Senate moves the bill toward enactment. —McGovern, Casar seek sweeping rewrite of seed patent rulesBill would expand seed rights but reshape private breeding incentives Reps. Jim McGovern (D-Mass.) and Greg Casar (D-Tex.) introduced the Fair Seeds for Farmers Act Tuesday, proposing a fundamental change in how plant innovations are protected in the U.S. The bill would limit federal intellectual-property protection for plants, plant varieties and germplasm to the Plant Variety Protection Act and the Plant Patent Act. It also would prohibit enforcement of new contracts restricting farmers and researchers from saving, propagating, experimenting with or breeding protected seeds. The changes would apply to pending and future patent applications and contracts, while patents already issued would remain valid. That makes the legislation considerably more consequential than a narrow attempt to police abusive patent enforcement, although it would not literally “break up Big Ag” in the traditional antitrust sense. The measure would not require companies to divest seed businesses, block mergers, impose price controls or invalidate existing patents. Instead, it would remove utility patents — generally the strongest form of seed intellectual-property protection — as an option for future plant varieties and germplasm. Unlike Plant Variety Protection certificates, utility patents do not include broad exemptions allowing farmers to save seed or other breeders to use protected material in research without permission. The lawmakers are targeting a demonstrably concentrated industry. USDA’s Economic Research Service found that Bayer and Corteva accounted for 72% of U.S. corn acres and 66% of soybean acres planted with their seeds during 2018–2020. Bayer, Corteva, Syngenta and BASF collectively control the majority of crop-seed and agricultural-chemical sales. USDA also found that crop-seed prices increased an average of 170% between 1990 and 2020, while prices for seeds carrying genetically modified traits rose 463%, compared with a 56% increase in commodity output prices. Those figures strengthen the sponsors’ argument that farmers are paying for both technological improvements and the market power attached to them. The farm level effects, however, would vary sharply by crop. The right to save seed could matter more for self-pollinated crops, small grains and specialty crops than for commercial corn. Nearly all U.S. corn acreage is planted with hybrids that do not reproduce true-to-form, meaning farmers generally must purchase new seed each season to maintain yield regardless of patent restrictions. For corn producers, therefore, the bill’s larger impact may come through greater access for independent breeders and seed companies to patented traits and germplasm rather than through widespread planting of farm-saved seed. The central policy question is whether utility patents primarily promote innovation or entrench dominant firms. USDA concluded that stronger intellectual-property protections produced both outcomes: they helped seed companies recover research costs and accelerate development of new varieties, but they also increased market power and seed prices. The American Seed Trade Association similarly argues that reliable patent protection is necessary to justify long-term investments in plant breeding and biotechnology. Supporters of the McGovern-Casar bill counter that the Plant Variety Protection Act would continue providing breeders with lengthy commercial protection while preserving research and on-farm seed-saving exemptions. Claims that the measure would lower grocery prices should be treated more cautiously. Existing utility patents would be grandfathered, meaning the bill would not immediately reduce royalties or reset prices for seed currently on the market. Any consumer savings would emerge gradually as new varieties were developed under the revised rules. Moreover, farms received only 11.8 cents of the average domestically produced food dollar in 2024, with the remainder covering processing, transportation, retailing, food service and other post-farm expenses. The legislation could improve farmers’ margins and bargaining power more directly than it lowers prices at supermarket checkouts. The seed industry’s established policy positions leave little doubt that its principal organizations will oppose the measure. The American Seed Trade Association (ASTA) maintains that seed developers should be able to select from several intellectual-property protections — including utility patents, Plant Variety Protection certificates, contracts, trade secrets and trademarks — depending on the invention. It argues that plant breeding can require five to 15 years and millions of dollars, making strong and enforceable intellectual-property rights essential for recovering research costs and attracting investment. Industry objections are therefore likely to focus on three areas. First, companies will argue that limiting protection to the Plant Variety Protection Act would weaken investment incentives because PVP includes farmer seed-saving and breeder research exemptions that utility patents do not. Second, they will contend that the restrictions on contracts could disrupt technology-use agreements, trait licensing and stewardship requirements for biotech and gene-edited products. Third, they are likely to reject the sponsors’ claim that the legislation would materially lower grocery prices, arguing that seed is only one cost at the beginning of a much longer food-supply chain. The reaction may not be entirely uniform. Independent seed companies have previously complained that large multinational firms are simultaneously their suppliers and competitors and that restrictive trait-licensing arrangements can make it harder for smaller companies to compete. That suggests some independents could support greater germplasm access or narrower licensing reforms, even while opposing the bill’s broader elimination of utility-patent protection. The likely industry message will be that patent and licensing reforms should target demonstrated anticompetitive practices rather than remove an entire category of intellectual-property protection. ASTA argues that both patents and PVP contribute to innovation and that the developer, rather than the government, should decide which protection is appropriate. Politically, the bill is part of the Congressional Progressive Caucus’ New Affordability Agenda and is backed by groups including the National Sustainable Agriculture Coalition, National Family Farm Coalition, Organic Seed Alliance, Farm Action Fund, Environmental Working Group and American Economic Liberties Project. With no Republican co-sponsors announced at introduction and the seed industry likely to strongly defend utility patents, near-term enactment appears unlikely. The bill is more immediately significant as a Democratic policy marker that could shape future farm-bill, competition and patent-law negotiations.

—Equities today: The Dow opened 100 points higher as traders are closely following U.S./Iran developments.

In Asia, Japan +1.5%. Hong Kong +1.4%. China -0.3%. India +0.2%.

In Europe, at midday, London -0.2%. Paris -0.2%. Frankfurt -0.7%.

—Equities yesterday: 

—June producer prices retreat, but oil shock threatens reversal

Energy-led decline offers the Fed relief that may prove short-lived

U.S. wholesale inflation cooled sharply in June as falling gasoline and other energy prices reversed part of the surge recorded during the spring. The Producer Price Index for final demand fell 0.3% from May, compared with expectations for no change, while the year-over-year increase slowed to 5.5%. The May monthly gain was revised down substantially to 0.6% from the initially reported 1.1%, and the annual rate was revised to 6.0%.

The decline was concentrated in goods rather than spread broadly across the economy. Final-demand goods prices dropped 1.4%, the largest monthly decrease since July 2022, as energy prices fell 6.4% and food prices declined 0.6%. Gasoline alone dropped 12% and accounted for nearly two-thirds of the decrease in goods prices. Diesel fuel, jet fuel, crude petroleum, fresh vegetables and thermoplastic resins also moved lower.

That breakdown makes the report encouraging but less reassuring than the headline suggests. Prices for final-demand services rose 0.2%, including a 0.4% increase in trade margins, while prices for goods excluding food and energy increased 0.2%. The conventional core measure excluding food and energy rose 0.2% for the month and 4.7% from a year earlier. Meanwhile, the Federal Reserve’s preferred PPI measure excluding food, energy and trade services rose just 0.1% in June but remained 5.1% above a year earlier.

The report therefore shows a meaningful easing of immediate pipeline inflation, but not a clean return to price stability. Intermediate-demand costs remained elevated even after June’s retreat. Prices for processed goods used by businesses fell 1.2% during the month, led by an 18% decline in diesel fuel, but were still 11.1% higher than a year earlier. Unprocessed inputs fell 4.1% in June but remained 13% above year-ago levels. Services for intermediate demand increased 0.3% and posted their largest annual increase since February 2023.

Those figures matter for agriculture and other commodity-dependent industries because the June report captured the period before the latest escalation in the Middle East. Lower diesel, crude oil, grains, oilseeds, slaughter livestock and raw-cotton prices helped reduce intermediate costs during June. But renewed pressure on crude oil and refined fuels could quickly raise farm operating expenses, freight rates, fertilizer production costs, plastics and packaging prices. The initial effect would likely appear in producer prices well before it fully reaches consumers.

The June PPI, combined with Tuesday’s softer Consumer Price Index, reduces the immediate pressure on the Federal Reserve to raise interest rates at its July meeting. It does not necessarily eliminate the possibility of additional tightening later this year. Fed officials will want to determine whether the June reports represent a durable decline in underlying inflation or primarily an energy-price reversal that was already becoming outdated by the time the data were released.

The central question is no longer whether inflation cooled in June—it clearly did—but whether the improvement can survive another oil shock. If Middle East disruptions persist and higher petroleum prices spread into transportation, manufacturing and food-distribution costs, June could prove to be a temporary pause rather than the beginning of a sustained disinflationary trend.

—Beige Book to test business confidence amid renewed energy shock

Fed report may reveal how oil prices are reshaping inflation and investment

The Federal Reserve’s Beige Book, due at 2 p.m. ET today, will provide a timely look at how businesses across the central bank’s 12 districts are assessing economic conditions as renewed conflict in the Middle East pushes energy prices higher and revives inflation concerns.

The report will arrive alongside Fed Chair Kevin Warsh’s congressional testimony and the latest wholesale inflation data, giving markets another piece of evidence on whether price pressures are broadening and whether businesses are becoming more cautious. Unlike official economic statistics, the Beige Book relies on interviews and surveys with companies, banks and community organizations, offering an early view of changes in sentiment before they appear in employment, investment or consumer-spending data.

Markets will focus particularly on references to oil, transportation and input costs. The Middle East conflict has featured prominently in previous editions, but the latest escalation raises the stakes because businesses must decide whether elevated energy prices represent a temporary disruption or a longer-lasting cost shock. That distinction will influence whether companies absorb higher expenses, pass them on to customers or delay hiring and capital investments.

The Beige Book typically emphasizes expectations as much as current activity, making its discussion of business planning especially important. Evidence that companies are postponing expansion, reducing inventories or becoming more reluctant to hire would suggest geopolitical uncertainty is beginning to weigh on growth. Conversely, reports that demand remains firm and firms retain pricing power could reinforce concerns that the energy shock will keep inflation above the Fed’s comfort level.

Because much of the information was collected before the final week leading up to publication, the report may capture only the early stages of the latest uncertainty. Even so, a noticeable deterioration in sentiment would signal that businesses were already reacting quickly, complicating the Fed’s effort to balance inflation risks against the possibility of slower economic growth.

—Wheat surges as Black Sea risk lifts overnight grain trade

Corn firms on weather concerns while soybeans hold near steady

Wheat futures led grain markets sharply higher overnight as traders added risk premium amid continued threats to Black Sea shipping and export infrastructure. September soft red winter wheat jumped 20 1/2 cents to $6.65 1/2, while September hard red winter wheat climbed 23 1/2 cents to $7.01 1/2. The gains extended wheat’s recent rally and pushed both contracts through psychologically important price levels.

The wheat market remains highly sensitive to developments involving Russia and Ukraine, particularly restrictions affecting the Azov Sea and Kerch Strait (see related items below for more details on this topic). Any prolonged disruption would force Russian exporters to reroute grain through alternative ports, raising transportation, insurance and handling costs. Russia is expected to remain a major wheat supplier, but the overnight price action shows traders are increasingly questioning whether grain can reach world buyers as cheaply and reliably as previously assumed.

• September corn rose 4 cents to $4.42 1/2, supported by the strength in wheat and continued concern about hot and dry conditions in parts of the western Corn Belt and Plains. Corn remains in a weather-driven trading environment, with forecasts for high temperatures and uneven rainfall encouraging traders to reduce bearish positions. However, the market still faces resistance from generally favorable crop ratings and expectations for a large U.S. harvest, limiting the advance compared with wheat.

• Soybean prices were little changed, with August futures up one-half cent at $11.93 1/4. August soybean meal slipped 20 cents to $317.20, while August soybean oil was unchanged at 72.40 cents. The mixed product trade suggests the soybean complex is consolidating after recent gains rather than receiving a fresh fundamental signal.

Soybeans continue to draw underlying support from weather concerns and expectations for additional export demand, but traders appear reluctant to aggressively extend the rally without clearer evidence of crop stress or new Chinese purchases. Weakness in meal also offset support from elevated soybean oil values, leaving soybeans largely on the sidelines while wheat commanded market attention.

The overnight session reinforces the widening divergence among the major grain markets. Wheat is trading an immediate geopolitical and logistical threat, corn is building weather premium, and soybeans are waiting for stronger confirmation from either crop conditions or export demand. Wheat’s ability to maintain its gains into the close will be important, as sustained trading above $7 in Kansas City wheat could signal that the market is beginning to price in a more prolonged disruption to Black Sea grain flows.

—Paris grains surge as Europe bakes and the Black Sea becomes a shooting gallery

Paris corn posts a contract high equal to $7.10 per bushel — a premium of roughly $2.70 over Chicago — while milling wheat jumps €10 as war-risk premiums and a withering EU corn crop reprice world grain

European grain futures exploded higher Wednesday, with the twin drivers of record heat across Western Europe and escalating attacks on Black Sea export infrastructure (see next item for details) feeding one of the sharpest single-day advances of the season.

The numbers. Paris (Euronext/MATIF) milling wheat futures surged €10.00/MT — about 4.6% — to €226.50/MT. At the current euro/dollar rate near $1.14, that works out to a U.S. equivalent of roughly $258.20/MT, or $7.03 per bushel. Paris August corn scored a new contract high at €245.25/MT, a U.S. equivalent of $279.60/MT, or $7.10 per bushel. Malaysian August palm oil edged up 1 ringgit — essentially flat, but a stabilization after Monday’s 83-ringgit slide on bearish Malaysian Palm Oil Board stocks data, with benchmark values holding in the mid-RM4,400s to low-RM4,500s (about $1,050–1,065/MT).

U.S. equivalents vs. U.S. futures. The premium structure now decisively favors U.S. origin:

U.S. Equivalents vs. U.S. Futures

Conversions at €1 = $1.14. Wheat: 36.7437 bu/MT; corn: 39.368 bu/MT. Paris wheat carries a premium of nearly 60¢/bu over Chicago September wheat; Paris corn stands about $2.70/bu over CBOT September corn.

Paris wheat now carries a premium of nearly 60 cents a bushel over Chicago September wheat, and Paris corn stands about $2.70 a bushel over CBOT corn — an extraordinary spread that makes U.S. (and South American) corn overwhelmingly competitive into European and Mediterranean feed channels.

Driver No. 1: Europe’s punishing summer. France logged its hottest June on record — roughly 6.8°F above the 1991–2020 average — with western and southwestern stations hitting all-time highs of 105–112°F, and the heat has extended into Germany, Spain, Hungary, Austria and Poland, with dryness bleeding into Ukraine’s crop belts. The timing could hardly have been worse for corn, with heat blasting the crop through pollination. FranceAgriMer’s good/excellent corn rating has collapsed from 84% in early June to 47% by July 6, and private estimates put the French crop at just 8.9–9.5 MMT — down about 30% from last year and potentially the smallest in decades; some western growers are already cutting failed corn for silage.

At the EU level, some analysts now peg the corn crop as low as 52.7 MMT — the smallest since 2007 — while USDA last week cut EU corn production to 57.5 MMT and trimmed world corn ending stocks by 6 MMT. EU corn import needs are projected near 22.5 MMT, approaching the record drought-year volumes of 2022-23. That import pull is the fundamental fuel under the Paris corn contract high — and it is a demand story that ultimately lands on U.S. and Brazilian corn (Conab this week raised Brazil’s corn crop to 141.73 MMT and soybeans to a record 180.57 MMT).

Wheat largely escaped: the French soft wheat crop matured ahead of the worst heat and is pegged at 31.5–32 MMT, down about 6% but with excellent milling quality. Wednesday’s wheat surge is therefore less about the EU crop and more about the second driver.

Driver No. 2: War execution risk in the Black Sea. The grain war within the war has escalated sharply. Since July 6, Ukrainian drones have struck more than 70 vessels in the Sea of Azov, prompting Russia to close the Kerch Strait on July 10 and halt Don–Azov canal traffic, cutting access to the Rostov-on-Don, Azov and Taganrog export ports. Russia answered over the weekend with roughly 120 drones and 12 missiles against Odesa, Chornomorsk and the Danube port of Izmail, knocking two Odesa load-out facilities out of service. Ukraine entered July with an estimated 9 MMT of carryover corn and wheat still to move.

The market is pricing execution risk, not lost bushels — yet. War-risk insurance has climbed to about 0.5% of hull value for Ukrainian ports and 0.65%–0.8% for Russian Black Sea ports, and Romanian cash wheat has jumped $11/MT in two sessions as buyers seek supply outside the line of fire. Russian cash wheat around $233/MT remains the world’s price floor — when Russian logistics function. Firm crude (Brent settling near $84.73, about a one-month high on Middle East tensions) adds a supportive macro backdrop across the ag complex, including vegoils.

What it means: The rally has two distinct legs, and they deserve different handicapping. The corn leg is fundamental — Europe’s crop losses are done and largely irreversible, EU import demand of 20+ MMT is coming, and with Paris corn at a $7.10/bu equivalent against CBOT near $4.40, the arbitrage window for U.S. corn into Europe, North Africa and the Mideast is wide open. That is durable, harvest-long demand-side support for U.S. corn even as cooler U.S. Midwest weather caps the board.

The wheat leg is risk premium — ample Russian and reasonable-quality French supplies exist; what’s being priced is the ability to load and sail. Risk premiums built on strikes can deflate as fast as they inflate if the Kerch Strait reopens and attacks pause; conversely, a sustained closure of Azov ports or further damage at Odesa/Izmail would strand real tonnage and force importers to Romanian, EU and U.S. origins. U.S. wheat, at a 60-cent discount to Paris with weekly export inspections already running strong (373,611 MT), is positioned to pick up flow either way — the question is degree.

Watch items: Kerch Strait status and any reopening of the Don–Azov canal; FranceAgriMer’s Friday crop ratings for confirmation of further corn slippage; whether Romanian/EU FOB premiums keep widening; the developing heat/dryness in the U.S. northern Plains (highs to 115°F, drought expanding into the Dakotas and Minnesota), which is quietly building a spring wheat and western corn story of its own; and palm oil’s ability to hold RM4,400–4,500 support after June stocks hit a four-month high — its stability matters for the whole vegoil complex, soyoil included.

Bottom line: Europe just became a major grain importer for 2026-27, and the Black Sea just became harder to ship from. Both roads lead, at least in part, to U.S. export elevators.

— Ukraine takes the drone war to the Black Sea — and the world’s biggest wheat exporter is caught in the crossfire

After hunting down more than 100 Russia-linked vessels in the Sea of Azov, Kyiv’s naval drones struck 20 ships in the Black Sea on Wednesday. Moscow has answered by closing the Kerch Strait, idling Azov grain ports that carry roughly a quarter of Russian wheat exports — and pounding Ukraine’s own export hubs for a fifth straight day.

The naval war between Ukraine and Russia entered a new and economically consequential phase Wednesday. Robert “Madyar” Brovdi, commander of Ukraine’s Unmanned Systems Forces, announced that his drones had struck 20 Russia-linked vessels in the Black Sea overnight — 17 oil tankers, two gas carriers and a tugboat — in an operation Kyiv dubbed “MoLoChKa” and timed to Ukrainian Statehood Day. “The first round of the naval battle is over,” Brovdi said on Telegram, referring to a nine-day campaign that Ukraine says hit 116 Russia-linked ships in the shallow Sea of Azov beginning July 6. “Now, the Black Sea.” Brovdi said an official report and video evidence would follow; the claims cannot yet be independently verified, and Moscow has not commented on the latest strikes.

The significance is less in any single hit than in what the campaign has already forced Russia to do. After Ukrainian drones tore through Azov shipping on July 10 — 13 vessels in one night, ten of them tankers — Russia’s FSB-run border service stopped accepting applications for passage through the Kerch Strait, the only gateway between the Sea of Azov and the Black Sea, and suspended traffic on the Don-Azov Channel linking the sea to the Don River. No reopening date has been given for either. The ports of Rostov-on-Don, Azov and Taganrog — the loading points for the grain of Rostov and Krasnodar, Russia’s premier wheat regions — are, in the words of one regional official, “temporarily neither receiving nor shipping grain.”

Russia is hitting back where it hurts Ukraine most: the ports. Moscow’s Defense Ministry said Wednesday it struck Odesa, Chornomorsk and the Dnipro-Buzky estuary ports overnight, damaging four vessels it said were delivering cargo to Ukraine’s armed forces. Ukrainian officials said at least three people were killed in Odesa in the fifth consecutive day of what the regional governor called “massive” strikes on port, industrial and civilian infrastructure. Odesa and Chornomorsk remain the backbone of Ukraine’s grain export corridor, with the Danube port of Izmail — also struck in recent days — carrying the overflow. Foreign Minister Sergei Lavrov branded Ukraine’s shipping attacks “terrorism” and said Russia would redirect its exports.
 

Both sides are now striking each other’s export lifelines. Vessel-strike locations are illustrative; port, strait and channel locations are actual.

For agriculture, the arithmetic is stark. The Sea of Azov handles up to one-quarter of the wheat exports of the world’s largest wheat exporter, and in the peak August-through-December window the shallow-draft Azov fleet can move as much as 6 million metric tons of grain a month. Markets noticed immediately: Euronext milling wheat jumped more than 4% to a six-week high after the July 10 closures, and Chicago September wheat futures climbed about 3.3% to roughly $6.40 per bushel ($235 per metric ton) as the disruption rippled through global price discovery. The timing could hardly be more sensitive — southern Russia is in the middle of its winter wheat harvest, and the new-crop export program normally accelerates within weeks.

Russia’s workarounds are real but imperfect. The deep-water Black Sea terminals at Novorossiysk and Taman remain open and will absorb what they can, and Moscow has floated routing grain through Vysotsk on the Baltic — a port with perhaps 4 million tons of annual capacity, a fraction of what the Azov system moves. The bottleneck lands squarely on southern Russian farmers, who face falling domestic bids, congested elevators and rising logistics costs just as harvest pressure peaks. If the closures persist into August, expect Russian export offers to thin, risk premiums on Black Sea freight and insurance to widen further — Ukraine is deliberately targeting the sanctioned “shadow fleet” tankers that keep Russian oil and fuel moving — and competing origins, including U.S. hard red winter wheat, to pick up demand at the margin.

The strategic logic on both sides is symmetrical, which is what makes this dangerous. Ukraine is squeezing the maritime logistics that feed Russian forces in the occupied south and the fuel-and-grain trade that funds the war, betting that Moscow cannot defend hundreds of slow civilian-flagged hulls. Russia is trying to re-impose its 2022-style chokehold on Ukraine’s seaborne grain trade, betting that insurers and shipowners will flee Odesa faster than Kyiv can shoot down incoming missiles. For the first time since the collapse of the Black Sea grain deal, both countries’ export corridors are under simultaneous, sustained attack — a situation with no obvious off-ramp and a direct feed into world food prices.

What to watch from here: whether Russia reopens the Kerch Strait or accepts a prolonged Azov shutdown into peak export season; whether Ukraine escalates to Novorossiysk, which alone handles a far larger share of Russian grain and crude; whether vessel insurers begin excluding the northwestern Black Sea again; and how quickly the wheat market’s war premium builds — or fades — with each night’s strikes. The first round, as Brovdi put it, is over. The second is being fought across the sea lanes that feed a large part of the world.

The shipping war at a glance

Sources: Bloomberg, Reuters, Kyiv Independent, Kyiv Post, Al Jazeera, gCaptain, UkrAgroConsult, Euromaidan Press. Ukrainian strike tallies are Kyiv’s claims and not independently verified.

—McConnell absence gives Democrats leverage over Senate farm bill

Committee math turns a SNAP delay into the likely price of moving the bill

Senate Ag Committee Chair John Boozman (R-Ark.) is confronting a problem that is as procedural as it is political as he attempts to mark up his Farm Bill 2.0 proposal before the August recess. Sen. Mitch McConnell (R-Ky.), a member of the committee, has been absent from the Senate since he was hospitalized June 14 following a fall. McConnell said he was briefly unconscious, was treated for mild pneumonia and is now undergoing rehabilitation, but acknowledged that he cannot return to the Capitol “quite yet.”

McConnell’s absence matters because the Senate Agriculture Committee has 23 members — 12 Republicans and 11 Democrats. Committee rules require a majority of the membership, or at least 12 senators, to be physically present before a bill can be reported. Approval also requires the support of a majority of the members physically present when the vote is taken.

That produces several possible outcomes. With McConnell absent, Boozman has only 11 Republican members available. If all 11 Democrats attend and oppose the bill, the vote would be tied 11-11 and the measure would fail. Democrats could also deny the committee a reporting quorum by refusing to attend, leaving only 11 Republicans in the room. Conversely, if one Democrat misses the vote while the remaining 10 attend, Republicans could report the bill on an 11-10 vote. McConnell’s absence therefore does not automatically prevent committee action, but it gives Democrats considerable control over the timing and attendance strategy surrounding a markup.

The arithmetic increases the pressure on Boozman to reach an agreement with Ranking Member Amy Klobuchar (D-Minn.) and at least part of the Democratic caucus before scheduling the vote. All 11 committee Democrats have said a Senate farm bill must delay the new SNAP cost shifts and ensure that states are treated equally. They have also linked bipartisan cooperation on agricultural provisions to action on those nutrition changes.

Under the OBBBA, the federal government’s share of state SNAP administrative costs falls from 50% to 25% beginning in fiscal 2027, effectively raising the state share from 50% to 75%. Beginning in fiscal 2028, states with SNAP payment-error rates of at least 6% must also begin paying between 5% and 15% of benefit costs. The law delays implementation for certain states with the highest error rates, a structure Democrats argue perversely gives the most troubled programs additional time while states with somewhat lower error rates face costs sooner.

Boozman’s discussion draft contains more than 100 provisions drawn from bipartisan Senate bills and includes changes involving farm credit, conservation, rural development, specialty crops, agricultural research, fertilizer costs and crop insurance. That bipartisan content gives Democrats reasons to remain engaged, but it has not displaced SNAP as the decisive negotiating issue. Boozman’s indication that he is examining whether to modify the draft to provide states some relief suggests he recognizes that a nutrition compromise may be the admission price for a successful markup.

A narrowly tailored delay could give both sides room to declare victory. Democrats could say they protected state budgets and prevented disruptive SNAP changes, while Republicans could preserve the underlying cost-sharing policy and argue that states were merely given more time to improve administration and prepare financially. The difficulty will be determining whether the delay applies uniformly, how long it lasts and whether its budgetary cost must be offset elsewhere in the farm bill.

Boozman could attempt to advance the bill without a deal by relying on perfect Republican attendance and favorable Democratic absences, but that would be a tactical victory rather than a durable legislative strategy. Most major legislation still needs 60 votes to overcome a Senate filibuster, meaning a farm bill assembled over unified Democratic opposition would have little chance of reaching final passage.

The larger risk is that the committee loses the remaining July window while waiting either for McConnell to return or for SNAP negotiations to produce an agreement. The current farm-bill extension expires Sept. 30, leaving little floor time after the August recess to pass a Senate bill, reconcile it with the House measure and send a final package to the president.

McConnell’s absence has therefore magnified an existing political reality rather than created a new one: A Senate farm bill was always going to require a bipartisan nutrition agreement. What has changed is that Democrats may now be able to enforce that requirement inside the committee instead of waiting for the bill to reach the Senate floor. Unless McConnell returns soon, a negotiated delay in SNAP cost sharing increasingly appears to be the most realistic path to getting Farm Bill 2.0 out of committee before the August recess.

—Equipment gains now count toward SDRP farm income test

USDA change could unlock an additional $125,000 in disaster aid

Paul Neiffer of the CPA Farm Report says USDA has confirmed that gains from the sale or trade of farm equipment will automatically be treated as farm income for Supplemental Disaster Relief Program payment determinations made on or after June 2, 2026. The change could allow more producers to satisfy the program’s 75% farm-income test and qualify for a payment limit of $250,000 rather than $125,000 across the 2023 and 2024 program years. Link to Paul’s report. 

The 75% test determines whether a producer is eligible for the higher SDRP payment limit for regular crops. Producers whose average adjusted gross income is more than 75% derived from farming, ranching or forestry may receive up to twice the standard payment limit.

Previously, equipment gains could be counted as farm income only when at least 66.66% of a producer’s average AGI already came from agricultural activities before the equipment gain was included. That created a circular calculation in which a producer might need the equipment gain to reach the required farm-income percentage but could not count the gain because the producer had not first cleared the lower threshold.

The new treatment eliminates that restriction. Equipment gains now count as farm income regardless of the producer’s initial farm-income percentage when USDA makes an SDRP determination on or after June 2.

Neiffer illustrated the impact with a farmer who has $1 million in average AGI, including $600,000 in ordinary farm income and a $250,000 equipment gain. Under the previous rules, the farmer’s initial farm-income share was only 60%, preventing the equipment gain from being counted and leaving the producer below the 75% requirement. Under the new calculation, farm income rises to $850,000, or 85% of AGI, qualifying the farmer for the higher $250,000 limit.

The change does not increase every producer’s payment automatically. The producer still must have sufficient eligible SDRP losses and satisfy other program requirements. But it could materially increase assistance for operations that sold or traded combines, tractors or other depreciable farm machinery during the applicable AGI base period.

Producers previously told they were ineligible for the higher payment limit because equipment gains were excluded should review their calculations with their tax adviser and local Farm Service Agency office. The date USDA makes the payment limit determination could now be as important as the income figures themselves.

— Screwworm Fight Turns a Corner as Inactive Cases Overtake Active Ones

USDA confirms two more New World screwworm cases in Texas, but 20 of 37 total infestations are now resolved — the clearest sign yet that eradication and containment efforts are gaining ground.

Two additional cases of New World screwworm (NWS) have been confirmed by USDA’s Animal and Plant Health Inspection Service (APHIS) — a case in a dog in Sutton County, Texas, and cattle in Brewster County, Texas — bringing the total number of confirmed cases to 37. Yet the most telling figure in the latest data is not the running total but the split beneath it: 20 of those cases are now considered inactive, leaving 17 active. For the first time since the outbreak was detected, resolved cases outnumber ongoing ones.

That crossover matters because it reframes what the case count is measuring. A rising cumulative total can look alarming in isolation, but when the majority of confirmed infestations have been cleared, the number increasingly reflects cases already contained rather than an infestation gaining ground. Seven counties are now listed as having only inactive cases, meaning the pest was found, addressed, and shows no continuing detection there. The shift from active to inactive is precisely the trajectory an eradication program is built to produce.

The oldest case still classed as active was confirmed in cattle in Medina County, Texas, on June 24, giving a sense of how long the longest-running open cases have persisted. Equally important is what the data does not show. APHIS still reports no cases confirmed in wildlife or feral animals, and no detections in fly traps. Those two absences are significant: they suggest the screwworm has not established a foothold in an untracked wild reservoir, and that the monitored fly population is not signaling undetected spread. Together they indicate the infestation remains concentrated in identified, managed hosts rather than moving through the broader environment.

Figure 1 — The two newly confirmed counties (Sutton, Brewster) and the county holding the oldest active case (Medina). All confirmations to date remain within Texas.

Read together, the numbers point to eradication and containment work that is continuing to produce results. The fact that inactive cases now exceed active ones is a leading indicator that control measures are taking hold in the initial counties where the pest first appeared — the places that have had the most time to move from detection to resolution. The pattern is consistent with a response that is closing out early clusters faster than new ones are opening.

The picture is not one of an outbreak fully behind us. New confirmations in Sutton and Brewster counties show the pest is still being found, and every open case requires sustained treatment and surveillance to keep it from seeding further spread. But the direction of travel is favorable. When the share of resolved cases climbs and no new fronts appear in wildlife or fly-trap monitoring, the trend lines describe an infestation being steadily pushed back rather than one expanding.

By the numbers

Notable individual confirmations

Source: USDA Animal and Plant Health Inspection Service (APHIS) case data. Figures reflect the latest reported totals of 37 confirmed cases (17 active, 20 inactive).

—India moves to curb forced-labor tariffs, but U.S. relief is uncertain

New import ban may not satisfy USTR’s demand for proven enforcement

India has authorized a ban on imports made wholly or partly with forced labor, moving to address a central U.S. trade complaint as New Delhi seeks to avoid another layer of tariffs and secure favorable treatment in its negotiations with Washington.

A July 13 notification empowers India’s central government to prohibit forced-labor goods and directs the Directorate General of Foreign Trade to investigate suspect imports and recommend restrictions. The action follows a U.S. Trade Representative Section 301 report accusing India and 59 other economies of failing to maintain or effectively enforce such bans.

USTR has proposed an additional 12.5% tariff on Indian goods, arguing that India had neither imposed a forced-labor import prohibition nor committed to one through a reciprocal U.S. trade agreement. India rejected that assessment and urged Washington to reconsider.

The new policy removes one of USTR’s stated objections, but it may not be enough to prevent tariffs. The U.S. review focuses not only on whether a legal ban exists but also on whether it is enforced effectively. India’s notification establishes an enforcement mechanism, but it does not yet provide the record of investigations, detentions or import exclusions that Washington may demand.

Former Assistant USTR Mark Linscott said the change was welcome but unlikely to materially alter U.S. tariff plans. He noted that India also faces a separate Section 301 investigation into excess manufacturing capacity, an issue unaffected by the forced-labor order and one that could produce additional tariff announcements.

The timing nevertheless underscores India’s effort to demonstrate policy alignment while broader trade negotiations continue. New Delhi is seeking preferential U.S. tariff treatment relative to competing exporters, but Washington appears to be keeping the bilateral trade talks and the Section 301 investigations on separate tracks.

Indian Commerce Secretary Rajesh Agrawal said completing a trade agreement could create an opening for broader discussions on the investigations. For now, however, India’s forced-labor ban is best viewed as a defensive step that strengthens its negotiating position rather than a guarantee of tariff relief.

—China’s growth slips to 4.3%, falling below Beijing’s target for the first time since the Covid era

Weakest expansion in three and a half years exposes an economy running on exports and factories while consumers, private investors and the property sector sit on their hands — and raises the odds of fresh stimulus in the second half

China’s economy grew 4.3% year-on-year in the second quarter of 2026, the National Bureau of Statistics reported, a marked deceleration from 5.0% in the first quarter and below the 4.5% consensus of economists surveyed ahead of the release. It was the weakest annual reading since the fourth quarter of 2022, when zero-Covid lockdowns were still strangling activity — and, more consequentially, the first quarterly print to fall beneath the lower bound of Beijing’s newly trimmed 4.5%–5.0% full-year growth target. 

Momentum cooled within the quarter as well: GDP rose just 0.9% from the previous three months, down from 1.3% quarter-on-quarter growth in January–March. For the first half, the economy expanded 4.7% — inside the target band, but with the trajectory pointing the wrong way.

The composition of the slowdown matters more than the headline. China’s supply side remains formidable: industrial output accelerated to 5.3% year-on-year in June, beating forecasts, powered by high-tech and equipment manufacturing and by AI-related exports — semiconductors, computing hardware and related electronics — that have proven strikingly resilient in the face of elevated external uncertainty. The demand side is where the economy is failing. Retail sales rose just 1.0% in June, and that counted as good news only because May had produced the first outright decline in more than three years. Fixed-asset investment contracted 5.7% in the first half — worse than the 4.1% decline through May — as private firms held back. And the property sector, once a quarter of the economy, remains the great deadweight: real-estate investment plunged roughly 18% from a year earlier, extending a downturn now in its fifth year.

This is the “imbalance between robust supply and weak demand” the statistics bureau itself acknowledged in its release — an unusually candid framing from an agency that typically accentuates the positive. Deputy NBS head Mao Shengyong maintained that the economy remained “within an appropriate range” and showed “strong resilience,” pointing to high-tech manufacturing and steady services growth. Both claims are defensible. But an economy that produces more than its households are willing to buy must export the difference or watch prices fall, and China is currently doing both: shipments have surged even as deflationary pressure lingers at home, a combination that stokes trade friction abroad without generating income confidence within.

The miss carries policy consequences. Beijing lowered its growth target to a 4.5%–5.0% range this year precisely to give itself room, and it has still undershot the floor. Premier Li Qiang has already called for “enhanced counter-cyclical measures,” and the leadership’s new five-year plan to boost consumption — targeting roughly $9 trillion in annual retail sales by 2030 — signals that policymakers grasp the structural nature of the problem. The question for the second half is whether Beijing reaches again for the familiar tools of infrastructure spending and rate cuts, which treat the symptom, or delivers the harder reforms — income redistribution, a stronger social safety net, a floor under housing — that would treat the disease. Markets are betting on more stimulus by the autumn; the urban jobless rate of 5.0% in June gives officials some breathing room, but a labor market that discourages spending is precisely what keeps households cautious.

The second half will test how much weight exports can continue to carry. Tariff uncertainty, Middle East supply shocks and softening global demand all threaten the one engine still running hot. If external demand falters before domestic demand revives, the 4.5% floor of Beijing’s target — already breached for one quarter — could be out of reach for the year. That is the scenario the July Politburo meeting will be designed to prevent.

China’s quarterly GDP growth slipped below Beijing’s 2026 target range in the second quarter — the weakest print in three and a half years.

BY THE NUMBERS — Q2 2026

GDP growth: 4.3% y/y (Q1: 5.0%; consensus: 4.5%) · Quarter-on-quarter: 0.9% (Q1: 1.3%) · First-half GDP: +4.7% · June industrial output: +5.3% y/y · June retail sales: +1.0% y/y · H1 fixed-asset investment: −5.7% · H1 property investment: ≈ −18% · June urban unemployment: 5.0% · 2026 growth target: 4.5%–5.0%.

—House GOP rolls the dice on reconciliation 3.0: $95 billion for the pentagon, farmers and trump’s election agenda — with no offsets

Budget panel marks up the blueprint Thursday ahead of a floor vote next week, but the package faces fiscal hawks demanding pay-fors, a Byrd rule gauntlet and a Senate GOP that has already pronounced a third party-line bill all but dead

House Republicans on Tuesday released the budget blueprint for their third reconciliation bill of the Trump era, a stripped-down, four-committee framework built to move fast: a House Budget Committee markup Thursday, floor passage next week, and — leadership hopes — a finished product before members scatter for an extended August recess with the midterms barely 100 days out.

Details: The resolution instructs the Armed Services Committee to spend $60 billion and the Intelligence Committee $13 billion, delivering roughly $73 billion in new security money on top of the $150 billion in defense funds Congress supplied in last year’s One Big Beautiful Bill Act. The Agriculture Committee gets a $12 billion instruction to carry out the administration’s request for economic assistance to struggling farmers. And the House Administration Committee receives a $10 billion ceiling to implement portions of the SAVE Act — the vehicle for grant money to nudge states toward proof-of-citizenship and voter ID requirements. All told, roughly $95 billion in new spending, with no reconciliation instructions to raise revenue or cut anything to pay for it.

What the blueprint signals: The bill’s architecture is as revealing as its numbers. Only four committees are instructed — no Ways and Means, no Energy and Commerce, no Natural Resources. That is a deliberate de-risking strategy: every committee added is another set of policy fights, another Byrd rule exposure in the Senate, and another week on the calendar leadership does not have. Energy provisions that committee Republicans spent months preparing were left on the cutting-room floor, and House Natural Resources Chairman Bruce Westerman confirmed his panel got no instructions, noting dryly that “apparently there’s not going to be any pay-fors the way the bill is right now.”

The defense number is also a fraction of what the Pentagon wanted. The administration’s fiscal 2027 defense request totaled a record $1.5 trillion, with as much as $350 billion of it contingent on a third reconciliation bill — a structure Senate appropriators of both parties called reckless. Sen. Susan Collins (R-Maine) warned the department was taking a “terrible risk” parking core funding in an uncertain reconciliation process, and Sen. Mitch McConnell flatly predicted “there will not be another reconciliation bill.” The $60 billion Armed Services instruction — close to the $67 billion supplemental request OMB sent Speaker Mike Johnson (R-La.), much of it tied to ongoing Iran operations — looks like leadership’s attempt to bank what is bankable and leave the rest to appropriators.

The farm piece. For agriculture, the $12 billion instruction slightly exceeds the administration’s $11.1 billion June request, which included $10 billion in temporary economic assistance for row and specialty crops planted in crop year 2026 and $1.1 billion for Florida producers hit by winter storms. It falls well short of the around $17 billion Senate Agriculture Chairman John Boozman had pushed. The context is sobering: with $12 billion in farmer bridge payments already distributed this year, another tranche would push total direct payments toward $55 billion — roughly a third of net farm income and the highest government share since 2001. That is a politically potent number heading into a midterm cycle in which rural voters are essential to the GOP map, and it is an implicit admission that low crop prices, high input costs and trade disruption have not abated. Watch how the Agriculture Committee structures the payments: reconciliation money must be scored as spending changes, not policy, and the committee will want payment terms that survive Byrd scrutiny while landing in farm country before November.

The SAVE Act workaround. The $10 billion House Administration instruction may be the most creative — and most vulnerable — element. Republicans cannot carry the SAVE Act’s proof-of-citizenship mandates through reconciliation; the Byrd rule bars provisions whose budgetary effects are merely incidental to policy. So the blueprint instead funds implementation grants, effectively paying states to adopt what the Senate will not pass. This is the price of ending the Anna Paulina Luna–led floor blockade that froze the House for two weeks, forced an early July Fourth recess, and at one point had 14 Republicans — including Majority Leader Steve Scalise — voting to grind the chamber to a halt until election legislation moved. Johnson bought peace by pledging to attach the SAVE Act to must-pass vehicles and to fund it here. Whether a grant program dressed in appropriations clothing survives the Senate parliamentarian is a genuinely open question, and hardliners have shown they will revolt again if it is stripped.

The pay-for problem. The absence of offsets is the fault line to watch Thursday. Rep. Chip Roy (R-Tex.) has insisted “we’ve gotta pay for everything,” even while conceding the political appetite for cuts is thin, and Westerman predicted “an uphill battle” without them. Budget Chairman Jodey Arrington says no decisions have been made on offsets — which, this late, generally means there will not be any. Leadership’s Camp David session with select Budget Committee members on Friday, phones confiscated at the door, was about locking down exactly these votes before the markup. Arrington can lose very few Republicans in committee, and a $95 billion deficit-financed bill is precisely the kind of measure fiscal hawks campaigned against.

Bottom line. The House can probably pass this. The four-committee design, the farm money aimed at the GOP’s rural base, the defense dollars the president is personally lobbying for, and the SAVE Act sweetener for the hardliners add up to a package built for 218. The Senate is another matter entirely. Majority Leader John Thune has called a third reconciliation bill a “heavy lift” with a “bumpy” path, offering only conditional interest if it is “designed right and scaled right.” McConnell and Collins have gone further, and Senate appropriators in both parties would rather move defense money through regular order. The likeliest outcomes are a Senate rewrite that shrinks the bill toward defense-plus-farm-aid and jettisons the election money, or a House-passed messaging vehicle that stalls — leaving the Pentagon’s Iran costs and the farm payments to ride an appropriations or supplemental vehicle this fall. Either way, House Republicans get what they most need before recess: a vote that lets vulnerable members go home having backed troops, farmers and election security in a single bill, 100-odd days before voters render their verdict.

—Senate Finance advances five ITC nominees

Bipartisan vote reflects urgency to restore the trade agency’s full membership

The Senate Finance Committee advanced five nominees to the U.S. International Trade Commission on Tuesday, clearing the way for a full Senate confirmation vote and potentially ending a prolonged period in which the six-member trade agency has operated with only three commissioners. The panel backed the nominations of Republicans Brett Doyle, Peter-Anthony Pappas and David Foley and Democrats Samuel Negatu and Bart Thanhauser. No more than three of the six ITC commissioners can be from the same party.

The committee approved Republican nominees Brett Doyle, Peter-Anthony Pappas and David Foley by identical 21-6 votes. Sens. Michael Bennet (D-Colo.), Elizabeth Warren (D-Mass.), Tina Smith (D-Minn.) and Ben Ray Luján (D-N.M.), along with Sen. Bernie Sanders (I-Vt.), opposed all three Republicans.

The two Democratic nominees encountered less resistance. Bart Thanhauser received unanimous committee support, while Samuel Negatu advanced 25-2, with Warren and Sanders voting against him.

Finance Committee Chair Mike Crapo (R-Idaho) and ranking member Ron Wyden (D-Ore.) supported the entire slate, underscoring a bipartisan desire to restore the ITC to full strength despite broader disagreements over President Donald Trump’s trade policies. Wyden acknowledged that supporting a complete package of Trump nominees was unusual for him but said a fully staffed commission was necessary to enforce trade laws and defend U.S. manufacturers and farmers.

The nominations are particularly significant because the ITC’s three sitting commissioners — Republican David Johanson and Democrats Amy Karpel and Jason Kearns — are all serving beyond the expiration of their terms. Confirming the five nominees would allow the administration and Senate to replace the holdovers while preserving the commission’s statutory partisan balance, which limits either party to three of the six seats.

A fully staffed ITC could provide greater continuity and certainty as the agency handles antidumping and countervailing-duty investigations, import-injury cases, intellectual-property disputes and congressionally requested trade studies. Those responsibilities have become more consequential as tariffs, trade enforcement and supply-chain security assume larger roles in U.S. economic policy.

All five nominees bring experience from Congress or the Office of the U.S. Trade Representative. Doyle is assistant USTR for congressional affairs; Pappas directs intellectual-property policy for the Senate Judiciary Committee; and Foley is chief intellectual-property counsel for the House Judiciary Committee. Negatu previously served as an assistant general counsel at USTR and now works for the Consumer Technology Association, while Thanhauser is deputy assistant USTR for Southeast Asia and the Pacific.

The differing expiration dates attached to the nominations reflect the ITC’s staggered-term structure rather than the prospect that all five would serve simultaneously for full nine-year terms. Senate confirmation would nevertheless mark the most substantial reshaping of the commission in years and give the agency a more durable leadership structure for adjudicating increasingly contentious trade cases.

— NWS outlook: Additional excessive rainfall likely across the Texas Hill Country… …Anomalous heat and humidity continuing across the Northern Plains/Upper Midwest while spreading into the northern Mid-Atlantic… …Monsoonal showers and thunderstorms develop across the interior western U.S.

—Corn Belt ridge weakens, opening door to eastern storms

Eastern rains offer relief as western heat and dryness deepen crop stress

The high-pressure ridge over the Corn Belt is forecast to weaken and shift southwestward quickly, destabilizing the atmosphere across eastern production areas and allowing deep moisture to surge northward. Slow-moving thunderstorms could produce localized rainfall exceeding 0.5 inch from Thursday through Saturday, with the heaviest totals expected Friday.

The rain will provide targeted relief in the eastern Corn Belt, but the western Corn Belt and hard red winter wheat belt are expected to remain mostly dry through the weekend. Continued heat and limited rainfall will accelerate soil-moisture losses and deepen crop stress, even as dry conditions permit uninterrupted fieldwork.

Forecast confidence has also increased for later-period “ridge-rider” thunderstorms. The European model now projects several organized storm sequences during the next 15 days, including potential events around July 22–23 and again July 25–26. Those systems could eventually offer broader relief, but their location and coverage remain critical uncertainties.

Above-normal temperatures will dominate the Corn Belt and northern Plains through Saturday. Eastern areas should return closer to normal by Sunday, while western regions remain hotter than normal through Tuesday. Extreme heat across the northern Plains is now expected to persist through Monday, compounding stress on spring wheat before a temporary cooling period develops from July 21–23.