Trump: U.S./Iran Cease Fire is Over; U.S. Launched New Strikes Against Iran After Three Hormuz Tanker Attacks; Iran Oil License Pulled; Crude Oil Surges
USTR Greer gives the most direct comments about U.S. strategy regarding USMCA and what to expect
| LINKS |
Link: UPDATED — USDA Accepts 2.2 Million Acres into CRP for 2026 —
Heavily Weighted Toward the Grasslands Effort
Link: The Screwworm Border: A Reopening Calculus Turned Upside Down
| Updates: Policy/News/Markets, July 8, 2026 |
| UP FRONT |
TOP STORIES
— Trump declares Iran ceasefire ‘over’ as Hormuz attacks shatter fragile truce: Tanker attacks in the Strait of Hormuz triggered U.S. strikes, renewed sanctions and a sharp oil-market risk premium, though diplomacy remains technically alive.
— Iran turns Khamenei’s funeral into a regional power test: Tehran is using Khamenei’s funeral route through Iraq’s Shia holy cities to project continuity, revive its regional axis and mask succession uncertainty.
— U.S. ethanol exports jump to 190 million gallons in May 2026: Record shipments through May, led by Canada, the EU and Brazil, are making ethanol exports a larger factor in U.S. corn demand expectations.
— North American trade reset begins: USTR Jamieson Greer framed USMCA’s non-renewal as leverage to tighten rules of origin, curb Asian transshipment and push more production into the U.S.
— U.S. trade deficit balloons to $77.6 billion as imports surge and exports retreat: May’s wider deficit signals a bigger drag from net trade on second-quarter growth, though tariff front-loading and metals volatility may have inflated the move.
— U.S. agricultural trade deficit steady in May, with full-year gap set to narrow from last year’s record: The monthly farm trade gap barely changed, but USDA still expects the annual deficit to shrink sharply from last year’s record.
FINANCIAL MARKETS
— Equities today: U.S. stocks were called lower as Iran strikes, rising crude, higher Treasury yields and renewed pressure on AI/chip names drove a risk-off tone.
— Equities yesterday: The Dow, Nasdaq and S&P 500 all closed lower July 7, with the Nasdaq hit hardest amid renewed pressure on technology shares.
AG MARKETS
— Global grain update: Paris corn held near record highs on French crop stress, while wheat remained capped by competitive Black Sea supplies and palm oil stayed firm.
— Ag markets on Tue., July 7: Corn, soybeans, wheat and cotton rallied on technical buying and improved U.S./China trade sentiment, while livestock markets weakened.
TRANSPORTATION & LOGISTICS
— Union Pacific, Norfolk Southern fire opening salvo in STB supplemental filings — and accuse rivals of using St. Louis Terminal Railroad as a ‘pawn’: UP and NS sought to defuse terminal-railroad concerns in their merger case while accusing rival carriers of trying to slow the deal.
POLITICS & ELECTIONS
— McConnell resurfaces by phone as absence stretches toward a month: GOP leaders publicly vouched for Mitch McConnell’s engagement after weeks out of sight, but the coordinated reassurances also highlighted uncertainty over his return.
WEATHER
— NWS outlook: Severe storms and excessive rainfall risks are expected across parts of the Plains, Mississippi Valley, Great Lakes and Ohio Valley through Thursday.
| TOP STORIES—Trump declares Iran ceasefire ‘over’ as Hormuz attacks shatter fragile truceThree tanker strikes in 24 hours trigger U.S. retaliation against 80-plus Iranian targets, reimposed oil sanctions, and a 6%spike in Brent crude — but the president left the door open to continued talks President Trump, speaking Wednesday at NATO’s annual summit in Ankara, declared the U.S./Iran ceasefire “over” — “For me, I think it’s over” — after the sharpest escalation since the Islamabad Memorandum was signed three weeks ago. The trigger: Iranian attacks on three commercial vessels in the Strait of Hormuz within 24 hours, including the Qatari-owned LNG tanker Al Rekayat, which caught fire, and the Saudi supertanker Wedyan. CENTCOM responded with strikes on more than 80 targets — air defenses, radar, anti-ship missile sites, and dozens of IRGC small boats — calling the tanker attacks “a clear and dangerous violation of the ceasefire.” Iran then hit back at U.S. bases in the Gulf. Treasury reimposed oil-export sanctions lifted under the memorandum and revoked Iran’s license to sell oil. Why the truce was always fragile. The Islamabad Memorandum, brokered June 17-18 by Pakistani PM Shehbaz Sharif, was never a peace deal — it was a 14-point framework giving negotiators 60 days to reach final terms on ending the war that began with joint U.S./Israeli strikes on Feb. 28. Its core bargain — Iran halts Hormuz attacks, the U.S. lifts its naval blockade and oil sanctions — collapsed at first contact with Iran’s internal politics. Tehran just concluded multiday funeral processions for Supreme Leader Khamenei, killed with family members in the war’s opening strikes. The timing of the tanker attacks — during and immediately after the funeral, where a performer publicly called for Trump’s assassination — suggests hardline IRGC elements may be acting to torpedo the deal, whether or not the new leadership sanctioned it. Notably, Iran made no official claim of responsibility even as its state media hinted at it. Read Trump’s language carefully. “Over” is not withdrawal from diplomacy. He said negotiators can keep talking — while dismissing it as “a waste of time” — and technical negotiations are still nominally set to begin July 11. This is a familiar Trump pattern: declare the deal dead, escalate pressure (sanctions plus strikes), and keep the negotiating channel alive. The reimposed sanctions are the real leverage; the strikes are punctuation. Market and downstream implications. Brent settled 3% higher Tuesday at $74.16, then on Wednesday jumped over $78, up 5.6%, with WTI crude at $74.50, up 5.75%. Roughly a fifth of global oil transits Hormuz, and insurers will reprice Gulf shipping risk immediately. Sustained crude above $75 feeds directly into diesel and fertilizer costs — natural gas is the feedstock for nitrogen — and the Qatari LNG tanker hit puts global gas markets in play, not just crude. If the July 11 talks proceed despite the rhetoric, expect prices to retrace; if Iran responds to the base attacks’ aftermath with further Hormuz disruption, the fuel-cost pressure that eased after the June truce returns in force heading into harvest. Bottom line: The ceasefire is functionally suspended, not dead. Both sides are escalating to improve their negotiating position inside the 60-day window, which runs to mid-August. The next week — whether July 11 talks convene and whether Hormuz attacks continue — will determine if this is a violent negotiating tactic or a return to full-scale war. —Iran turns Khamenei’s funeral into a regional power testBy taking the slain supreme leader’s body through Najaf and Karbala, Tehran is using mourning rites to show that its Iraqi networks, Shia religious ties and “axis of resistance” still matter despite war losses and succession uncertainty The Financial Times frames Ayatollah Ali Khamenei’s funeral procession into Iraq as a deliberate display of Iranian regional reach, not simply a religious farewell. The symbolism is unmistakable: Najaf and Karbala are among Shia Islam’s holiest cities, and the presence of Khamenei’s body there allows Tehran to bind the late leader’s legacy to the broader Shia political geography Iran has cultivated for decades. Reuters reported that mourners in Najaf carried portraits of Khamenei, chanted anti-U.S. and anti-Israel slogans, and gathered under Iraqi and Iranian flags alongside banners from powerful Iran-backed Iraqi militias. Iraqi Prime Minister Ali al-Zaidi, senior Iraqi officials, Iranian President Masoud Pezeshkian and Revolutionary Guard commanders were also present, underscoring the state-level and militia-level choreography behind the event. A funeral staged as geopolitical theater. The procession is Tehran’s attempt to convert a moment of vulnerability into a signal of continuity. Khamenei’s killing by U.S. and Israeli strikes was a major psychological and strategic blow. But by moving his coffin from Iran into Iraq, then through sacred Shia spaces, the regime is trying to show that the Islamic Republic’s influence did not die with him. The message is aimed at several audiences at once: Iranians who need reassurance after the war; Iraqi Shia factions that Tehran wants to keep aligned; Washington and Israel, which are testing Iran’s post-Khamenei cohesion; and Gulf governments watching whether the “axis of resistance” is fragmented or still mobilizable. Iraq is the real stage. The most important part of the funeral is not the crowd size alone, but where the crowd is being mobilized. Iraq is both a sovereign state and the central arena of Iranian influence outside Iran. Najaf carries religious weight, Karbala carries the language of martyrdom and resistance, and the participation of Iran-backed militias turns the funeral into a live demonstration of Tehran’s embedded power. That is why the event is politically sensitive for Baghdad. Al-Zaidi’s government must show respect for Shia sentiment while avoiding the appearance that Iraq is simply an extension of Iranian strategy. AP reported that the body will move from Najaf to Karbala before returning to Iran, with prayers at the Imam Ali and Imam Hussein shrines — a route heavy with religious and political meaning. The axis is being revived, not merely mourned. The FT’s core point is that Tehran is trying to revive the image of a functioning regional axis after months of setbacks. Khamenei was not only Iran’s supreme leader; he was the political patron of a system that tied together the Revolutionary Guard, Iraqi militias, Hezbollah, the Houthis and other aligned forces. His funeral gives those groups a common narrative: martyrdom, resistance and continuity. But that narrative also exposes a weakness. A durable axis needs command, financing, discipline and political cover. A funeral can display loyalty, but it cannot by itself resolve succession questions, battlefield losses or pressure from the U.S. and Israel. Succession uncertainty remains the biggest caveat. The absence of Iran’s new supreme leader, Ayatollah Mojtaba Khamenei, from the ceremonies is a notable vulnerability. AP reported that Mojtaba has not appeared publicly during the funeral events and is believed to be in hiding after reportedly being wounded in the strike that killed his father. That matters because the funeral is meant to project continuity, but the unseen successor invites questions about who is commanding the system. Tehran can still mobilize crowds and militias, but the longer Mojtaba remains absent, the more the regime’s display of unity will look like a managed performance rather than a settled transition. Market and security implications. The funeral is also unfolding against a dangerous military backdrop. AP reported that U.S./Iran talks appear to be on hold until after the burial, while fresh strikes in the Persian Gulf have raised the risk that an interim agreement could break down. That means the funeral could become more than a symbolic event: it could harden anti-U.S. pressure inside Iran and among Iraqi militias, complicate diplomacy, and keep risk premiums alive in oil and shipping markets tied to the Strait of Hormuz. Bottom line: Iran is using Khamenei’s funeral as a regional referendum on its staying power. The spectacle in Iraq shows Tehran’s networks remain deep, especially in Shia political and militia circles. But it also highlights the contradictions now facing the Islamic Republic: it can still mobilize grief and symbolism at scale, yet it must prove that its post-Khamenei leadership can control the axis, avoid uncontrolled escalation and preserve influence in Iraq without provoking a sovereignty backlash. — U.S. ethanol exports jump to 190 million gallons in May 2026Record January–May shipments, stronger Canada and EU buying, and Brazil’s return are turning ethanol exports into a bigger piece of the U.S. corn-demand story. U.S. fuel ethanol exports climbed to 190 million gallons in May 2026, up from 172 million in April and above the 185 million shipped in May 2025 — extending a record-setting run that is reshaping the outlook for U.S. corn demand. The strength reflects higher blending mandates abroad, the reopening of the Brazilian market, a sharp jump in European buying, and tightening supply in competing origins. Headline numbers. At 190 million gallons, May marked a clear step up from April and edged above the year-ago month. Through the first five months of the calendar year, January–May export shipments totaled a record 1.0 billion gallons, up 12% year over year. The scale of that run stands out against recent history: as recently as 2024, monthly U.S. ethanol exports were routinely only 130–160 million gallons. The pace keeps the 2025/2026 marketing year (September–August) on track to top the all-time high of roughly 2.1 billion gallons set the year before — itself a jump of nearly 400 million gallons (about 23%) over the prior record. Ethanol’s marketing year runs September–August. Sept. 2025 through May 2026 (nine months) exports of 1.76 billion gallons is marketing-year-to-date. With June/July/August still to come at around 190M/month, that puts the full MY around 2.3 billion gallons, comfortably above last year’s around 2.1 billion record. On the value side, USDA raised its fiscal year 2026 ethanol export forecast to about $5.1 billion in its late-May Outlook for U.S. Agricultural Trade, up from $4.6 billion in fiscal year 2025 — a signal that both volumes and per-gallon values have held firm. Where the ethanol is going. Canada remains the anchor of the export book, importing about 432 million gallons so far in the marketing year, up nearly 17%. Provincial moves toward higher blends — up to 15% ethanol in some provinces — are pulling demand forward, ahead of mandated timelines. The European Union has been the year’s standout growth story, nearly doubling its purchases to about 252 million gallons as member states work toward a 14%renewable share in transport by 2030. That European pull looks set to persist as steep corn production losses in France tighten the region’s domestic feedstock supply and reinforce its reliance on imported U.S. ethanol. Japan, a mature and steady buyer, has taken about 88 million gallons, up roughly 14%. Two developing market shifts round out the picture. Brazil has returned as one of the largest U.S. customers, with imports up about 350% to roughly 78 million gallons after a stretch of trade friction eased. Nigeria continued its steady climb, up about 16% to around 20 million gallons, reinforcing its role as a front-runner for ethanol adoption in the region. What’s driving the run. Industry officials point to a combination of policy tailwinds and product reliability. Removals of trade barriers and blend-rate increases in several countries have improved U.S. ethanol’s competitiveness, while emerging applications — marine fuel and sustainable aviation fuel among them — are widening the long-term demand base. On the supply side, rising domestic corn yields give producers volume that needs export outlets, and buyers value the consistent quality and availability of U.S. product as they invest in the infrastructure and policy to support ethanol economies. With Canada and Europe set to stay active in the U.S. marketplace — Europe all the more so given the French corn shortfall — the two anchor buyers should keep demand firm. The corn demand angle. The export surge is doing more than setting records; it is adding to forward corn disappearance and reshaping the demand outlook. Ethanol’s corn demand draw has struggled to push past 5,550 million bushels, and near-term challenges remain. But with a reduced U.S. sorghum surplus and sustained large ethanol exports, some industry analysts expect corn grind in crop year 2026/2027 to reach 5,600 million bushels. The step-change in export volumes — from the routine 130–160 million gallons a month seen as recently as 2024 to nearly 190 million in May 2026 — is a meaningful new source of grind. That is why some conclude it is difficult to be bearish on U.S. corn consumption. —North American trade reset beginsU.S. trade representative frames July 1 non-renewal as leverage to tighten rules of origin, block Asian transshipment and push more manufacturing into the United States In a Tuesday, July 7 interview with Larry Kudlow, U.S. Trade Representative Jamieson Greer made clear the Trump administration is treating the USMCA review not as a routine extension of the North American trade pact, but as a pressure point to rewrite the terms of regional trade. Greer said President Trump “was never going to rubber stamp this,” arguing that the agreement created during Trump’s first term did not fully deliver on its purpose of pulling more auto production and manufacturing into the United States, Canada and Mexico.The comments followed the administration’s July 1 decision not to renew USMCA in its current form. USTR said the agreement remains in force while the U.S. continues talks with Mexico and Canada over the pact’s “shortcomings” and U.S. trade deficits. The decision starts a process of annual reviews and leaves the agreement in place unless the three countries later agree to renew it with changes or the pact ultimately expires. USMCA becomes a negotiating weapon. Greer’s central message was that the July 1 decision was intentional and strategic. He reminded Kudlow that the sunset review clause was built into USMCA for this very purpose: to prevent the agreement from automatically rolling forward without a hard look at whether it was working. “We planted in that agreement, you’ll remember, a sunset review clause, where the agreement would — we’d start exiting it unless we affirmatively agreed to renew it,” Greer said. “Well, last week President Trump decided he wasn’t going to rubber stamp it. We need to change it.” That framing is important. Greer was not presenting the decision as a collapse of USMCA, nor as an immediate break in North American commerce. Instead, he cast it as leverage. The administration is signaling that continued preferential access to the U.S. market will depend on tighter compliance, stronger regional-content rules and a broader alignment among the three countries against Chinese and other Asian overcapacity. Greer also emphasized that Trump’s stance has political support beyond the Republican base. He said one of his “favorite headlines” after the July 1 decision was one noting “bipartisan support for not renewing USMCA.” His point was that skepticism over the agreement’s performance has spread across the political spectrum, with critics on both the left and right arguing that parts of the deal need to be fixed. No cliff, but no comfort zone. Greer was careful to reassure companies that the July 1 decision does not mean the rules vanished overnight. Asked by Kudlow whether the existing rules apply while negotiations continue, Greer answered directly: “They do.” “There’s not like a cliff where everything ends and no one knows what’s happening,” Greer said. “The existing rules continue to apply.” That point matters for agriculture, autos, manufacturing, logistics and energy. For now, the USMCA framework remains operative, including preferential tariff treatment and rules of origin. So the agreement has not lapsed or expired and existing USMCA rights and obligations remain in force while annual reviews proceed. But Greer’s reassurance came with a warning. The legal framework may remain, but the policy environment has already changed. Greer said Trump has “already, in a sense, superseded the USMCA” through tariffs on autos, steel, aluminum and timber. In other words, the administration is not waiting for a formal rewrite of the agreement to reshape North American trade flows. That is the market signal. USMCA remains in place, but the era of assuming stable, duty-free North American access without new conditions is over. Toyota move becomes the administration’s proof point. Kudlow pointed to Toyota’s decision to shift much of its Tacoma pickup production from Mexico to Texas, saying Trump viewed the move as a function of tariffs. Greer agreed. “That’s exactly right,” Greer said. Toyota announced a $3.6 billion investment in its San Antonio, Texas, plant and said it would shift most Tacoma production from Mexico to the United States over roughly four years. CBS reported the investment will expand the San Antonio operation and move most midsize pickup production from Toyota’s Tijuana, Mexico, facility. Reuters separately reported Toyota would build a new Texas plant and shift some truck production from Mexico. Greer used the Toyota example to rebut the business argument that tariffs create uncertainty. His counterargument was that companies can find certainty by producing inside the United States. “I would say that there is always certainty if you’re making in America, if you’re sourcing in America, and you’re using American workers, and you have access to the American consumer,” Greer said. That line captures the administration’s trade doctrine. Tariffs are not being presented merely as punishment for foreign producers. They are being used as a location signal: build in the United States and the uncertainty fades; build outside the United States and market access becomes conditional. Greer also tied the argument to the strength of U.S. demand. “The American consumer, as you know, is super robust,” he said, adding that despite supply shocks such as the pandemic, the American consumer has remained “certain.” For Greer, that consumer base is the prize, and the administration wants companies to pay for access through investment, production and employment inside North America — preferably inside the United States. Rules of origin move to the center of the fight. The clearest substantive demand Greer outlined involves rules of origin. He said the administration wants to make sure goods receiving special treatment under USMCA are genuinely North American, not simply routed through Mexico or Canada after being substantially produced elsewhere. “We’re concerned we don’t want North America to be a dumping ground for excess capacity and production in Asia,” Greer said. He specifically cited Mexico’s recent moves to raise tariffs on Asian countries, including China and Vietnam, as an example of progress. In Greer’s view, Mexico has “seen the light” and begun taking action to prevent its market from becoming a backdoor for Asian production seeking U.S. access. The broader concern is transshipment and content dilution. If products are mostly made in a third country, Greer said they should not receive special USMCA treatment simply because some final processing occurs inside North America. “If you’re part of the North American region, if you’re going to get any kind of deal on trade, it has to be because the goods are coming from North America,” Greer said. “It can’t be from Vietnam or some other place.” That statement has major implications for autos, parts, steel-intensive products, electronics, machinery and other sectors where global supply chains can be routed through multiple jurisdictions. Reuters reported that U.S./Mexico talks scheduled for the week of July 20 are expected to focus on strengthening rules of origin for autos and other industrial goods, along with broader economic security concerns tied to China. Mexico is both partner and pressure point. Greer’s comments suggest Mexico is the first major battlefield in the USMCA reset. He praised Mexico for beginning to raise tariffs on Asian countries, but also made clear the U.S. wants more. The administration’s objective is to prevent Mexico from becoming the preferred assembly platform for goods whose core value comes from China, Vietnam or other non-North American suppliers. That is especially sensitive in autos, where Chinese components, Asian steel, batteries, electronics and other inputs could potentially enter North American supply chains through Mexico. Greer’s formulation draws a line between legitimate regional integration and what the administration views as tariff avoidance. If goods contain meaningful U.S. and North American content, “then we can talk about special treatment,” he said. But if they are “mostly from a third country,” Greer said, “you’re not going to get special treatment here.” That is a tougher version of North American regionalism. It does not simply defend USMCA as a free-trade pact. It recasts USMCA as a managed production bloc designed to serve U.S. industrial and national security goals. Dispute panels take a back seat to U.S. enforcement. Kudlow asked whether USMCA still contains mechanisms for settling disputes. Greer acknowledged that it does, and noted that the Trump administration used dispute settlement in the first term, including on autos. But he quickly shifted the focus away from panels and toward unilateral U.S. enforcement. “The President, however, has shown he has the political will to use his existing trade tools, trade remedies, investigations, etc., to take action in a way that the United States decided is appropriate,” Greer said. That comment is one of the most revealing parts of the interview. Greer is not saying dispute settlement is irrelevant, but he is saying it is subordinate to U.S. discretion on core economic security matters. Lower-sensitivity issues may still be resolved through panels, he suggested, but Washington will not hand over fundamental trade policy decisions to outside bodies. “We’re not outsourcing our views on trade policy to some panel or some supranational organization or arbitral panel,” Greer said. For companies, that means the formal USMCA legal process may offer less protection than in prior trade eras. The administration is signaling that tariffs, investigations and trade remedies will remain active tools even while the agreement itself technically remains in force. The bigger trade doctrine: access must be earned. The interview showed that Greer is advancing a broader Trump trade doctrine built around conditional access to the U.S. market. The message to companies is straightforward: access to U.S. consumers is valuable, and the administration wants that access to be tied to domestic production, U.S. sourcing, American workers and tighter regional supply chains. That approach marks a sharp departure from the older assumption that trade agreements primarily exist to preserve open flows of goods. In Greer’s telling, USMCA must now prove that it supports production inside the region and does not serve as a conduit for Asian overcapacity. The immediate targets are autos, steel, aluminum, timber and rules of origin. But the logic could spread. Agriculture will watch carefully because Mexico and Canada are critical U.S. export markets, and farm groups have repeatedly warned that uncertainty around USMCA could threaten sales channels, input flows and rural supply chains. Mexico and Canada together buy more than a third of U.S. agricultural exports. Bottom line: USMCA survives, but the old assumptions do not.Greer’s interview made clear the Trump administration is not walking away from North American trade immediately. The rules remain in place, negotiations continue and the agreement is still functioning. But the July 1 non-renewal changed the psychology of the pact. The administration is now using USMCA’s sunset clause as leverage to demand tougher rules, stronger North American content, less exposure to China and Vietnam, and more production inside the United States. Greer’s comments show that the White House sees Toyota’s Texas move as the kind of response tariffs are supposed to generate: a corporate decision to shift production closer to the U.S. consumer because the cost of foreign production has become less predictable. The risk is that this strategy raises costs, complicates supply chains and injects recurring uncertainty into a $1.6 trillion North American trading relationship. The opportunity, in the administration’s view, is that it forces companies and trading partners to choose between preserving old supply-chain habits and earning continued access to the U.S. market on Trump’s terms. Greer’s message to Canada, Mexico and multinational manufacturers was unmistakable: USMCA is still alive, but it is no longer on autopilot. —U.S. trade deficit balloons to $77.6 billion as imports surge and exports retreatA widening May gap points to a heavier drag from net trade on second-quarter growth The U.S. trade deficit widened sharply to $77.6 billion in May 2026 from a revised $54.6 billion in April, roughly matching the consensus forecast of a $78.5 billion shortfall. It was the widest gap since March 2025, and the composition of the move — imports rising while exports fell — makes it more consequential for the growth outlook than a deficit driven by one side alone. Imports climbed 3.3% to $395.3 billion, their highest level in more than a year. The gains were led by consumer goods, particularly pharmaceutical preparations and cell phones, alongside crude oil and passenger cars. The mix matters. Strength in consumer imports suggests underlying household demand remains firm even after a long stretch of trade-policy noise, while the jump in pharmaceuticals and phones carries a familiar signature of front-loading: importers pulling shipments forward to get ahead of anticipated tariff changes rather than responding purely to end demand. If that dynamic is at work, some of May’s import surge is borrowed from future months and could reverse, which would flatter later trade figures even without any real improvement in the underlying balance. Exports moved the other way, falling 3.2% to $317.7 billion. The decline was concentrated in nonmonetary gold and other precious metals, computers and accessories, and consumer goods — again including pharmaceutical preparations, which weighed on both sides of the ledger. Precious-metals flows are notoriously volatile and often reflect financial positioning rather than the health of US manufacturing, so the gold-driven portion of the drop should be discounted. But softer exports of computers and higher-value consumer goods are harder to wave away, and they hint that foreign demand for US output, and the strong dollar’s effect on competitiveness, are becoming more of a headwind. The immediate implication is for GDP accounting. Net exports subtract from growth when the deficit widens, and May’s deterioration—both larger imports and smaller exports—implies trade will weigh more heavily on second-quarter GDP than it did in the first. A single month does not set the quarter, and April’s revised figure shows how much these numbers can move, but the direction of travel in May tilts the arithmetic toward a bigger drag. Whether that translates into materially weaker headline growth depends on how much of the import surge was inventory-building, which can offset the net-trade hit within the GDP tables, versus final consumption, which does not. Underneath the data sits an unusually unsettled policy backdrop. The Trump administration is pursuing alternative tariff measures and moving to annual trade reviews with Canada and Mexico, an approach that replaces the predictability of a fixed framework with recurring negotiation. For businesses, that uncertainty is itself a variable: it encourages exactly the kind of defensive front-loading visible in May’s import numbers and makes the monthly trade series noisier and harder to read as a clean signal of demand. Until the tariff path settles, wider and more volatile deficit prints are likely to be the norm, and each month’s figure will need to be weighed against the possibility that it reflects timing rather than trend. The takeaway is measured. May’s report is a genuine deterioration and a real negative for near-term growth math, but a meaningful share of it—precious-metals swings on the export side, probable tariff front-loading on the import side—may prove transitory. The cleaner read is that domestic demand still looks resilient while the external position is softening, a combination that keeps the deficit wide and leaves the second-quarter growth contribution from trade squarely in negative territory. —U.S. agricultural trade deficit steady in May, with full-year gap set to narrow from last year’s recordA flat monthly shortfall sits beneath a USDA forecast for the annual deficit to shrink from $43.7 billion to $29 billion The U.S. agricultural trade deficit was essentially unchanged in May 2026 at $2.84 billion, up only marginally from $2.82 billion in April, as exports and imports both edged higher. Farm and food exports rose to $15.18 billion from $15.09 billion, while imports climbed to $18.02 billion from $17.89 billion. The near-standstill in the monthly gap is the surface story, but the more meaningful signal is in the fiscal-year trajectory, which points to the sector’s deficit narrowing appreciably from the record set a year earlier. Through the first eight months of Fiscal Year 2026, cumulative exports stand at $122.4 billion against imports of $135.3 billion, leaving a deficit of $12.9 billion. That the U.S. runs an agricultural trade deficit at all remains a relatively recent structural feature, driven by strong domestic demand for products the country imports in volume — horticultural goods, coffee, and processed foods — alongside a firm dollar and uneven overseas demand for American grain and soybeans. But the pace of that shortfall this year is running well below last year’s, when the full-year deficit reached a record $43.7 billion. USDA’s forecast implies that improvement continues. The department projects FY 2026 exports of $176.5 billion and imports of $205.5 billion, a $29 billion deficit — roughly $15 billion narrower than FY 2025. Rather than a blowout, the outlook is one of a recovering export position gradually closing the gap. Reaching those annual figures requires exports to average about $13.53 billion a month over the final four months, a pace that sits comfortably below May’s $15.18 billion print and below the recent monthly run rate. That cushion suggests the export forecast is conservative and could be revised higher if current momentum holds, which would narrow the deficit further still. The import side tells a more demanding story for the forecast. To reach $205.5 billion for the year, imports would need to average close to $17.6 billion a month through September — above the roughly $16.8 billion monthly pace seen over June–September of the prior year, though below May’s elevated $18.02 billion reading. In practice, the projected narrowing of the deficit leans on exports firming up rather than on any sharp pullback in imports, which have remained strong across categories like fresh produce, beverages, and processed goods. If imports cool toward their earlier pace while exports hold near recent levels, the annual deficit could come in even narrower than the $29 billion USDA envisions. The policy backdrop cuts both ways and keeps the outlook uncertain. The trade-policy turbulence weighing on the broader goods balance — the Trump administration’s shifting tariff measures and its move to annual trade reviews with major partners — runs through agriculture as well. Retaliatory measures and renegotiated terms can suppress U.S. farm exports and undercut the very recovery the forecast assumes, while tariffs on inputs and the threat of escalation can pull imports forward and inflate near-term totals. For a sector whose improving balance depends on exports firming, that environment is the principal risk to the narrowing story. The takeaway is that a quiet monthly figure and a shrinking annual deficit are two sides of the same trend. May’s $2.84 billion gap barely moved from April, but it sits within a fiscal year on track to finish well inside last year’s $43.7 billion record. The path to USDA’s $29 billion forecast runs through steady, better-than-projected exports rather than any collapse in imports—and the main threat to it is a trade-policy climate that could just as easily stall the export recovery it depends on. |
| FINANCIAL MARKETS |
—Equities today: Opening calls for U.S. equities: lower across the board. What’s driving it: Geopolitics. Fresh U.S. military strikes hit 80+ targets in Iran (command centers, missile sites), and Washington revoked waivers for Iranian oil exports. Brent and WTI crude is surging, with Strait of Hormuz risk premium building.
Chips/AI rout, day two. Micron, Nvidia, Marvell, and AMD are all lower again after Tuesday’s semiconductor selloff. Samsung’s profit rose 19x year-over-year yet the stock fell — traders are questioning stretched AI valuations and the memory-chip demand outlook rather than trailing results.
Rates.
The 10-year Treasury yield hit a one-month high at 4.56% as the oil spike revives inflation worries — a headwind for the rate-sensitive growth names already under pressure.
Watch today: FOMC minutes this afternoon — key for whether the Fed sees oil-driven inflation risk as reason to stay restrictive. Energy is the only clear winner so far (BP +1.8%, Shell +0.8% in Europe); European bourses otherwise opened lower.
The read: classic risk-off rotation — energy up, tech down, yields up. The market’s bigger concern appears to be the AI valuation reset rather than Iran per se; the modest 0.2% futures decline on major military action suggests investors still expect the conflict to stay contained. The pain is concentrated in semis. Escalation around Hormuz or hawkish Fed minutes are the two things that could turn an orderly rotation into broader selling.
—Equities yesterday:
| Equity Index | Closing Price July 7 | Point Difference from July 6 | % Difference from July 6 |
| Dow | 52,925.15 | -130.76 | -0.25% |
| Nasdaq | 25,818.69 | -302.47 | -1.16% |
| S&P 500 | 7,503.85 | -33.58 | -0.45% |
| AG MARKETS |
—Global grain update: Paris corn holds near record highs as wheat sags under Black Sea weight
Heat-stressed French corn crop keeps Euronext corn at contract highs; Russian new-crop wheat competitive at $242/ton; palm oil firm above RM4,500
European grain markets remain split between a heat-damaged corn crop and a wheat market capped by abundant Black Sea supplies. Malaysian palm oil is holding near recent highs on strong early-July exports.
French wheat. September milling wheat on Paris-based Euronext has hovered just above the psychological €200 floor, trading around €201.50–€202 per metric ton ($230–$231/ton, or roughly $6.27–$6.29/bu) in the most recent sessions. The contract retreated from a four-week high of €210.75 set during France’s late-June record heatwave as harvest results improved — FranceAgriMer put the soft wheat harvest at 26% complete, far ahead of the 5% five-year average, with ratings at 68% good/excellent. Wheat found modest support from a large Saudi purchase and a weaker euro, but expectations of bumper Black Sea crops continue to cap rallies. Soufflet pegs French soft wheat production at 31.5–32 million tons versus 33.4 million last year.
French corn. Corn is the bull story in Paris. November corn traded up to €230.75/ton (about $264/ton, or $6.70/bu equivalent) after setting a contract high of €232.75 (~$266/ton, $6.76/bu), an exceptionally large premium over wheat. French corn ratings plunged to a 13-year low after the June heatwave, and growers are already projecting a 30% production drop on top of sharply reduced plantings. Temperatures near 40°C (104°F) forecast for southern France threaten further stress, especially on non-irrigated fields.
Russia. Russian 12.5%-protein wheat for late-June/early-July shipment slipped to around $242/ton FOB (about $6.59/bu), with new-crop July–August offers at the same level. Softer global futures, a weaker ruble, and upward revisions to the Russian crop — the IGC lifted its forecast to 89 million tons — are pressuring values and making Russian wheat the most competitive origin in tenders, including the recent Saudi tender where Black Sea origins were seen winning most of the business.
Ukraine. Ukrainian milling wheat purchase prices on a DAP-port basis were quoted around $200–$208/ton ($5.44–$5.66/bu) — Grade 2 near $203, Grade 3 near $208 and Grade 4 near $200 — pressured by weak import demand and competition from cheaper new-crop Russian supplies. Corn export activity remains seasonally slow; Fastmarkets reports Ukrainian corn shipments running at their slowest pace in years as logistics constrain exports despite competitive pricing.
Malaysian palm oil. Benchmark September crude palm oil on Bursa Malaysia held above RM4,500/ton Wednesday after settling Tuesday at RM4,549 — roughly $1,100–$1,115/ton (about 50–50.5¢/lb) at the current rate of RM4.08 per dollar. Support came from firmer Dalian and Chicago vegetable oils and strong exports, with cargo surveyors estimating July 1–5 shipments up 10.6%–11.1% from a month earlier. Gains were capped by a firmer ringgit and news that Indian imports fell to a 14-month low in June.
—Ag markets on Tue., July 7:Grains and cotton rally as U.S./China thaw lifts ag markets; livestock slides
Corn, soybeans and wheat all touch multi-week highs on fund short covering, while cattle and hogs retreat on long liquidation
Ag markets split sharply along commodity lines Tuesday, with the row crops and cotton posting broad gains on improved technicals and warming U.S.-China trade relations, even as the livestock complex sold off.
Corn led the grains higher, with December futures climbing 6 1/4 cents to $4.64 1/4, finishing near the daily high and notching a five-week high. The market showed strong follow-through buying, much of it fund short covering alongside speculative and technical buying. Prices staged a bullish upside breakout on the daily bar chart, and the improved technical picture suggests the momentum could continue to draw in buyers.
The soybean complex extended Monday’s gains across the board. November soybeans rose 5 1/2 cents to $11.97 3/4, settling near the mid-to-upper end of the daily range and poking to a five-week high. Products followed suit, with September soybean meal up $3.30 to $314.50 for its own five-week high and September soybean oil gaining 77 points to 68.16 cents, also finishing near the top of the range.
Wheat participated but with less conviction, as the winter markets largely paused after Monday’s strong advance. September SRW added 4 1/2 cents to $6.18 1/2 and September HRW gained 3 cents to $6.52 3/4, both reaching two-week highs, while September spring wheat rose 3 1/2 cents to $6.33.
Cotton was the day’s standout performer. December futures rallied 299 points to 81.30 cents and hit a five-week high, driven by heavy short covering and fresh speculator buying tied to warming U.S./China relations, including recent Chinese purchases of U.S. soybeans. That same geopolitical thaw provided an underlying supportive tone across the crop markets.
Livestock moved in the opposite direction. August live cattle fell $0.675 to $238.425, finishing near mid-range and touching a four-week low as technically based short selling and weak long liquidation pressured a market that is trending lower on the daily chart. August feeder cattle edged up $0.15 to $360.65. Hogs saw the sharpest livestock decline, with August lean hogs dropping $1.60 to $96.925 near the daily low on heavy profit-taking and weak long liquidation after recent gains.
The session underscored a rotation into the grain and fiber markets, where friendlier trade signals and firming technicals are rebuilding speculative interest, and out of livestock, where the charts have turned defensive.
| Commodity | Contract Month | Closing Price July 7 | Change from July 6 |
| Corn | December | $4.64 1/4 | +6 1/2 cents |
| Soybeans | November | $11.97 3/4 | +5 1/2 cents |
| Soybean meal | September | $314.50 | +$3.30 |
| Soybean oil | September | 68.16 cents | +77 points |
| Wheat (SRW) | September | $6.18 1/2 | +4 1/2 cents |
| Wheat (HRW) | September | $6.52 3/4 | +3 cents |
| Spring wheat | September | $6.33 | +3 1/2 cents |
| Cotton | December | 81.30 cents | +299 points |
| Live cattle | August | $238.425 | -$0.675 |
| Feeder cattle | August | $360.65 | +$0.15 |
| Lean hogs | August | $96.925 | -$1.60 |
| TRANSPORTATION & LOGISTICS |
—Union Pacific, Norfolk Southern fire opening salvo in STB supplemental filings — and accuse rivals of using St. Louis Terminal Railroad as a ‘pawn’
First round of responses tackles TRRA, Kansas City Terminal and TTX ownership questions; remaining answers due July 27 as merger fight enters a decisive stretch with heavy stakes for agricultural shippers
Union Pacific Corp. and Norfolk Southern Corp. on Monday submitted the first installment of their responses to the Surface Transportation Board’s May 28 request for supplemental information supporting their accepted $85 billion merger application — the transaction that would create America’s first true transcontinental railroad. The filing zeroes in on three jointly owned entities that have become an unexpected flashpoint in the proceeding: the Terminal Railroad Association of St. Louis (TRRA), the Kansas City Terminal Railway (KCT) and railcar-pooling giant TTX Company. The railroads say the remaining responses to the STB’s other information requests will follow by the board’s July 27 deadline.
The core commitment: All three entities are jointly owned with other Class I railroads, run by independent management teams and governed by non-discrimination policies. UP and NS stress they do not control these companies today and pledge they will not control them post-merger — and the supplemental filing gives the STB a menu of options to enforce that commitment, up to and including divestiture. That language matters. Union Pacific holds 42.84% of TRRA and Norfolk Southern 14.29%, meaning a combined UP-NS would sit above 57% ownership of the neutral switching carrier that operates roughly 170 miles of track and two Mississippi River bridges at the St. Louis gateway. In their amended April 30 application, the railroads already committed to divest or otherwise relinquish control of TRRA as a condition of closing, abandoning an earlier request for temporary controlling authority that had drawn STB criticism. The board, in rejecting the original application in January, pointedly noted that the related TRRA control filing should have been styled as “significant” rather than “minor.”
The “pawn” accusation: The most combative element of Monday’s filing is the railroads’ charge that rival Class I carriers are weaponizing the TRRA to stall the merger. UP and NS say the filing provides clear evidence that vocally opposed railroads failed to appear at a properly convened special meeting called by TRRA’s corporate secretary — a session whose sole purpose was to discuss ways of reducing Union Pacific’s TRRA ownership post-merger. Only UP and NS board members showed up; representatives of BNSF, CSX and Canadian National did not. The optics cut both ways. UP and NS get to argue that opponents are manufacturing a governance impasse they refuse to help solve; the no-show railroads will likely counter that resolving TRRA ownership is the applicants’ burden, not theirs, and that attending could have been spun as tacit blessing of the merger’s terminal arrangements. Either way, the episode confirms what has been evident since December: BNSF, CSX, CN and Canadian Pacific Kansas City are waging a coordinated, multi-front campaign against the deal, having already filed challenges to the application’s completeness and its market-share methodology this spring.
Why terminals are the soft underbelly: Neutral terminal railroads at St. Louis and Kansas City are the connective tissue of the U.S. rail network — the choke points where all major carriers interchange traffic on nominally equal terms. TTX, jointly owned by the Class Is, supplies the intermodal and automotive railcar fleets the entire industry depends on. The STB’s May 28 decision singled out these gateway and car-supply issues precisely because a merged UP-NS holding 50%-plus stakes could, at least in theory, tilt access, pricing or car allocation against competitors. For the applicants, neutralizing this issue cheaply — through governance firewalls or partial share sales rather than outright forced divestiture — would remove one of the opposition’s most concrete, non-speculative arguments. That is why they led with it in the first tranche of responses rather than saving it for the July 27 omnibus.
Procedural state of play: The docket has traveled a bumpy road. The railroads filed their original application — nearly 7,000 pages — on Dec. 19, 2025. The STB unanimously rejected it as incomplete on Jan. 16, and UP-NS refiled a revised application April 30, this time built on 100% actual traffic data from all six North American Class I railroads, a first in modern rail-merger history. On May 28 the board unanimously accepted the revised application as complete but held the entire proceeding — including the environmental review — in abeyance pending supplemental information on enhanced competition, protections for shippers who would go from two carriers to one, diversion analysis, a service assurance plan, the gateway and car-supply issues addressed Monday, market-share projections, downstream merger impacts and passenger rail. Once the board lifts the abeyance and publishes its acceptance, a 12-month statutory clock governs the evidentiary phase. The companies continue to target a mid-2027 close.
The shipper-benefit case: UP and NS frame the merger as a competition-enhancing event, not a consolidation play. Connecting the two end-to-end networks would give American shippers single-line transcontinental service for the first time, creating a stronger alternative to long-haul trucking and — by the railroads’ estimate — saving shippers roughly $3.5 billion annually as freight shifts from highway to rail. UP CEO Jim Vena has argued the mere announcement of the deal has already prompted rival railroads to roll out new competitive service offerings. The counterargument, pressed by CN, CPKC and BNSF, is that eliminating one of the remaining independent Class I carriers erases interchange leverage at Chicago, St. Louis and New Orleans, and that projected truck-to-rail diversions are speculative while the loss of two-railroad competition is certain.
The agriculture stakes: For farm-sector shippers, this proceeding is arguably the most consequential rail matter in a generation. American Farm Bureau Federation analysis using USDA and STB data estimates a combined UP-NS would originate roughly 44% of total carloads across major commodity groups and handle more than one-third of all U.S. grain rail movements. Around 95% of grain elevators are served by a single railroad, which means competitive discipline for most agricultural shippers comes not from switching carriers but from regulatory oversight and interchange alternatives — precisely what critics say the merger erodes. Farm Bureau also notes farm-product rail revenue above variable cost more than doubled from 2004 to 2023, from $1.08 billion to $2.44 billion, evidence that pricing power on ag lanes is already substantial. The National Grain and Feed Association and a bipartisan group of 18 senators have separately urged the STB to scrutinize the deal’s impact on agricultural producers, invoking memories of the service meltdowns that followed the 1996 UP-Southern Pacific combination.
Bottom line: Monday’s filing is both substance and signal. Substantively, UP and NS are trying to take the terminal-railroad issue off the table early by showing flexibility all the way to divestiture. Strategically, the “pawn” language marks a sharp escalation in rhetoric against BNSF, CSX and CN, telegraphing that the applicants intend to litigate their rivals’ motives — including those railroads’ own downstream merger ambitions — as aggressively as the merits. The next mile markers: the balance of the supplemental responses by July 27, the STB’s subsequent decision on whether to lift the abeyance and start the evidentiary clock, and the shape of any conditions the board signals on gateways, car supply and captive-shipper protections. For agriculture, the fight over what ‘open gateways’ means in practice — at St. Louis, Kansas City, Chicago and New Orleans — will determine whether the promised $3.5 billion in shipper savings ever reaches the farm gate, or whether the sector absorbs another round of consolidation costs it cannot route around.
| POLITICS & ELECTIONS |
—McConnell resurfaces by phone as absence stretches toward a month
GOP leaders vouch for the ailing Kentuckian, but their coordinated reassurances underline how much his silence has cost him
Senate Republican leaders spent Tuesday doing something they rarely have to do for Mitch McConnell (R-Ky.): speaking on his behalf.
Majority Leader John Thune (R-S.D.) said he and McConnell had a “lengthy and substantive” phone conversation Monday touching on national security, while the No. 2 Republican, John Barrasso of Wyoming, followed with a roughly 20-minute call and reported that the 84-year-old was “fully engaged and eager to get back to the Senate.” The statements were unusual not for their content but for their choreography — a cluster of high-profile Republicans publicly attesting, on the same day, that they had personally heard McConnell’s voice.
That coordination is the story as much as the calls themselves. McConnell has been hospitalized since June 14, and three weeks of official silence about the reason has let a vacuum fill with speculation, including reports of emergency dispatch audio suggesting a possible cardiac incident at his home. When a leadership office declines to explain a prolonged absence, allies are left to manage perception rather than facts, and the “I spoke with him” statement becomes the currency of reassurance. It is also inherently soft evidence: it confirms he is communicating, but not his prognosis, his stamina, or a timeline for return.
The political stakes explain the urgency. Even stripped of his former leadership title, McConnell remains a consequential vote and a fixture on the Appropriations and Armed Services committees, and a Senate operating on narrow margins can feel a single sustained absence. The emphasis on “national security” in the Thune readout is a deliberate signal that McConnell is still substantively in the loop on the issues he cares about most, not merely convalescing. Yet the subtext of the reassurance campaign cuts the other way: sources this week openly floated the possibility that he may not return to the chamber this year, a question that would have been unthinkable to raise aloud about McConnell even a year ago.
What to watch now is whether the messaging shifts from “we’ve talked to him” to “here is when he’ll be back.” As long as the proof of life comes secondhand and the medical picture stays private, the reassurances will keep inviting the very doubt they are meant to quiet — and MAGA-aligned critics have already seized on the gap, accusing the party establishment of a cover-up. The durability of McConnell’s standing may ultimately depend less on the phone calls his colleagues describe than on the day he is seen and heard making them himself.
| WEATHER |
— NWS outlook: There is a Slight Risk (level 2/5) of severe thunderstorms over parts of the Central Plains, Upper/Middle Mississippi Valley on Wednesday… …There is a Slight Risk (level 2/5) of severe thunderstorms over parts of the Ohio Valley/Middle Mississippi Valley and Central/Southern High Plains on Thursday… …There is a Slight Risk (level 2/4) of excessive rainfall over parts of the Upper Great Lakes/Upper Mississippi Valley and the Middle Mississippi Valley/Central Plains on Wednesday and over parts of the Ohio/Middle Mississippi Valley on Thursday.
