U.S. Inflation Rate Falls More than Expected 

Fed head Warsh testifies | Hormuz blockade leads to surging oil prices | Conab corn, soybean estimates | Russia moves to reroute grain as Azov Sea disruption deepens

Link: U.S. vs. Brazil Corn: Populations, Yield Ranges, and
         Why the Averages Differ

Link: Industry to Trump Administration: A U.S./China Board of Trade Will
         Only Work If It’s Built to Last

Link: Renewed U.S./Iran Strikes Put Fertilizer Markets Back on
         a War Footing

Link: Thompson’s Farm Labor Bill Faces Its First Gatekeeper: Jim Jordan
 

Link: Video: Wiesemeyer’s Perspectives, July 12
Video show is now on You Tube,Spotify & Apple
Link: Audio: Wiesemeyer’s Perspectives, July 12

TOP STORIES
 

— Inflation breaks lower: June CPI posts first monthly decline since 2020: June CPI fell on lower energy prices, easing Fed pressure, but the relief could prove temporary as U.S./Iran tensions push oil higher again.

— Warsh debuts on the Hill: ‘No tolerance’ for inflation, no hints on rates: Fed Chairman Kevin Warsh used his first semiannual testimony to stress inflation discipline, avoid rate guidance and launch broad reviews of Fed operations.

— Hormuz blockade pushes oil above $85 and rewrites the risk premium: Trump’s blockade and proposed security toll for Hormuz transit lifted oil prices and raised legal, diplomatic and inflation risks.

— The Gulf builds its detour around Hormuz: Gulf producers are accelerating pipeline routes that could bypass much of Hormuz oil traffic by 2028, reducing Iran’s leverage over crude flows.

— Dubai moves to build a trade lifeline beyond Hormuz: DP World’s Fujairah port plan would give Dubai a second maritime gateway outside the Persian Gulf if Hormuz disruptions persist.

— Pork industry presses USTR to challenge China’s trade barriers: NPPC wants USTR to confront Chinese tariffs, subsidies and sanitary restrictions that continue to limit U.S. pork access.

— USDA sets FY 2027 sugar quotas at WTO minimum: USDA kept raw and refined sugar TRQs at minimum WTO levels, leaving specialty users constrained and Mexico as the main expected supply relief.

FINANCIAL MARKETS

— Equities today: U.S. Dow opened around 90 points lower while the Nasdaq opened 130 points higher. The action came after cooler CPI data, though oil risks, Warsh testimony and bank earnings tempered the upside.

— Equities yesterday: The Dow, Nasdaq and S&P 500 all closed lower July 13, with the Nasdaq posting the sharpest decline.

— Precious metals buckle as safe-haven logic turns upside down: Gold and silver fell sharply as oil-driven inflation fears lifted rate expectations and made the Fed, not missiles, the metals market’s bigger concern.

AG MARKETS

— Conab nudges Brazil’s record corn crop higher: Corn up 1.2 MMT, Soybeans firm at 180.6 MMT: Conab raised Brazil’s corn crop on stronger safrinha yields, reinforcing export competition and the big-supply outlook.

— Russia moves to reroute grain as Azov Sea disruption deepens: Russia says it can divert grain exports from the Sea of Azov, but longer rail hauls, higher costs and insurance risks could slow shipments.

— European grains slip on friendlier weather outlook as Russian wheat offers surge: Paris wheat and corn eased on better weather forecasts, while rising Russian FOB values signaled tighter Black Sea availability.

— Grain futures ease overnight as recent rally pauses: Corn, soybeans and wheat pulled back overnight on profit-taking, while soyoil stayed firm on vegoil and energy-market support.

— Ag markets Mon., July 13: Weather premium lifts corn and soybeans as wheat markets retreat: Corn and soybeans gained on Midwest heat concerns, while wheat faded on harvest pressure and profit taking.

FARM POLICY

— When should a loss be a loss? Economists say the crop safety net now pads profits, not just losses: A farmdoc analysis argues the U.S. crop safety net has shifted since 2007 from offsetting losses to enhancing sector profitability.

SCREWWORM

— New World screwworm reaches 35 confirmed U.S. cases: U.S. screwworm cases have reached 35, all in domestic animals, though July detections have slowed and no human or wildlife cases are confirmed.

TRADE POLICY

— Tariff refunds surge past $86 billion as Treasury payouts accelerate: CBP has moved $86.3 billion in tariff refunds to Treasury for payment, with more claims pending and litigation still shaping the final total.

CHINA

— China’s trade surplus swells to $125.6 billion as AI boom powers record exports: China’s June surplus hit its second-highest level ever as AI-related exports surged, deepening trade friction while U.S. farm purchases still lag commitments.

POLITICS & ELECTIONS

— Graham’s sister named interim senator as GOP scramble begins: South Carolina Gov. Henry McMaster appointed Darline Graham Nordone to serve out Lindsey Graham’s term, restoring the GOP’s nominal 53-seat Senate majority.

WEATHER

— NWS outlook: Heat and humidity will expand from the northern Plains into the Northeast and Mid-Atlantic, while heavy rain threatens parts of Texas.

— Heat dome deepens crop stress across western Corn Belt: A strong ridge will keep the western Corn Belt and Plains hot and dry, while eastern rains offer only partial relief.

TOP STORIES—Inflation breaks lower: June CPI posts first monthly decline since 2020 as oil retreatsHeadline relief masks a split-screen economy — grocery inflation stays contained even as beef keeps climbing, and Wall Street’s rally rests on a Middle East ceasefire that is already fraying The June Consumer Price Index delivered the kind of downside surprise markets had been begging for. The all-items index fell 0.4% on a seasonally adjusted basis — the first outright monthly decline since 2020 and the largest one-month drop since April 2020, when the pandemic cratered demand. The annual rate fell to 3.5% from May’s three-year high of 4.2%, well below the 3.8% consensus. Core inflation was even more encouraging: the index excluding food and energy was flat on the month, pulling the annual core rate down to 2.6% from 2.9%. The story is almost entirely energy. The energy index plunged 5.7% in June — also the steepest drop since April 2020 — as gasoline fell 9.7% on the month. Crude prices tumbled more than 20% after the mid-June ceasefire in the U.S.–Iran conflict and the reopening of the Strait of Hormuz, unwinding the war premium that had driven May’s inflation spike. Even so, energy remains up 15.7% from a year ago and gasoline up 26.7%, a reminder of how much geopolitical risk is still embedded in household costs. Shelter added to the good news, rising just 0.1% — the smallest monthly increase since January 2021 — and easing to 3.3% annually. What the report said about food prices. Food inflation stayed on its recent moderate track, but with sharp divergences underneath. The overall food index rose 0.2% in June and stands 3.0% above a year ago — cooler than May’s 3.1% pace. Food at home (grocery prices) also rose 0.2% on the month and is up 2.7% over 12 months, while food away from home matched the 0.2% monthly gain and eased to 3.4% annually, continuing the pattern of restaurant inflation outrunning the grocery aisle. Among the six major grocery store food groups, dairy and related products posted the biggest monthly jump at 1.2%, though dairy is up just 0.4% on the year. Meats, poultry, fish and eggs rose 0.6% on the month and 2.6% annually. Cereals and bakery products gained 0.3% (up 2.4% year over year), and “other food at home” rose 0.5%. On the relief side, nonalcoholic beverages fell 1.5% in June, fruits and vegetables slipped 0.2% (though they remain the hottest annual category at 5.3%), and coffee dropped 2.0% on the month — welcome movement in an item still 12.9% above a year ago. The protein complex tells the sharpest story. Beef and veal rose another 1.2% in June and are up 11.8% over 12 months, tracking USDA’s Food Price Outlook forecast of a 12.1% increase for 2026 as the cattle herd remains historically tight — the clearest pressure point on consumers’ dinner plates. Eggs moved the other way on the year: despite a 4.3% bounce in June, egg prices are down 27.9% from a year ago as flocks recover from avian influenza, making eggs the standout deflation item in the store. USDA’s outlook still pegs 2026 food-at-home inflation at a modest 2.8%, and June’s data sit comfortably inside that forecast. Likely impact on U.S. equity prices. The knee-jerk reaction was textbook risk-on: S&P 500 futures rose after the release, extending a market already trading near record territory (the index closed Monday at 7,575). The mechanism is the Fed. Coming into the report, futures markets were pricing roughly one-in-three odds of a July rate hike and nearly 70% odds of one by September — a hawkish tilt built on war-driven energy inflation. A flat core reading and a falling headline undercut the case for tightening, and every tick lower in hike probability translates into lower Treasury yields (the 10-year sat at 4.58% pre-release) and support for equity multiples. Rate-sensitive corners of the market — megacap growth and tech, homebuilders, small caps and regional banks — stand to benefit most, and the timing is fortuitous with big-bank earnings kicking off this week. The durability of the rally is another matter, and the caveats are substantial. First, June’s decline is backward-looking: the ceasefire that produced it is already disintegrating, with U.S. strikes on Iran resuming this week and WTI crude surging back above $80 on renewed Strait of Hormuz disruptions. If oil holds these levels, July’s CPI could give back much of June’s headline improvement, capping how dovish the Fed can afford to sound. Second, core inflation at 2.6% is still above target, with services and travel costs sticky. Third, real wages remain under pressure — average hourly earnings rose 3.5% over the past year, only now catching up to the inflation rate — which keeps a question mark over the consumer. The most likely equity outcome is a relief rally that firms the market’s floor by taking a near-term Fed hike off the table, but with upside capped until oil markets confirm the energy shock has truly passed. Stocks are being asked to price a ceasefire the headlines keep contradicting. —Warsh debuts on the Hill: ‘No tolerance’ for inflation, no hints on ratesNew Fed chairman uses first semiannual testimony to pledge price stability, launch a top-to-bottom review of how the central bank operates — and keep every policy option open Federal Reserve Chairman Kevin Warsh delivered his semiannual Monetary Policy Report testimony to the House Financial Services Committee Tuesday morning, greeting Chairman French Hill (R-Ark.) and Ranking Member Maxine Waters (D-Calif.) with a performance that was long on institutional philosophy and notably short on forward guidance. He opened with a tribute to Alan Greenspan, who died last month “after a century of life,” recalling that his friend appeared before Congress more than two hundred times “displaying his agile mind and his distinctive way with words.” The homage was not incidental: Warsh spent much of the testimony positioning himself as heir to a tradition of Fed discretion and institutional self-confidence, even as he announced plans to reexamine nearly everything the institution does. The economy: solid, with an AI-sized asterisk. Warsh described economic activity as expanding at a solid pace, with moderate household consumption growth and manufacturing output moving up steadily this year. The standout was business investment: equipment spending rose about 8 percent for the year ending in the first quarter, and within that, high-tech spending logged growth of nearly 25 percent on a four-quarter basis — the AI and data-center buildout showing up unmistakably in the national accounts. Warsh leaned into it, predicting that “AI investment will soon be called just ‘investment.’” The one soft spot he flagged was housing, which “gives a different picture and continues to lag” — the familiar signature of a rate-sensitive sector still straining under borrowing costs. Labor markets, in his telling, are in equilibrium: unemployment low and little changed over the past year, few layoffs, only slight variance in job vacancies, and solid nominal wage growth. On policy: a hold, a vow, and deliberate silence. The FOMC held the federal funds target range at 3-1/2% to 3-3/4% at its June meeting, and Warsh offered no signal — none — about the direction or timing of the next move. What he offered instead was rhetoric: the Committee has “no tolerance for persistently elevated inflation” and shares “a resolute commitment to restoring price stability,” language acknowledging that “high inflation has been an undue burden on American households” through “the inflation surge of the last five years.” That phrasing is doing real work. Warsh arrived at the Fed carrying a reputation as a hawk and a market expectation, in some quarters, that he would accommodate the administration’s well-known preference for lower rates. The “no tolerance” formulation reads as a deliberate effort to establish anti-inflation credibility at the outset — while the total absence of forward guidance preserves maximum room to cut later and frame it as data-driven rather than pressured. The real news: five task forces. The most substantive announcement was a set of five internal task forces charged to “start with first principles, ask hard questions, examine current practices, consider alternatives.” They will examine the form and function of Fed communications; the balance sheet, including the ample-reserves regime and the composition of asset holdings; the Fed’s data sources and measurement methods; the productivity and labor-market impact of new general-purpose technologies such as AI; and the empirical robustness of the Fed’s inflation models and frameworks. For longtime Warsh watchers, this is the arrival of his years of outside criticism — of Fed groupthink, of a bloated balance sheet, of communications noise, of stale Phillips-curve thinking — now converted into official machinery. The balance-sheet review is the one with teeth: asking whether the ample-reserves regime has “advantages… and what are the alternatives” opens the door to a structurally smaller Fed footprint, a position Warsh advocated for years before taking office. The productivity task force matters too, because if the Fed formally concludes that AI is lifting the economy’s productive capacity, that becomes the intellectual bridge to lower rates without conceding anything on inflation — the supply-side argument the administration has been making all along. What went unsaid. The testimony contained no specific inflation readings, no mention of tariffs or their pass-through to prices, no discussion of bank regulation or supervision, and no comment on fiscal policy — a striking set of omissions that kept Warsh clear of every live political tripwire. On independence, he threaded the needle carefully, calling congressional accountability “a prudent and wisely conceived obligation” that is “of a piece with the Fed’s rightful independence,” grounding both in the country’s founding principles rather than in any current dispute. Bottom line: Warsh closed by declaring that “today we are at a hinge point in history” and that the Fed’s number one objective “is to get monetary policy right — or as near to it as we possibly can. That is our clear and constant aim, the star we steer by.” Translation: rates stay where they are until the data — or the task forces — say otherwise. The near-term policy signal is a wash; the longer-term signal is that Warsh intends to renovate the Fed’s operating doctrine from the inside, and the balance sheet and inflation-framework reviews are the ones to watch. For rate-sensitive sectors — housing now, and by extension farm credit and land markets — relief is not being promised, only left possible.—Hormuz blockade pushes oil above $85 and rewrites the risk premiumA U.S. security toll could prove more disruptive than the blockade itself Brent crude surged near $87 per barrel Tuesday as traders confronted not merely another exchange of U.S./Iranian strikes, but a fundamental change in how Washington intends to manage the Strait of Hormuz. Brent was up 3.8% at $86.84 and West Texas Intermediate up 3% at $80.50 in morning trading, their highest levels since before the short-lived June 17 U.S./Iran agreement. Tanker traffic has already fallen to a two-month low, while Iranian missile strikes on two Emirati tankers killed one crew member and wounded eight others — evidence that the risk premium is being supported by physical shipping disruptions, not rhetoric alone. President Donald Trump said the U.S. blockade beginning at 4 p.m. Eastern Time would stop Iranian ships and its customers from entering or leaving while preserving passage for other countries. But those vessels would apparently be required to provide the U.S. with a “20% reimbursement” for protecting the waterway. That turns the operation from a conventional naval blockade into something closer to a security toll system imposed on one of the world’s most important international shipping routes. Before the conflict, roughly one-fifth of global oil and liquefied natural gas supplies moved through Hormuz. The most important unanswered question is what the 20% applies to. Trump’s language suggests a charge based on cargo value, but the administration has not specified who would pay it, how cargo would be valued, whether energy shipments would receive exemptions or how the U.S. military would enforce payment. U.S. Central Command said additional instructions would be issued through a formal notice to commercial mariners, while officials referred questions about collecting the money to the White House. A literal 20% charge on cargo value would be extraordinarily large. It would dwarf ordinary canal, port and escort fees and would probably be passed rapidly from cargo owners and charterers into crude, LNG, refined product and petrochemical prices. It could also penalize the Gulf allies Trump says the U.S. is protecting — Saudi Arabia, the United Arab Emirates, Qatar, Bahrain and Kuwait — because their exports would become more expensive even when their vessels were not targeted by Iran. The proposal also raises serious legal and diplomatic questions. The International Maritime Organization said there is no legal basis for imposing mandatory tolls merely for transit through an international strait. Secretary of State Marco Rubio had previously argued that charging vessels would violate international law. Iran, meanwhile, has attempted to turn Trump’s logic against Washington: Foreign Minister Abbas Araghchi said whoever provides secure passage should be compensated, but contended Iran was the strait’s rightful guardian and would charge less than the U.S. That response highlights the larger danger. Washington and Tehran are no longer arguing only over whether Hormuz is open; they are competing over who controls passage, who grants permission and who collects revenue. Two rival powers claiming authority over the same narrow waterway could leave shipowners facing conflicting instructions, uncertain insurance coverage and the possibility that payment to one side would trigger retaliation from the other. Even without a complete closure, those uncertainties can reduce available vessels, raise war-risk premiums and delay loadings. The separate decision to support the Russia sanctions bill compounds the supply risk. The legislation championed by the late Sen. Lindsey Graham (R-S.C.) and Sen. Richard Blumenthal (D-Conn.) would authorize penalties against countries buying Russian oil, natural gas and uranium. The original proposal contemplated tariffs of as much as 500%, although the White House-backed revision reportedly narrows those provisions and gives Trump greater flexibility. The bill has 85 Senate cosponsors, but Senate Majority Leader John Thune (R-S.D.) has not announced a vote date. The timing is potentially combustible. Russian exports have served as an important alternative supply stream while Gulf shipments have been constrained. Pressuring China, India and other Russian-energy customers at the same moment that Hormuz traffic is shrinking could remove part of that cushion. Trump may intend the sanctions authority primarily as leverage against Russian President Vladimir Putin, but oil markets will price the possibility that enforcement ultimately removes or redirects barrels. For agriculture, the transmission path runs through diesel, ocean freight, natural gas-linked fertilizer production and Gulf exports of ammonia, urea and sulfur. The immediate effect will be higher volatility rather than a uniform price increase, but sustained Brent prices in the $85-to-$90 range would threaten to reverse the recent retreat in fertilizer costs and raise fall fieldwork and grain-transportation expenses. ANZ analysts said continued disruptions could keep oil within that range.The market’s next test comes after the 4 p.m. deadline. Traders will watch whether U.S. forces actually stop Iranian-linked vessels, whether commercial ships receive workable payment instructions, how Gulf governments respond and whether insurers continue covering Hormuz voyages. If the announcement produces mainly naval escorts and symbolic enforcement, some of the premium could fade. If it produces interdictions, competing toll demands or additional tanker attacks, $85 may prove a floor rather than a ceiling. — The Gulf builds its detour around HormuzSeven pipeline projects could reroute more than 60% of the oil that once moved through the world’s most vulnerable chokepoint by the end of 2028 — a structural shift that may outlast the war that forced it. The big picture: The Strait of Hormuz has been a war zone for most of 2026. Iran mined and effectively closed the waterway after the February strikes that killed Supreme Leader Ali Khamenei, sending Brent to a peak near $126 a barrel in the largest disruption to world energy supply since the 1970s. The June 17 memorandum that reopened the strait collapsed within three weeks — Iran struck tankers on June 25 and again on July 7, the U.S. answered with roughly 90 strikes and a plan to toll non-Iranian cargoes about 20% (roughly $32 million per supertanker), and daily transits have fallen from 49 ships to about 25. Brent jumped back above $83 this week. Why it matters: Gulf producers have stopped treating the strait’s closure as a tail risk and started treating it as a design constraint. Every barrel of pipeline capacity that reaches the Mediterranean, the Red Sea or the Gulf of Oman is a barrel Iran can no longer hold hostage — and a permanent discount on the geopolitical value of the strait itself. Zoom in: The buildout runs on three axes. In the UAE, the existing Habshan–Fujairah line already moves about 1.5 million barrels a day to the Gulf of Oman, and a second West–East pipeline — roughly half complete and accelerated by Abu Dhabi in May — would double Fujairah’s export capacity to around 3 million barrels a day by 2027. Saudi Arabia is running its East–West Petroline to the Red Sea port of Yanbu near its limits and studying further expansion. And Iraq is the wild card: the $1.5 billion Basra–Haditha line now under construction (2.25–2.5 million barrels a day when complete) would feed revived or proposed routes onward to Turkey’s Ceyhan terminal, Syria’s Baniyas, and Jordan’s Aqaba — the web of lines pointing at the Mediterranean and Red Sea on the map above. Analysts also deem a restart of the long-idle Iraq–Saudi IPSA line to Yanbu feasible. See next item for more on this topic.  By the numbers: Roughly 20 million barrels a day — about a fifth of global consumption — moved through Hormuz before the war, against total bypass capacity of only 8 to 8.5 million barrels a day. Goldman’s analysts think the projects now under construction or in the works close much of that gap: enough to replace more than 45% of pre-war Gulf shipments by the end of 2027 and more than 60% by the end of 2028. History says the timelines are credible — comparable pipelines have taken a median of about 2½ years to build, and crisis-driven projects have moved faster. Petroline itself was born of the Iran–Iraq tanker war. Between the lines: This is why Goldman argues Hormuz traffic may never fully recover, projecting flows settle near 70% of pre-war levels even in peace — and Bloomberg Intelligence sees the strait carrying as little as 7 to 9 million barrels a day long term. The rerouting is redrawing the region’s commercial map along with its physical one: the UAE quit OPEC in April to chase its own export strategy, Kuwait is negotiating with Riyadh and Abu Dhabi for pipeline access and storage in Oman, and ports like Fujairah, Yanbu, Ceyhan and Aqaba are emerging as the new toll booths of Gulf energy. Reality check: Pipelines are insurance, not a substitute. Moving crude overland costs more per barrel than a tanker, several proposed routes cross Syria and other territory with its own security problems, and the projects on paper still leave a third or more of pre-war volumes with no alternative exit. The most exposed players — Kuwait, Qatar and Bahrain — sit entirely inside the chokepoint, and Qatar’s LNG has no pipeline workaround at all. Natural gas, not crude, remains the strait’s true hostage. Bottom line: Whether or not the ceasefire is stitched back together, the money is already committed. The Gulf is building a world in which the Strait of Hormuz still matters — just a lot less than it used to.—Dubai moves to build a trade lifeline beyond HormuzDP World’s Fujairah plan would turn wartime rerouting into permanent capacity Dubai is preparing a permanent hedge against disruption in the Strait of Hormuz. the Financial Times reports exclusively that DP World is in talks to develop both a new multipurpose port in Fujairah and a container terminal at the emirate’s existing harbor. People familiar with the discussions said an initial project could require hundreds of millions of dollars and become operational in as little as 18 months. The plan would not replace Jebel Ali, DP World’s flagship hub and the foundation of Dubai’s rise as a global trade center. Rather, it would give Dubai a second maritime gateway outside the Persian Gulf. Ships could unload on the Gulf of Oman without entering Hormuz, with containers then moved by road or rail to Dubai, Abu Dhabi and other Gulf markets. The urgency became clear when Iranian attacks and restrictions reduced vessel traffic at Jebel Ali by as much as 95%, according to the FT. The UAE has already demonstrated that such a system can work, although at a much smaller scale. During the current disruption, AD Ports Group rerouted cargo through Fujairah and Khor Fakkan, handling more than 54,000 twenty-foot-equivalent units at the eastern ports and moving more than 22,000 containers overland. The emergency network has employed 800 trucks and four daily Etihad Rail services linking the east coast with Jebel Ali, Khalifa Port and Sharjah. The challenge is scale. Jebel Ali provides more than 80 weekly shipping services connecting over 150 ports and has 27 berths across its four terminals, along with an enormous concentration of warehouses, factories, customs services and free-zone businesses. Nearby Khor Fakkan shows that a major east-coast container operation is technically possible — it has six berths, 18 quay cranes and capacity for 5 million TEUs — but neither existing eastern port can fully substitute for Jebel Ali during a prolonged closure. Perspective: The proposal is as much a commercial move as a security project. Gulftainer, DP World’s regional rival, already operates Khor Fakkan and is preparing a dry port of more than 100 hectares at Al Dhaid, connected to the terminal by road and rail. The first phase is expected to cost more than $100 million. Without its own east-coast gateway, DP World risks seeing shipping lines establish permanent alternative networks outside its system. The reported 18-month timetable probably refers to limited initial capacity rather than a fully developed competitor to Jebel Ali. That is an inference based on the scale of the existing hub. A modular terminal at Fujairah’s current harbor could be commissioned relatively quickly, while the greenfield multipurpose port, rail connections, customs facilities, storage areas and supporting logistics parks would likely be developed in phases. The project would reduce concentration risk, but it would not eliminate it. Cargo landed at Fujairah would still depend on inland transport corridors that could become congested, while the eastern coast itself is not beyond the reach of Iranian weapons. Drone strikes hit Fujairah’s energy infrastructure in March, temporarily disrupting some oil-loading activity. For agricultural commodities, food, fertilizer and manufactured goods, the biggest benefit would be continuity rather than lower costs. An eastern port could reduce the need for emergency diversions, expensive air freight and long truck movements from Oman or Saudi Arabia during another Hormuz closure. It could also make the UAE a more important fallback gateway for Qatar, Kuwait and Bahrain, whose principal seaborne routes remain trapped behind the strait. Bottom line: Dubai is no longer treating the Hormuz threat as temporary. Jebel Ali will remain the commercial center of gravity, but Fujairah could become its strategic insurance policy — a second front door to an economy whose existing entrance can be narrowed or closed by conflict. —Pork industry presses USTR to challenge China’s trade barriersNPPC says tariffs and sanitary rules still constrain a critical export market The National Pork Producers Council (NPPC) is urging the Office of the U.S. Trade Representative to confront Chinese tariffs, subsidies and sanitary restrictions that continue to limit U.S. pork exports despite market-access commitments made under the 2020 Phase One trade agreement. In comments to USTR, NPPC argued that several Chinese policies conflict with World Trade Organization rules and international standards. Among them is China’s requirement that all U.S. pork shipments test negative for ractopamine residues, even though the feed additive has a maximum residue limit established by the UN Codex Alimentarius Commission and accepted in many other markets. NPPC also challenged China’s increased inspections and testing of pork from certain U.S. plants following alleged detections of diseases such as porcine reproductive and respiratory syndrome. The group noted that PRRS is endemic in China and that common tests can produce false positives in animals that have been vaccinated. The organization endorsed USTR’s consideration of a government-to-government U.S./China Board of Trade. NPPC said such a mechanism could provide regular talks on market access and use technical committees, similar to those under the U.S.-Mexico-Canada Agreement, to track commitments involving sanitary measures and other non-tariff barriers. The stakes are substantial for U.S. producers. China was the third-largest market by value for U.S. pork in 2025, purchasing nearly $893 million. It also accounted for 59% of U.S. pork variety-meat exports, including feet, heads, stomachs and hearts — products for which the industry has few alternative markets capable of absorbing comparable volumes and value. —USDA sets FY 2027 sugar quotas at WTO minimumRaw access stays flat as specialty-sugar imports remain constrained USDA’s Foreign Agricultural Service established the opening FY 2027 tariff-rate quotas for raw cane and refined sugar at the minimum levels required under U.S. World Trade Organization commitments. The quotas cover Oct. 1, 2026, through Sept. 30, 2027, and allow eligible sugar to enter at the lower, in-quota tariff rate. Link The raw cane sugar TRQ was set at 1,117,195 metric tons raw value, equivalent to about 1.231 million short tons raw value. The refined sugar TRQ was established at 22,000 MTRV, including 20,344 MTRV available for sugars, syrups and molasses and only 1,656 MTRV reserved for specialty sugar. USDA added no discretionary volume to the specialty allocation, which will open on a first-come, first-served basis Oct. 1. The announcement is essentially a continuation of the FY 2026 policy rather than an expansion of low duty import access. USDA also began FY 2026 with a 1,117,195-MTRV raw sugar quota and a 22,000-MTRV refined quota, including the same 1,656-MTRV specialty allotment. By comparison, the FY 2025 refined quota included an additional 210,000 MTRV specifically for specialty sugar. That comparison makes the specialty decision the most consequential part of the announcement. USDA’s Economic Research Service estimated that the absence of additional specialty quota in FY 2026 would push high-tier organic sugar imports to a record 244,000 MTRV, accounting for roughly 80% of U.S. organic sugar supplies. Maintaining the minimum specialty allotment for another year suggests organic food manufacturers and other specialty users could remain heavily dependent on imports paying the much higher over-quota tariff unless USDA later expands access or domestic supplies improve. For the broader sugar market, the initial quota should not create a major new supply shock. USDA’s July 10 supply-and-demand report already projected FY 2026/27 TRQ imports at 1.422 million STRV, unchanged from June. The increase in USDA’s total import forecast—to 3.579 million STRV—came instead from larger expected imports from Mexico and slightly higher high-tier imports. USDA currently projects 1.346 million STRV from Mexico, compared with only 220,000 STRV in 2025/26. USDA’s July balance sheet places 2026/27 ending stocks at 1.697 million STRV and the stocks-to-use ratio at 13.5%, the level around which the U.S.-Mexico sugar suspension agreements generally manage Mexican access. That indicates the WTO quota announced Tuesday was already incorporated into USDA’s market expectations and that Mexico — not an expansion of the WTO quota — is expected to provide most of the additional supply needed to balance the market. The announced volumes are also an opening baseline, not necessarily the final amount that can enter during FY 2027. USDA retains authority to modify raw and refined sugar TRQs later in the year, while the Office of the U.S. Trade Representative will separately allocate the raw quota among eligible supplying countries. USDA increased the FY 2024 raw sugar quota by 125,000 MTRV when additional imports were needed, illustrating the flexibility available if domestic production, refinery requirements or inventories deteriorate. The market implication is mildly supportive for domestic sugar prices because USDA declined to front-load additional low-duty supplies. That benefit could be limited, however, by the sharp projected rebound in Mexican shipments and continued use of high-tier imports. Domestic cane and beet producers gain protection from an early quota expansion, while refiners and specialty users remain more exposed to the cost and availability of Mexican and over-quota sugar.

—Equities today: U.S. Dow opened around 90 points lower while the Nasdaq opened 130 points higher. The June CPI came in cooler than expected — headline prices fell 0.4% on the month (the first monthly decline in six years), taking the annual rate down to 3.5% from 4.2%, while core CPI was flat on the month and eased to 2.6% year-over-year, below the 2.9% forecast. The soft print pared back bets on a quarter-point rate hike at the July 28–29 FOMC meeting, which had climbed to around 43% before the report. That relief on the rate front is supporting rate-sensitive tech, though it hasn’t sparked a broad rally.

Fed Chairman Kevin Warsh delivers his first semiannual monetary policy testimony at 10 a.m. ET. His prepared remarks strike a hawkish-leaning but patient tone: “no tolerance for persistently elevated inflation,” with the funds rate held at 3.50%–3.75% and no signal of an imminent move. Markets will parse the Q&A for any hint on whether the July meeting remains live for a hike despite the cool CPI.

Two crosscurrents temper the upside: escalating U.S.-Iran tensions have pushed oil to four-week highs on Strait of Hormuz risks — a fresh inflation threat — and Q2 bank earnings from JPMorgan, Goldman Sachs, Wells Fargo and Citigroup land this morning, setting the tone for the earnings season.

Bottom line: expect a choppy, mixed open with a modest tech bid, with direction after 10 a.m. hinging on how Warsh handles rate-hike questions in the Q&A.

In Asia, Japan +0.7%. Hong Kong +0.5%. China +1.4%. India -0.7%.
 

In Europe, at midday, London -0.4%. Paris -0.8%. Frankfurt -0.5%.

—Equities yesterday: 

—Precious metals buckle as safe-haven logic turns upside down

Gold’s near-3% slide and silver’s 50% collapse from January’s record show rate expectations, not fear, are driving the metals

The renewed clashes between the U.S. and Iran also rippled through precious metals — but not in the direction textbooks would predict. Gold tumbled nearly 3% to close just under $4,000 per troy ounce, marking its second-largest percentage decline of the year. Silver mirrored the slide, falling 3.6% to $57.634. The metal has now plummeted 50% from its January record of $115.

On its face, the move is a paradox: geopolitical flare-ups are supposed to send investors running toward gold, not away from it. The explanation lies in what the conflict is doing to interest-rate expectations. With Iran claiming the Strait of Hormuz is “effectively closed” and crude prices surging, markets are bracing for a fresh inflation impulse just as the Fed weighs its next move. Hotter energy costs strengthen the case for a higher-for-longer rate stance — and elevated rates raise the opportunity cost of holding metals that pay no interest. In this environment, the safe-haven bid is flowing into the dollar and short-term Treasurys instead, with the U.S. Dollar Index holding above 101. A stronger greenback makes dollar-denominated bullion more expensive for foreign buyers, compounding the pressure.

Silver’s deeper wound reflects its split personality. Unlike gold, roughly half of silver demand is industrial — solar panels, electronics, EVs — so the metal gets hit twice when an oil shock threatens to slow global growth while simultaneously hardening the Fed’s resolve. Add in the speculative froth that carried silver to $115 in January, and the unwind has been brutal: what was a 173% year-over-year gain in mid-May has been cut to under 60%, with leveraged longs forced to liquidate into every leg down.

The near-term test comes today, when June CPI data will show whether the energy spike is bleeding into broader prices. A hot print would cement the higher-for-longer narrative and keep the metals on the defensive; a soft one could revive rate-cut hopes and hand gold back its haven role. Until then, the message from the metals pits is clear — in this conflict, the market fears the Fed more than it fears the missiles.

—Conab nudges Brazil’s record corn crop higher: Corn up 1.2 MMT, Soybeans firm at 180.6 MMT

Safrinha yields outrunning expectations push total grain output to 360.1 MMT, widening the gap with USDA’s Brazilian corn estimate just four days after the July WASDE

Brazil’s crop agency Conab raised its estimate of total 2025/26 grain production to 360.1 million metric tons in its 10th survey released Tuesday, up 1.5 MMT (0.4%) from June and 7.8 MMT (2.2%) above last season — extending what was already the largest harvest in Brazilian history.

The corn number carried the news. Conab pegged total corn production at 141.7 MMT, up about 1.2 MMT from June’s 140.5 MMT, with the entire increase coming from the second (safrinha) crop, now estimated at 109.4 MMT versus 107.9 MMT last month. The raise is notable because it came early: the safrinha harvest was only 18.8% complete at survey time, meaning Conab is seeing enough in early-harvested fields in Mato Grosso and elsewhere to mark yields up with most of the crop still standing. First-crop corn held at 29.6 MMT (up 18.7% on the year), while the small third crop was trimmed to 2.7 MMT. Total corn area rose 3.6% to 22.6 million hectares, offsetting a national yield that is down 3.1% from last year’s exceptional levels.

Soybeans were a fine-tuning story. Conab put the crop at 180.57 MMT, a touch above June’s 180.3 MMT and up 5.3% from 2024/25 — a record by a wide margin, built on 48.6 million hectares (up 2.7%) and a national yield of 3,712 kg/ha. With the soybean harvest long finished, this figure is effectively settled; remaining revisions will be bookkeeping.

Perspective: The report leans bearish for corn. Conab now sits roughly 4 MMT above USDA, which held Brazilian corn at 138 MMT in last Friday’s July WASDE — and the direction of Conab’s revision, made with 80% of the safrinha still unharvested, suggests the risk to that gap is that it widens further before it closes. If early-harvest yields hold up as combines move through Paraná and Mato Grosso do Sul, look for USDA to move toward Conab in the August WASDE. A 141-MMT-plus Brazilian crop means aggressive export competition (Conab has exports near 43 MMT) landing in the second half of the year, exactly when U.S. new-crop corn is being marketed — an added headwind for CBOT corn already digesting big U.S. acreage. On soybeans, Conab and USDA are now essentially converged near 180 MMT, so the number itself is neutral; the market implication is simply confirmation that record Brazilian supplies will keep U.S. export share under pressure into 2027, with Conab projecting Brazilian bean exports around 116 MMT. Bottom line: the report reinforces the big-supply narrative on both crops, with corn the one to watch as safrinha harvest data firms up over the next two surveys.

—Russia moves to reroute grain as Azov Sea disruption deepens

Alternative ports may protect volumes, but costs and delays will rise

Reuters reports that Russia is preparing to redirect grain exports away from the Sea of Azov after Ukrainian attacks disrupted shipping through one of the country’s most important agricultural corridors. Russian Foreign Minister Sergei Lavrov called the attacks on commercial vessels “terrorism,” while the Agriculture Ministry and Russia’s Union of Grain Exporters and Producers insisted that Moscow would meet its foreign supply commitments and protect domestic food availability.

The immediate problem is concentrated at the Sea of Azov’s two exits. Industry sources said vessels could continue moving inside the sea but were unable to enter or leave through the Kerch Strait or the Azov-Don Channel. The restrictions began July 10 following attacks on 13 Russian vessels, including 10 tankers, but Russian agencies have not formally acknowledged imposing the curbs or indicated when normal passage will resume. Reuters described the situation as the most serious disruption to Black Sea grain trade since Russia’s February 2022 invasion of Ukraine.

Russia has the physical capacity to shift at least some cargoes to deepwater terminals at Novorossiysk and other Black Sea locations, where larger ocean-going vessels can be loaded more efficiently. Baltic terminals at Vysotsk, Ust-Luga and Kaliningrad provide another option. But rerouting is not the same as replacing the Azov system without friction. Grain that normally moves from the major producing regions of Rostov and Krasnodar to nearby river and shallow-water terminals may instead require longer rail movements, new terminal reservations and changes in vessel schedules.

The structure of Russia’s export network illustrates the challenge. During the 2023-24 season, more than 90% of Russian maritime grain exports moved through the combined Azov-Black Sea basin, while Baltic ports handled only 2.36%. Baltic loading capacity has expanded since then, but those ports have not historically absorbed anything close to the volume moving through southern Russia. Some alternative Black Sea and Baltic facilities also remain exposed to Ukrainian drone attacks, meaning exporters may be shifting cargoes rather than eliminating the security risk.

Timing provides Russia with a limited cushion. July is normally a slower export month before new-crop grain begins arriving in volume, and SovEcon had projected Russian grain shipments at about 2.3 million metric tons in July, down from 2.7 million in June and well below the more than 5 million tons shipped during peak months. The delayed start to harvesting also gave exporters roughly 10 days to reorganize some flows before larger supplies reach southern ports.

That cushion will disappear quickly if restrictions extend into August or September. SovEcon expects Russia to export 46.5 million metric tons of wheat and 56.1 million tons of total grain during the 2026-27 marketing year. Moving that volume requires reliable access to southern terminals, particularly when harvest deliveries accelerate. A short closure can be managed through inventories, scheduling changes and higher use of deepwater ports. A closure lasting several weeks would begin producing vessel backlogs, rail congestion and higher freight, insurance and transshipment costs.

The price consequences could run in opposite directions inside and outside Russia. Euronext wheat initially rose as much as 4% to a six-week high after news of the restrictions emerged, reflecting the risk that less Russian wheat would reach world markets. Within Russia, however, prolonged export delays could pressure farmgate prices as grain accumulates in Rostov, Krasnodar and other southern producing areas. Black Sea analyst Andrey Sizov said an extended closure could lift futures and export prices while depressing Russian domestic grain and sunflower prices.

Lavrov’s criticism also highlights the dispute over the status of the targeted vessels. Ukraine contends that many tankers and other ships operating around Crimea and the Sea of Azov supply Russian forces, move sanctioned fuel or support Moscow’s wartime economy. Russia describes them as civilian commercial vessels. Regardless of their legal status, attacks near the Kerch Strait raise the perceived risk for grain carriers, crews, insurers and shipowners that are not directly involved in moving military supplies. Meanwhile, Russia’s continuing attacks on Ukrainian ports and vessels have threatened Ukraine’s own grain shipments, making commercial shipping an increasingly prominent battlefield for both sides.

The restrictions threaten to impede roughly 25% of Russia’s grain trade, creating a significant logistical challenge during a period when exporters are seeking to move newly harvested supplies. Moving additional grain to deepwater terminals will require more rail cars, trucks, fuel and storage capacity. Limited domestic gasoline and diesel supplies could further increase transportation costs, while shortages of rail equipment or trucks could constrain how much grain can realistically be shifted.

Ocean freight insurance costs are also rising as the Black Sea becomes more dangerous for commercial shipping. Both Russia and Ukraine appear increasingly willing to target port facilities and maritime infrastructure as part of their broader effort to weaken the other side’s economy. Russia’s recent attacks on Ukraine’s Odesa port reportedly damaged important grain storage and loadout capacity, while Ukrainian strikes have added uncertainty around Russian-controlled shipping routes.

The immediate impact may be slower vessel loading, higher freight premiums and greater uncertainty over delivery schedules rather than a complete halt in Black Sea grain exports. But if the restrictions persist, Russia may struggle to move grain quickly enough to prevent congestion at inland elevators and export terminals. That could widen the gap between domestic Russian grain prices and international offers even as FOB values remain elevated.

Analysts say Russia therefore can probably meet its near-term export commitments if the restrictions prove temporary. Moscow’s claim that overall volumes will be unaffected becomes less convincing if the Kerch Strait remains effectively closed, alternative ports become congested or Ukrainian attacks spread to additional export terminals. The key market signals will be the reopening of Kerch Strait passage, the pace of loadings at Novorossiysk, changes in Black Sea freight and insurance rates, and whether southern Russian wheat prices begin weakening relative to export values. Until those indicators normalize, the Azov disruption will continue to add a geopolitical premium to global wheat prices even if actual Russian export losses remain limited.

—European grains slip on friendlier weather outlook as Russian wheat offers surge

Paris wheat and corn ease on cooler, wetter forecasts, but a sharp rally in Russian FOB values signals tightening Black Sea supplies at the start of the new export season

European grain futures traded lower Tuesday as weather models trended more favorable, while cash wheat values out of Russia moved sharply in the opposite direction — a divergence that bears close watching as the 2026-27 Black Sea export campaign gets underway.

• Paris wheat: September milling wheat on Euronext settled down €1.00/MT at €213.75 — roughly $243.30/MT at current exchange rates, or about $6.62 per bushel (down about 3 cents). Paris corn: August corn fell €1.75/MT to €237.50, equivalent to about $270.30/MT or $6.87 per bushel (down about 5 cents). Pressure on both contracts came from forecasts calling for improved shower chances and cooler temperatures across Europe next week, easing crop-stress concerns for corn moving through its critical reproductive window and taking some weather premium out of the market.

•Russian wheat: The standout move was in the Black Sea cash market. Russian FOB offers for August shipment jumped to $238/MT, with 12.5%-protein wheat for August/September shipment basis Novorossiysk said to be offered at $238-240/MT — a sharp rally in recent days. That works out to roughly $6.48-$6.53 per bushel and puts Russian offers near parity with (even slightly above) the Paris September contract in dollar terms, an unusual posture for the world’s price-setting origin, which typically undercuts European values to win business.

• Palm oil: In the vegoil complex, Malaysian August palm oil futures rallied 36 ringgits to close at 4,529 RM/MT — about $1,108/MT, or roughly 50 cents per pound — lending support to global vegetable oil values.

Perspective: The message from Tuesday’s action is that futures and cash are telling two different stories. Futures markets are trading the weather — cooler, wetter European forecasts trimmed risk premium. But the cash market is trading availability, and surging Russian FOB values suggest exportable supplies from the world’s top wheat shipper are tighter than the futures board implies, whether from slow farmer selling at harvest, a smaller-than-hoped new crop, or firm early-season demand. If Russian offers hold at $238-240, they effectively put a floor under world wheat values and improve the competitive position of other origins — including U.S. wheat — into fall tenders. A weather-driven dip in futures against a firming cash backdrop is typically a correction, not a trend change. Watch whether importers step in at these Russian levels or wait buyers out; that will determine if this rally has legs.

—Grain futures ease overnight as recent rally pauses

Corn, soybeans and wheat retreat while soyoil holds firm

Grain and soybean futures traded mostly lower overnight, suggesting markets are consolidating after the recent weather-driven advance. September corn fell 5 1/2 cents to $4.35 1/2, August soybeans slipped 4 1/4 cents to $11.92 1/2 and the wheat markets posted modest losses. September soft red winter wheat declined 2 3/4 cents to $6.32 1/2, while September hard red winter wheat eased 2 cents to $6.64 1/4.

The corn pullback was the most pronounced move among the major contracts, but the decline remains relatively modest compared with the gains generated by recent concerns about heat and dryness across portions of the Corn Belt. Overnight weakness appears more consistent with profit-taking and position adjustment than a decisive change in the weather-market narrative. Forecast changes will remain the primary driver, and even small shifts in expected rainfall coverage or temperatures could produce sharp intraday swings.

Soybeans also softened, with August futures down 4 1/4 cents. August soybean meal declined $1.90 to $315.30 per ton, while August soybean oil gained 18 points to 73.00 cents per pound. The divergence within the soy complex indicates that vegetable oil demand and broader energy-market strength continue to support soyoil, while meal and whole beans encounter some corrective pressure. Firm soyoil prices may help limit deeper soybean losses, particularly as traders continue assessing crop-weather risks and potential export demand.

Wheat futures were modestly lower but remained comparatively resilient. September Kansas City hard red winter wheat maintained a premium of nearly 32 cents over Chicago soft red winter wheat, reflecting stronger underlying support in the higher-protein wheat market. However, without a fresh supply disruption or renewed export demand, wheat may continue to follow corn and broader commodity-market direction.

Overall, the overnight trade represents a cautious retreat rather than a broad liquidation. Weather forecasts, midday model updates and the market’s ability to hold recent technical gains will determine whether the losses deepen or buyers return during the daytime session.

—Ag markets Mon., July 13:Weather premium lifts corn and soybeans as wheat markets retreat

Hotter Midwest forecasts spark buying, but late profit taking caps gains

Weather concerns remained the dominant force in agricultural markets Monday, July 13, as hotter and drier forecasts for the Corn Belt encouraged fund short covering and fresh speculative buying in corn and soybeans. Early rallies pushed several contracts to multi-week highs, but profit taking ahead of the close left prices well below their session peaks and underscored the heightened volatility likely to define trading in the coming weeks.

• December corn rose 2 1/4 cents to $4.63 1/4 after reaching a five-week high early in the session. The market extended Friday’s strong advance as traders added weather premium amid expectations that a strengthening ridge will reduce rainfall and increase temperatures across important western and northern production areas.

The concern is not simply daytime heat. Persistently warm nighttime temperatures can increase plant respiration and limit recovery during pollination and early grain fill. With much of the crop entering its most yield-sensitive period, each weather-model update now has the potential to trigger sharp price swings.

Still, corn’s retreat from its high showed that traders are not yet prepared to price in a major production loss. National crop conditions remain relatively strong, and forecasts still indicate opportunities for showers in portions of the eastern Corn Belt. The market is shifting away from trading current conditions and toward estimating how long the heat and dryness will persist.

•November soybeans gained 4 cents to $11.94 3/4 after touching a seven-week high. Soybeans benefited from the same Midwest weather concerns as corn, while reported Chinese purchases of U.S. supplies added a demand component to the rally.

Soybean weather risk generally becomes more important during August pod setting and filling, but the recent forecast shift has made traders less comfortable maintaining large bearish positions. Continued Chinese buying would strengthen the market’s ability to hold a weather premium, particularly if importers begin securing larger volumes of new-crop soybeans.

The strongest move in the soy complex came in soybean oil. September soybean oil surged 223 points to 72.15 cents and reached a four-week high, while September soybean meal fell $3.20 to $314.00. The divergence reflected aggressive spread trading, with market participants buying soybean oil and selling meal.

Firm energy markets likely added support to soybean oil because of its connection to renewable diesel and biofuel demand. The oil-share rally suggests traders see greater near-term value in soybean oil than meal, although such a rapid move also increases the risk of corrective selling.

• Winter wheat markets moved in the opposite direction after reaching six-week highs early in the session. September soft red winter wheat fell 5 cents to $6.35 1/4, while September hard red winter wheat dropped 10 cents to $6.66 1/4. September spring wheat edged 3/4 cent higher to $6.53 1/4.

The declines in winter wheat appeared to be primarily corrective, with shorter-term traders taking profits following the recent rally. Weekly U.S. wheat export inspections totaled 373,611 metric tons for the week ended July 9, up 226,787 tons from the previous week. The improvement was supportive but not strong enough to prevent selling after the market’s recent gains.

Wheat also faces more immediate harvest pressure than corn and soybeans. As the winter wheat harvest advances, fresh supplies are entering commercial channels, making it more difficult for futures to sustain rallies without stronger export demand or a renewed global supply concern.

• December cotton slipped 3 points to 81.51 cents after reaching a seven-week high earlier in the day. Mild profit taking and a firmer U.S. dollar limited the market, although losses were contained by strength in crude oil and the broader row-crop complex.

Cotton remains caught between improving technical momentum and uncertain demand. Higher grain prices can provide indirect support by affecting future acreage competition, while stronger crude oil can make petroleum-based synthetic fibers relatively more expensive. However, a rising dollar makes U.S. cotton less competitive in export markets and could limit rallies unless global textile demand strengthens.

• Livestock futures were mixed to weaker. August live cattle fell 47.5 cents to $234.725, and August feeder cattle declined 25 cents to $354.35. Both markets attracted short covering and bargain buying for much of the session after Friday’s losses pushed prices to multi-week lows, but neither was able to sustain the rebound.

The underlying cattle supply outlook remains historically tight, but exceptionally high futures and cash prices have made the markets increasingly sensitive to concerns about beef demand, packer margins and consumer resistance. Feeder cattle also remain vulnerable to changes in corn prices because rising feed costs can pressure expected feedlot returns.

August lean hog futures declined 90 cents to $98.10 after reaching a six-week high early in the session. The setback appeared to be routine profit taking rather than a decisive change in trend. Seasonal demand tied to bacon, lettuce and tomato sandwich consumption continues to support wholesale pork values, and the futures market’s daily chart remains in an upward trend.

The broader message from Monday’s trade is that agricultural markets have entered a more volatile phase. Corn and soybeans are beginning to carry a meaningful weather premium, but traders remain reluctant to chase rallies without clearer evidence of sustained crop stress. Wheat is struggling to balance improving export activity against harvest pressure, while cotton and livestock markets are taking directional cues from energy prices, currencies, feed costs and consumer demand.

For corn and soybeans, weather forecasts will remain the primary price driver. Any extension of the hot, dry pattern could generate additional short covering and speculative buying. Conversely, a wetter forecast could quickly remove part of the newly established premium. Monday’s retreat from early highs was a reminder that weather markets rarely move in a straight line.

—When should a loss be a loss? Economists say the crop safety net now pads profits, not just losses

A 50-year look at nine major crops finds the safety net flipped in 2007 from offsetting market losses to guaranteeing sector-wide profitability — raising pointed questions ahead of the next farm policy debate

A new analysis (link) in farmdoc daily (July 13, 2026, Gardner Policy Series) by Carl Zulauf of Ohio State University and Henrique Monaco and Gary Schnitkey of the University of Illinois argues that the central unresolved question in U.S. crop policy is deceptively simple: when should a loss actually be a loss? Examining 1975–2025 returns for the nine crops for which USDA computes a cost of production — barley, corn, cotton, oats, peanuts, rice, soybeans, and wheat among them — the authors find the private market has never covered full economic production costs over that half century, posting a cumulative $226 billion deficit. Yet safety net payments of $521 billion more than erased those losses, leaving the sector with a $295 billion cumulative net gain. The pivot point is 2007: before that crop year, the safety net offset most but not all market losses; since then, it has covered every cumulative loss and added profit on top, even during loss periods.

The numbers behind that shift are striking. From 1975 to 2006, the safety net offset 88 percent of cumulative market losses — farmers still absorbed some pain. Since 2007, the pattern inverted. During the multiyear loss periods of 2014–2020 and 2023–2025, safety net payments not only covered market losses but generated net sector profits. More provocatively, payments added 70 percent and 41 percent to market profits during the profit periods of 2007–2013 and 2021–2022. The authors attribute the change to the growth of crop insurance and ad hoc payments, which flow even in prosperous years. Their data note underscores the point: the 2025 crop year alone includes $9.6 billion in ad hoc Farmer Bridge Assistance, $2.2 billion in net insurance indemnities, and an estimated $13.3 billion in commodity program payments.

The analytical heart of the piece is its multiyear framing. Because no farmer plans to farm for a single year, and because field crop agriculture moves in multiyear runs of profits and losses (1981–2006, 2014–2020, and 2023–2025 were loss eras), the authors argue policy should be evaluated — and designed — on a multiyear horizon rather than the current annual orientation. They also raise an economic warning that will resonate with farm bill skeptics: payments above market losses get capitalized into input prices, land values, and rents, making input suppliers, landowners, insurers, and lenders stakeholders in preserving and expanding the safety net — and raising the very cost of production the programs are measured against. Their two framing questions — what share of sector losses should the safety net cover, and is profit enhancement its intended outcome — are aimed squarely at the fairness and efficiency of payments made in profitable years.

Is the viewpoint balanced on regional differences? Only partly — and the authors admit it

Judged on its own terms, this is careful, transparent work: the methods are documented, the countercyclical history is presented fairly, and the authors flag their own key limitation in the final sentence, conceding that safety net impacts “will likely vary across crops and regions, topics for future exploration.” But that concession matters more than its one-line treatment suggests. The entire analysis is a national sector aggregate, and aggregates conceal exactly the heterogeneity that drives farm bill politics. A cumulative sector “profit” is fully compatible with sustained, uncovered losses for wheat growers in the drought-prone Plains or cotton producers in Texas, offset in the national ledger by strong Corn Belt returns. Conversely, the “supercharged profits” the authors criticize are not evenly spread: commodity program payments tied to reference prices flow disproportionately to Southern crops like rice, peanuts, and seed cotton, while crop insurance experience differs sharply between low-loss-ratio Corn Belt counties and high-risk Plains and Southern regions. Ad hoc programs have had their own well-documented regional and crop skews. There is also an institutional lens to note: farmdoc is a University of Illinois product, and a sector-level cost-of-production framework — built on USDA national averages that include opportunity costs for owned land and family labor — tends to reflect the economics of large Midwestern cash grain operations better than those of Southern or Western specialty and program-crop agriculture.

None of this makes the piece unbalanced in intent; it is candid about its scope and asks the right structural questions. But readers should treat its headline finding — that the safety net now guarantees sector profitability — as a national average, not a description of every region’s reality. The policy question the authors pose (“when should a loss be a loss?”) will ultimately be answered crop by crop and region by region in the reference-price and insurance-subsidy fights of the next farm bill, and this analysis, by its own admission, has not yet done that regional accounting. Its strongest contribution stands regardless: the burden of proof has shifted to defenders of programs that pay out in years when the sector, taken as a whole, is already profitable.

— New World screwworm reaches 35 confirmed U.S. cases

The flesh-eating parasite has spread across two states and 20-plus Texas counties since June — but the pace of new detections has cooled sharply in July.
 

Updated July 14, 2026   ·   U.S. figures current through USDA’s July 12 confirmation   ·   Regional totals per CDC (June 23)

As of July 14, 2026, the United States has recorded 35 confirmed cases of New World screwworm (NWS), all in domestic animals, since the parasite’s first U.S. detection on June 3. Of these, 19 remain active and 16 have been resolved. Thirty-four of the cases are in Texas and one is in New Mexico. No human or wildlife infections have been confirmed in the U.S.

The trend

After a fast-moving June that produced roughly 30 detections in a month, the outbreak’s growth has slowed markedly. Only four new cases have been confirmed in the first two weeks of July — three in Crockett County and one in Brewster County — versus the 15 cases added between June 22 and July 2 alone. Officials caution that a slower detection rate is not the same as containment: the flat July curve may reflect intensified surveillance and animal-movement restrictions taking hold, but the screwworm’s summer breeding season runs for months yet.
 

Cumulative confirmed U.S. cases, June 3 – July 12, 2026

Source: USDA APHIS confirmation notices and situation trackers.

Where it is concentrated

The outbreak remains tightly clustered in a containment zone across southern and western Texas. Crockett County alone accounts for 11 cases — nearly a third of the national total and almost double the next-hardest-hit county. Cattle make up the majority of infections, followed by sheep and goats; two dogs have also been infected, including the single New Mexico case in Lea County. Movement restrictions on warm-blooded animals are in force across more than 20 designated Texas counties.

Cases by animal type (U.S. total, n = 35)

Hardest-hit counties

Detailed case table

U.S. New World screwworm cases as of July 14, 2026

The bigger picture & the response

The U.S. cases are the leading edge of a far larger regional outbreak. The CDC reports that Central American countries and Mexico have together logged more than 185,000 animal cases and 2,175 human cases. Mexico alone had recorded roughly 1,944 cases by late June, dozens of them within 100 miles of the U.S. border — the pipeline feeding northward spread.

The primary weapon remains the sterile insect technique, which releases sterilized male flies to collapse the wild population over successive generations. Mexico opened a new sterile-fly production facility on June 27 — backed by a $21 million U.S. investment — that is scaling toward 100 million flies per week by year’s end. In parallel, U.S. researchers are fast-tracking newer genetic and control methods to shorten the road to eradication. Whether the July slowdown becomes a durable plateau will depend on how quickly that sterile-fly capacity can be brought to bear over the peak summer season.

—Tariff refunds surge past $86 billion as Treasury payouts accelerate

Nearly three-quarters of the $166 billion pool is now in the pipeline

U.S. Customs and Border Protection’s tariff-refund operation accelerated sharply in early July, moving another $15.2 billion toward importers in less than two weeks. In a July 13 filing with the U.S. Court of International Trade, CBP reported that, as of July 10, its Consolidated Administration and Processing of Entries system had accepted $121.75 billion in potential and certified refunds, with approximately $86.3 billion certified and transmitted to the Treasury Department for disbursement. The comparable June 29 figures were $104.29 billion accepted and $71.06 billion sent to Treasury.

The numbers show that about 73% of the estimated $166 billion in tariffs subject to repayment has entered the CAPE pipeline, while roughly 52% has been sent to Treasury. That leaves approximately $35.45 billion in accepted claims that have not yet been transmitted for payment and another $44.25 billion that has not been accepted into the system. Because interest is being paid on eligible refunds, the government’s ultimate cost will exceed the original $166 billion in duties collected.

The refunds stem from the Supreme Court’s Feb. 20 ruling that the International Emergency Economic Powers Act does not authorize a president to impose tariffs. The Court of International Trade subsequently directed CBP to liquidate or reliquidate affected entries without the unlawful IEEPA duties, including entries whose liquidation had become final. CBP launched CAPE on April 20 to automate a repayment process covering roughly 53 million import entries and hundreds of thousands of importers. CBP says valid claims generally should be paid within 60 to 90 days after acceptance.

The fiscal consequences are already visible. Treasury issued $49.2 billion in tariff refunds during June after returning $22 billion in May. June refunds exceeded the month’s $23.6 billion in gross customs collections, producing a net customs outflow of $25.6 billion and contributing to a $120 billion federal budget deficit. The reversal is especially striking because June 2025 produced a $27 billion surplus, although fiscal year-to-date net customs receipts remained above the prior-year level.

Economically, the repayments function more like the return of an overpaid tax than a new government stimulus program. Companies that absorbed the tariffs can use the money to rebuild margins, reduce debt, replenish inventories or restart capital spending. Importers that passed most of the duties to customers may instead gain room to lower prices, offer promotions or retain part of the refund as an earnings benefit. The overall impact on inflation and economic activity will therefore depend heavily on how much of the original tariff cost companies absorbed and whether the recipients had been constrained by limited cash or credit.

The remaining refunds are likely to be more difficult than the first $86.3 billion. CAPE’s early phases concentrated on unliquidated entries and entries whose liquidation could still be reopened administratively. Later phases must address reconciliation entries, older transactions and “finally liquidated” entries that CBP says may require an importer-specific court order. The Justice Department is appealing the trade court’s authority to require refunds for importers that were not plaintiffs, leaving more than $30 billion in potentially affected older entries exposed to continuing litigation.

That distinction is crucial. The Supreme Court has settled the underlying question of whether the IEEPA tariffs were lawful, but the courts have not fully resolved how broadly refunds must be distributed or whether every importer can recover without filing an individual lawsuit. The government’s current position is that CAPE’s planned third phase would process finally liquidated entries only for importers that have filed cases with the Court of International Trade. The increasing volume of litigation prompted the court on July 13 to establish new administrative procedures for IEEPA tariff cases.

Bottom line: the refund program has shifted from a slow portal rollout into a mass cash-disbursement operation. The $86.3 billion sent to Treasury represents substantial progress, but nearly $80 billion of the original tariff pool has yet to reach that stage. As the easiest claims are cleared, the pace will increasingly depend on litigation, data corrections and the treatment of older entries. Meanwhile, the repayments will continue to depress reported customs revenue and enlarge near-term federal deficits, reversing a significant portion of the tariff receipts previously counted as a central fiscal benefit of the administration’s trade policy.

—China’s trade surplus swells to $125.6 billion as AI boom powers record exports

Second-largest monthly surplus on record deepens trade friction with Washington and Brussels — even as a five-year-high import surge hints at rebalancing, and U.S. farm sales still lag the promises of the May trade deal
 

China posted a $125.62 billion trade surplus in June, the second-largest monthly surplus ever recorded, up from $113.84 billion a year earlier and well above the $121 billion consensus forecast. But the headline number understates how unusual this report was: both sides of the ledger blew past expectations at once. Exports surged 27% year-over-year to a record $412.39 billion — the strongest reading in four months and far above the 18.2% economists expected — while imports jumped 36%, the fastest pace in five years, to an all-time high of $286.76 billion.

The common thread on both sides is artificial intelligence. Soaring chip prices and relentless global demand for AI data center hardware are pulling semiconductors, servers and components through China’s factories at record volume. The country shipped some 32 billion integrated circuits in June, while imports of chips and equipment from South Korea leaped 85% and from Taiwan 41% — the raw material of an export machine running hot. Car exports topped one million units in a single month for the first time. Some of the strength also reflects front-loading: U.S. retailers reportedly moved orders forward four to six weeks ahead of anticipated tariff changes.
 

The bilateral fault lines: Washington and Brussels
 

China’s surplus with the United States rose to $28.9 billion in June from $26.02 billion in May — politically sensitive but, notably, no longer the epicenter of the story. Eight years of U.S. tariffs have not shrunk China’s overall surplus; they have redirected it. The surplus with the European Union widened 27% year-over-year to a record $32.9 billion — now larger than the U.S. gap — and the surplus with Germany, Europe’s manufacturing anchor, more than doubled from a year earlier.

That redirection is turning Europe into the new front of the trade conflict. French President Emmanuel Macron has warned openly of a European “China shock,” and G7 leaders at their June summit flagged global imbalances that have “persisted and widened.” The European Commission is preparing economic-security tools for September, and analysts at the Atlantic Council say Brussels is edging toward its own version of the U.S. Section 301 statute — a unilateral tariff mechanism aimed at subsidized overcapacity. Peterson Institute economist Maurice Obstfeld has cautioned that without export restraint, China risks triggering “a protectionist wave against Chinese imports worldwide.”
 

The import surge: rebalancing, or just more inputs?
 

The 36% import jump is the most intriguing number in the report, and the first-half data show why it matters. Through June, China’s cumulative surplus of $575.98 billion actually ran below last year’s $586 billion, because imports (up 26.6%) grew faster than exports (up 17.6%). At first glance that looks like the rebalancing Washington and Brussels have demanded for years. The composition, however, argues for caution: much of the import strength is chips and equipment feeding the AI export complex — intermediate goods that will leave the country again as finished exports — rather than a revival of Chinese consumer demand. Crude oil imports fell to their lowest level since 2016, and retail sales remain flat, fixed-asset investment has turned negative, and second-quarter GDP growth is tracking near 4.5%. Gavekal Dragonomics estimates exports now equal roughly 24% of China’s manufacturing sales — the highest share since it joined the WTO in 2001. China is not consuming more of the world’s goods; it is processing more of them.
 

The agriculture angle
 

For U.S. agriculture, the June data land against the backdrop of the May Trump/Xi summit deal, under which the White House says Beijing committed to at least $17 billion in annual U.S. farm purchases and at least 25 million tonnes of soybeans per year through 2028 — figures Beijing has never publicly confirmed. Through May, China had taken about 8.3 million tonnes of U.S. soybeans, all through state-owned buyers filling government commitments, while private Chinese crushers continue to favor South American origin. With the recent rally putting U.S. beans 50 to 60 cents above Brazilian and Argentine offers, purchases remain well below pre-trade-war norms — a reminder that China’s record import bill is being spent on chips, not commodities from the American heartland. A widening bilateral surplus alongside underwhelming ag purchases hands ammunition to those in Washington arguing the deal needs teeth.
 

What to watch
 

Three things bear watching from here. First, whether the EU follows through in September with a Section 301-style instrument, which would open a second major tariff front against Chinese goods and could push even more exports toward Asia and the Global South. Second, whether the U.S./China truce holds as the monthly bilateral surplus grinds higher and agricultural purchases disappoint. Third, whether the AI hardware cycle — now carrying China’s $20 trillion economy almost single-handedly while domestic demand stalls — can sustain this pace into the second half. The Economist Intelligence Unit’s Xu Tianchen sees continued export strength pointing “to a better second half,” but an economy this dependent on one global capex boom, and this exposed to protectionist retaliation on two continents, is running with little margin for error.

—Graham’s sister named interim senator as GOP scramble begins

Appointment restores GOP’s 53-seat majority ahead of an Aug. 11 primary

South Carolina Gov. Henry McMaster (R) has appointed Darline Graham Nordone to complete the Senate term of her brother, the late Sen. Lindsey Graham (R-S.C.). Nordone, who will become the first woman to represent South Carolina in the Senate, is expected to be sworn in Tuesday and will serve until Graham’s current term expires Jan. 3, 2027. She said accepting the appointment was a way to honor her brother and continue some of the work he left unfinished.

The appointment restores the Senate’s nominal Republican majority to 53-47 following Graham’s death. In practice, however, Republicans are operating with 52 available senators because Sen. Mitch McConnell (R-Ky.) remains in rehabilitation after suffering a fall and developing pneumonia. McConnell said Sunday that doctors have not yet cleared him to return to the Senate floor.

Nordone’s decision not to seek the seat gives McMaster a temporary successor who carries Graham’s name and personal legacy without receiving the political advantage of incumbency in the coming election. That should reduce accusations that the governor used the vacancy to favor one faction in what is expected to become a crowded and potentially divisive Republican contest.

Candidate filing will run from July 21 through July 28, followed by a special Republican primary Aug. 11. A runoff would be held Aug. 25 if no candidate receives a majority. The eventual nominee will face Democratic nominee Annie Andrews in the Nov. 3 general election. Given South Carolina’s Republican lean, the compressed GOP primary may effectively determine Graham’s long-term successor, even though the winner must still navigate a general election campaign lasting barely two months.

The timetable could also produce legal and logistical questions because federal law generally requires military and overseas ballots to be distributed at least 45 days before a federal election. South Carolina’s statutorily required special-primary schedule cannot meet that standard, potentially requiring state officials or the courts to devise an accommodation.

— NWS outlook: Anomalous heat and humidity continue across the northern Plains/upper Midwest while spreading into the Northeast today, and reaching into the Mid-Atlantic on Wednesday… …Significant heavy rainfall likely from the Hill Country to the Big Bend regions of Texas… …Monsoonal showers and thunderstorms develop across the interior  western U.S… …Severe thunderstorms possible today across northern New England.

—Heat dome deepens crop stress across western Corn Belt

Eastern Corn Belt rains offer only limited relief as Plains heat intensifies

A powerful high-pressure ridge over the north-central Corn Belt is creating a sharply divided weather pattern, with the western Corn Belt and Plains remaining largely dry through the end of the week while rain chances improve farther east. The combination of persistent dryness, intense heat and rapid moisture loss is expected to increase crop stress and could pull national corn and soybean condition ratings lower for the week ending July 19.

The eastern Corn Belt has the best chance for relief. Deep moisture pushing northward against a weakening ridge is forecast to produce scattered heavy rainfall from Thursday through Saturday, with localized totals exceeding 0.5 inch. Coverage is unlikely to be uniform, however, leaving some areas vulnerable to continued moisture stress.

Conditions will be more severe across the northern Plains, where temperatures above 100°F will sharply increase evaporation and further pressure spring wheat. Some moderation is expected late in the weekend as temperatures move closer to normal and ridge-rider thunderstorms become possible.

The hard red winter wheat belt will remain dry through the next seven days, with more meaningful rain chances delayed until the 11- to 15-day period. Meanwhile, the Mid-South and Southeast are expected to receive their best rainfall during the near-term and again late in the outlook, accompanied by a broader cooling trend during the second week.