War Premium Returns to World Grain Trade as Black Sea Chokepoints Tighten

EPA SRE decisions to put soyoil demand expectations on the line | China continues to buy U.S. soybeans
 

Link: Ukraine’s Strike on Taman Knocks Out a Pillar of Russia’s Grain Export Machine
Link: The $30 Billion Problem: Farm Bill Funding Meets Its Limit

Link: Black Sea Goes Dark: Port War Halts Grain Trade at Peak of Harvest

Link: California Finally to Write the Rules for E15 — But the Pump is Still a Long Way Off
Link: Divided Fed Holds at 3.50%–3.75% as Warsh Warns He ‘Will Not Hesitate’ on Inflation
Link: Breakthrough in Fort Morgan: Cargill, Teamsters Reach Tentative Deal to End 70-Day Lockout

Link: Video: Wiesemeyer’s Perspectives, July 26
Video show is now on You Tube,Spotify & Apple
Link: Audio: Wiesemeyer’s Perspectives, July 26


UP FRONT

■  TOP STORIES

— Brent tops $92 before declining as Iran war reopens a two-chokepoint oil crisis: Renewed U.S. strikes, falling inventories and threats to Hormuz and the Red Sea kept a substantial geopolitical premium in crude oil.

— EPA SRE decisions to put soyoil demand expectations on the line: Rulings involving HF Sinclair and Delek could signal how broadly EPA will grant refinery waivers and influence RIN and soyoil prices.

■  FINANCIAL MARKETS

— Equities today: Global stocks attempted to rebound on encouraging technology earnings, but rising long-term Treasury yields continued to tighten financial conditions.

— Equities yesterday: The Dow fell 2.19%, the Nasdaq dropped 1.74% and the S&P 500 declined 1.52% on July 29.

— Bond market tightens as divided Fed holds rates steady: The 30-year Treasury yield topped 5.2% as three Fed officials favored a rate hike and markets increased bets on September tightening.

— Core PCE inflation cools as consumer spending remains resilient: June core inflation slowed slightly more than expected while consumer spending continued to expand.

■  AG MARKETS

— USDA daily export sale: USDA reported a sale of 132,000 metric tons of soybeans to China for 2026-27 delivery.

— More U.S. soybean sales to China confirmed beyond daily sales: Weekly data lifted confirmed Chinese commitments for 2026-27 U.S. soybeans to more than 3 million metric tons.

— Black Sea disruptions ignite wheat rally; corn, soybeans stabilize: Wheat surged on worsening export disruptions, while favorable Midwest weather limited rebounds in corn and soybeans.

— War premium returns to the world grain trade as Black Sea chokepoints tighten: European and Russian wheat prices rose as attacks and shipping restrictions threatened peak-season Black Sea exports.

— Ag markets Wed., July 29: Chart breaks deepen grain selloff as better rain forecasts spur liquidation: Improving crop weather initiated selling, while breached technical support accelerated losses in corn, soybeans, cotton and hogs.

■  SCREWWORM

— USDA adds $25 million Arizona fly hub as Mexican cattle trade resumes: A planned Douglas dispersal facility will strengthen western-border defenses as USDA prepares to reopen cattle imports.

— Screwworm’s active U.S. footprint shrinks again as total holds at 42: Active infestations fell to eight across five Texas counties, with no wildlife or fly-trap detections reported.

— Reopening Mexican cattle trade reflects a changed screwworm risk: With the pest already present domestically, the economic case for maintaining a complete cattle-import ban has weakened.

— Screwworm response working, but sterile-fly supply remains the test: NCBA’s Colin Woodall said containment efforts are functioning, but lasting success depends on rapidly expanding sterile-fly production.

■  TRADE POLICY

— Commerce finalizes Spanish olive subsidy rates: Final countervailing duties of up to 25.21% extend the long-running U.S./EU dispute over Spanish agricultural subsidies.

■  TRANSPORTATION & LOGISTICS

— BNSF warns UP/Norfolk Southern merger would raise freight rates: BNSF argues the proposed transcontinental railroad would weaken competition and raise costs for agricultural and other captive shippers.

■  WEATHER

— NWS outlook: Flash flooding and severe storms threaten several regions while dangerous heat persists across the South and expands westward.

— Corn Belt rain offers timely yield support as southern Plains bake: Beneficial Midwest rainfall could stabilize corn and soybean yields, while extreme heat and drought intensify Southern Plains crop and livestock stress.

■  TOP STORIES

—Brent tops $92 before declining as Iran war reopens a two-chokepoint oil crisis

Fresh U.S. strikes, shrinking stocks and Saudi involvement lift supply risk

Brent crude briefly climbed above $92 per barrel Thursday, extending Wednesday’s nearly 8% rally as renewed U.S. attacks on Iran shattered hopes that this week’s diplomatic opening would produce a durable pause in the fighting. However, prices then went slightly negative to around $89. The latest strikes targeted dozens of Islamic Revolutionary Guard Corps command centers and drone facilities after Iran fired ballistic missiles at U.S. forces across the Middle East.

The oil market is responding to more than another exchange of missiles. The conflict is evolving into a contest over two of the world’s most important energy corridors: the Strait of Hormuz and the Bab el-Mandeb gateway to the Red Sea.

Hormuz normally carries roughly one-fifth of global oil and natural gas flows. Iran continues to insist that it control passage through the strait, granting permission to individual vessels rather than accepting an international or jointly managed shipping arrangement. A Qatari liquefied natural gas tanker was allowed through this week, showing that the waterway is not completely closed. But selective passage leaves shippers, insurers and energy buyers dependent on decisions made by Tehran.

Meanwhile, Iran-backed Houthi forces in Yemen have declared a naval blockade of Saudi Arabia and are considering charging commercial vessels to transit the southern Red Sea. That threatens Saudi Arabia’s principal alternative route for avoiding Hormuz and transforms the Bab el-Mandeb from a secondary concern into another potential constraint on global petroleum movements.

Saudi Arabia’s decision to join U.S. forces in striking Iran-aligned militia targets in Iraq represents another significant escalation. U.S. Central Command said American and Saudi aircraft struck logistics and weapons facilities after more than 30 drone attacks were launched against U.S. forces and Saudi energy infrastructure during a 72-hour period. It marked the first public Saudi participation in U.S.-led attacks during the current conflict and increased the risk that Tehran and its proxies will directly target Saudi production, pipelines, export terminals and refineries.

The U.S. military said it struck dozens of Islamic Revolutionary Guard targets in Iran, including military command centers and drone facilities, in a two-hour operation launched after Tehran fired ballistic missiles at U.S. forces in the Middle East. “The strikes aimed to further diminish threats posed by Iran and its proxies to American forces, commercial shipping, and neighboring Gulf countries,” CENTCOM said in a statement.

The widening conflict is landing on a market that was already becoming tighter. U.S. commercial crude inventories fell 7.2 million barrels during the week ended July 24 to 404.5 million barrels, about 7% below the five-year seasonal average. Refineries operated at 97.2% of capacity, while crude imports declined and exports increased. The draw was therefore not simply a speculative headline: U.S. refiners were processing large volumes just as fewer imported barrels were entering storage.

The Strategic Petroleum Reserve declined by another 3.8 million barrels to 307.65 million barrels, its 18th consecutive weekly drop and its lowest level since March 1983. The reserve remains substantial, but its rapid depletion reduces Washington’s flexibility to offset an extended interruption in Middle Eastern supplies without pushing stocks toward historically unprecedented lows.

Perspective: The oil market is now carrying both a physical-tightness premium and a geopolitical insurance premium. The inventory draw supports prices even without additional military escalation. The conflict then magnifies that underlying tightness by raising freight rates, insurance costs, voyage times and the possibility that crude or refined products will be stranded behind one of the two maritime chokepoints.

Still, the move above $92 does not mean the market has concluded that a major supply loss is inevitable. Traders remain focused on actual export volumes rather than military headlines alone. Brent would probably need evidence of sustained reductions through Hormuz, successful attacks on major Saudi infrastructure or a prolonged shutdown of Red Sea traffic to hold above recent highs and make another run toward $100.

The opposite is also true. Oil fell nearly 9% Monday when the U.S. temporarily paused its strikes, demonstrating how quickly the war premium can evaporate when diplomacy appears credible. Prices are therefore likely to remain unusually volatile, with sharp gains after attacks followed by equally abrupt reversals whenever negotiations resume.

For the U.S. economy, sustained Brent prices above $90 would raise gasoline, diesel, aviation and freight costs while reinforcing inflation concerns already confronting the Federal Reserve. Agriculture would feel the pressure through higher diesel, transportation, irrigation and crop-drying expenses. Fertilizer costs could also rise if the conflict disrupts Gulf natural gas, ammonia or urea supplies.

Higher petroleum prices may improve the relative economics of ethanol and other biofuels, but that benefit would be partly offset if expensive gasoline reduces overall fuel demand. Livestock and food processors would also face higher refrigerated transportation and packaging costs.

Upshot: The central issue is no longer simply whether Iran can interrupt Hormuz. It is whether Tehran and its allies can impose enough uncertainty across Hormuz, Iraq, Saudi Arabia and the Red Sea to keep oil moving more slowly and at substantially higher cost. As long as that uncertainty persists — and U.S. commercial and strategic inventories continue falling — oil buyers will be reluctant to remove the geopolitical premium from Brent.

—EPA SRE decisions to put soyoil demand expectations on the line

HF Sinclair and Delek rulings may preview treatment of broader waiver backlog

The Environmental Protection Agency (EPA) has committed to issue final decisions by Aug. 3 on two disputed small refinery exemption petitions covering the 2024 Renewable Fuel Standard compliance year. The petitions were filed by HF Sinclair and Alon Refining Krotz Springs, the Louisiana refinery owned by Delek US. Some market reports suggest the announcement could come Friday, July 31, although EPA’s formal commitment gives the agency through Monday.

The decisions follow an April 7 ruling in which the U.S. Court of Appeals for the District of Columbia Circuit vacated EPA’s earlier denials and returned the petitions to the agency. The court found that EPA improperly applied its eligibility requirements when determining whether the facilities qualified as small refineries. It also left the door open for the refiners to seek additional relief if EPA failed to act lawfully and promptly on remand.

HF Sinclair and Delek subsequently asked the court to compel EPA to rule by Aug. 11. The companies argued that additional delays could sharply reduce the value of any 2024 Renewable Identification Numbers (RINs) returned to them because those credits face practical limitations as the Sept. 1 deadline for complying with the 2025 RFS approaches. EPA is separately considering whether to extend that compliance deadline but continues to publicly treat Sept. 1 as the operative date.

The immediate decisions involve only two refineries, but their importance extends well beyond HF Sinclair and Delek. They could provide the first indication of how EPA will apply its current hardship methodology after the D.C. Circuit rejected the agency’s previous eligibility analysis. A full exemption for both facilities would increase expectations that other pending petitions could receive favorable treatment. Partial exemptions or denials based on economic-hardship findings would signal a narrower approach.

One important update is that the pending inventory is larger than 25 petitions. EPA data released July 16 showed 42 pending SRE petitions overall, including 34 for the 2025 compliance year, four for 2024 and two for 2023. That means the policy implications could be considerably larger than suggested by the two court-ordered decisions alone.

Why soyoil is watching. SREs matter to soybean oil because they can reduce refinery demand for biomass-based diesel RINs, known as D4 credits. When a small refinery receives an exemption, it no longer needs to blend renewable fuel or acquire enough RINs to cover the exempted portion of its gasoline and diesel production. Broadly granted waivers can therefore add RINs back to the market, depress D4 credit prices and weaken the economic incentive to produce biodiesel and renewable diesel.

That transmission mechanism helps explain why soyoil can sell off even while petroleum diesel prices are climbing. Higher diesel values normally improve the relative economics of renewable diesel and biodiesel. But the market is currently assigning greater weight to the possibility that EPA policy could reduce mandated demand or delay the point at which refiners must acquire credits.

There is also a political tension. High diesel prices strengthen the commercial case for renewable fuels, but they increase pressure on the White House and EPA to limit refinery compliance costs. Reuters reported that the administration is weighing an extension of the Sept. 1 compliance deadline as elevated RIN prices, energy-market volatility and consumer fuel costs receive greater scrutiny.

Some analysts note that SRE fears have contributed materially to the soyoil selloff. However, the ultimate demand impact depends on three issues: how many petitions EPA grants, whether exemptions are full or partial, and how waived obligations are accounted for elsewhere in the RFS.

Reallocation limits the bearish case. EPA’s March 2026 rule establishing the 2026 and 2027 RVOs already reallocates 70% of the obligations exempted for the 2023 through 2025 compliance years. That policy shifts much of the waived requirement onto the broader refining sector, preserving a substantial portion of intended renewable-fuel demand rather than allowing every exempted gallon to disappear from the program.

EPA has also said it intends to use the same general methodology employed in its 2025 SRE decisions when reviewing petitions for 2025 through 2027. For 2026 and later, the agency plans to account prospectively for projected exempt refinery volumes, reducing the need for repeated retroactive reallocation exercises.

That means the bearish interpretation should not automatically assume that every granted waiver represents a one-for-one loss of soyoil or renewable-diesel demand. EPA has already built projected exemptions and partial reallocation into the 2026-2027 framework. The more immediate effect of favorable 2024 or 2025 decisions could instead be an increase in available RIN supplies and reduced near-term refinery buying ahead of the compliance deadline.

EPA has further stated that additional decisions on pending 2025 petitions will not cause it to recalculate the reallocation volumes already finalized for 2026 and 2027. As a result, large 2025 approvals could soften the nearby RIN market without automatically reducing the future RVOs by the same amount.

The 2028 deadline. EPA faces an Oct. 31, 2026, statutory deadline for finalizing the 2028 RVO, which must be established 14 months before the compliance year begins. Resolving the bulk of the 2025 petitions by late September would give the agency better information for that rule and reduce the risk of another rushed or delayed RFS process. We have previously reported that it appears EPA will miss that deadline.

Clearing those petitions is not necessarily a legal prerequisite for issuing the 2028 RVO. EPA can use projected exempt volumes, including its three-year rolling-average methodology. But carrying dozens of unresolved petitions into the 2028 rule would prolong uncertainty over the size of the RIN bank, expected refinery obligations and the real level of biomass-based diesel demand.

Market bottom line: the first market reaction should appear in D4 RIN prices, followed by soyoil futures, according to analysts. Full waivers accompanied by returned RINs would likely pressure both markets, particularly if EPA also extends the Sept. 1 compliance deadline. Partial exemptions, denials or language reaffirming strong prospective reallocation would reduce the bearish impact.

The central question is no longer simply whether HF Sinclair and Delek receive relief. It is whether EPA uses these two decisions to signal a broadly accommodating waiver policy or treats them as narrow court-directed cases. Until that distinction is clear, soyoil will retain a sizable policy-risk discount even as high diesel prices and the underlying 2026-2027 biomass-based diesel mandates argue for stronger long-term feedstock demand.

■  FINANCIAL MARKETS

—Equities today: Global equities attempted to recover Thursday as encouraging corporate earnings helped stabilize the technology sector, but the rebound was overshadowed by another sharp increase in long-term U.S. borrowing costs. Reuters said investors were balancing evidence that some artificial intelligence investments are generating returns against growing doubts about the Federal Reserve’s ability to contain inflation.

Microsoft was the principal source of optimism. Its shares jumped nearly 8% in premarket trading after strong cloud growth and assurances that the company expects to continue generating substantial cash through fiscal 2027. Investors interpreted the results as evidence that Microsoft can finance its enormous AI infrastructure program without sacrificing profitability. Meta Platforms moved in the opposite direction, falling more than 8% as its results and outlook highlighted the continuing cost of building AI capacity.

The earnings rebound followed a difficult Wednesday session as noted below. 

The bond market is the bigger story. The 30-year Treasury yield climbed to approximately 5.24% early Thursday, its highest level since 2007. The 10-year yield also moved above 4.70%. Long-term yields rose even though the Fed kept its benchmark rate unchanged at 3.5% to 3.75%, creating an unusual situation in which the bond market effectively tightened financial conditions while the central bank stood still. (See next item for more perspective on this topic.)

The shape of the move was particularly revealing. Shorter-term yields initially declined while 10- and 30-year yields rose, producing a steepening yield curve. That suggests investors were not simply anticipating an imminent Fed increase. They were demanding greater compensation for holding long-term debt exposed to persistent inflation, policy uncertainty and the possibility that the Fed may fall behind the inflation curve. Bank of America economists characterized the reaction as financial markets questioning the Fed’s credibility.

Fed Chair Kevin Warsh contributed to the uncertainty by offering little forward guidance after three policymakers dissented in favor of an immediate quarter-point increase. The divided vote underscored concern inside the central bank that inflation remains too high, while Warsh’s less prescriptive communications approach left traders with fewer clues about what would trigger a September move. Markets increased the implied probability of a September rate increase to about 65%, according to CME FedWatch figures.

Long-term Treasury yields are central to the valuation of stocks, particularly technology and other growth companies whose expected profits lie further in the future. At yields above 5%, investors can obtain historically attractive returns from government bonds without assuming equity-market risk. That raises the return companies must generate to justify elevated stock valuations.
 

Higher yields also flow through to mortgages, commercial real estate loans, corporate debt, equipment financing and government interest costs. The longer yields remain near current levels, the greater the chance that tighter financial conditions begin restraining housing, capital investment and consumer spending—even without another Fed move.

In Asia, Japan +0.7%. Hong Kong +0.2%. China -0.6%. India +0.4%.
 

In Europe, at midday, London +0.2%. Paris +0.8%. Frankfurt flat.

—Equities yesterday: 

—Bond market tightens as divided Fed holds rates steady

Thirty-year Treasury yield tops 5.2% as September hike bets build

The Federal Reserve left its benchmark interest-rate range unchanged Wednesday, but the bond market delivered the tightening that policymakers declined to impose. The yield on the 30-year U.S. Treasury bond climbed above 5.20% for the first time since 2007 — a 19-year high — as investors demanded greater compensation for inflation, geopolitical and fiscal risks.

The Federal Open Market Committee (FOMC) voted 9-3 to maintain the federal funds rate at 3.5% to 3.75%, where it has remained since December. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan dissented in favor of a quarter-point increase — the clearest evidence yet that pressure for renewed monetary tightening is building inside the central bank. Link to our special report released Wednesday.

The Fed acknowledged that inflation remains above its 2% objective, partly because supply disruptions have lifted energy and other prices. However, policymakers concluded that solid economic growth, stable unemployment and recent signs of moderating underlying inflation gave them room to wait for additional data before raising rates.

Chair Kevin Warsh attempted to reconcile the decision with his reputation as an inflation hawk, declaring that the Fed would not “waver” in returning inflation to 2%. He also stressed that leaving rates unchanged did not make the July meeting inconsequential, describing the decision as the beginning of the policy debate rather than its conclusion.

The bond market’s message. The most revealing market movement occurred across the Treasury yield curve. The two-year yield, which is closely tied to expectations for near-term Fed policy, declined after the decision. Meanwhile, 10- and 30-year yields rose sharply, with the 30-year yield crossing 5.20%. That produced a bearish steepening of the curve: long-term borrowing costs rose even though the Fed declined to increase its overnight rate.

That reaction suggests investors are worried about more than whether the Fed raises rates in September. Long-term Treasury yields incorporate expectations for inflation, economic growth, federal borrowing and the additional premium investors require to hold debt for decades. Federal Reserve research has linked the broader increase in long-term rates to concerns about future supply shocks and federal deficits, as well as uncertainty about the economic outlook.

The market’s verdict was therefore less “the Fed should have raised rates today” than “the Fed may have to keep rates higher for longer — and possibly raise them later.” Warsh said he was comfortable allowing markets to reach their own conclusions instead of relying heavily on Fed projections and forward guidance. But that strategy carries a cost: reduced guidance can increase volatility and allow risk premiums to build more rapidly.

Iran complicates the Fed’s decision. The conflict with Iran presents the Fed with a classic supply-shock problem. Higher oil and transportation costs can raise headline inflation while simultaneously weakening consumer purchasing power and slowing economic growth. Raising interest rates cannot produce more oil or reopen disrupted shipping lanes, but the Fed may need to tighten if energy-driven inflation spreads into wages, services and public expectations.

That helps explain the divided vote. The majority appears willing to look through a temporary energy shock, particularly after recent indications that core price pressures are easing. The dissenters appear more concerned that five years of above-target inflation have reduced the Fed’s margin for patience and could weaken its credibility if policymakers repeatedly attribute new price increases to temporary factors.

September is now the key meeting. Markets emerged from the meeting still leaning toward a September rate increase. Fed funds futures assigned roughly a 57% probability to a quarter-point hike after Wednesday’s announcement, down from nearly certain expectations earlier in the week but still high enough to make the Sept. 15-16 meeting a live decision. Two additional rounds of employment and inflation data will arrive before then.

A continued easing in core inflation, combined with lower oil prices, could keep the Fed on hold. Persistent energy inflation, strong hiring or evidence that tariffs and higher transportation costs are spreading through the economy would strengthen the case for an increase.

Impact on consumers, farmers and agribusiness. The Fed’s decision provides no immediate relief for borrowers. The average contract rate on a 30-year fixed mortgage had already climbed to 6.76% in the week ending July 24, its highest level since August 2025, while mortgage applications fell 6.4%. The latest increase in long-term Treasury yields creates additional upward pressure on mortgages, corporate bonds and other fixed-rate credit.

For agriculture, the consequences are mixed but predominantly negative. Operating credit and variable-rate farm loans remain expensive because the Fed did not lower short-term rates. Meanwhile, higher long-term yields can raise the cost of financing farmland, machinery, storage facilities and agribusiness expansion. Elevated interest rates also reduce the capitalized value of future farm income, creating a potential headwind for farmland prices if commodity margins weaken.

The broader conclusion is that the Fed may have stood still, but financial conditions did not. By pushing the 30-year Treasury yield to a 19-year high, bond investors effectively imposed their own form of tightening — one that reaches well beyond Wall Street and directly into mortgages, federal interest costs, farm lending and business investment.

—Core PCE inflation cools as consumer spending remains resilient

June data offered the Federal Reserve a measure of relief, but renewed energy-price gains could complicate the July inflation picture.

The Federal Reserve’s preferred inflation gauge largely matched expectations in June, while underlying price pressures eased slightly more than forecast and consumer spending continued to expand.

The Personal Consumption Expenditures Price Index fell 0.1% in June after rising 0.4% in May. The annual inflation rate slowed to 3.7% from 4.1%, in line with expectations.

Core PCE, which excludes volatile food and energy prices, increased 0.1% for the month. That was below forecasts for a 0.2% gain and slower than May’s 0.3% increase. The annual core inflation rate edged down to 3.3% from 3.4%, as expected.

Consumers increased spending by $65.2 billion in June. The largest gains were recorded in health care, up $22.8 billion; motor vehicles and parts, up $17.4 billion; financial services and insurance, up $14 billion; and recreational goods and vehicles, up $13.8 billion.

The overall increase came despite a sharp decline in energy-related outlays. Consumers spent $48.1 billion less on gasoline and other energy goods in June than in May as fuel prices retreated.

Bottom line: The report reinforced better-than-expected consumer and wholesale inflation readings, but it represented only one month of improvement. Energy prices resumed climbing in July, suggesting fuel costs could again add to household expenses and inflation when the July Personal Income and Outlays report is released Aug. 26.

■  AG MARKETS

—USDA daily export sale: 132,000 MT soybeans to China for 2026/27. 

—More U.S. soybean sales to China confirmed beyond daily sales. USDA weekly Export Sales activity for the week ended July 23 confirmed additional sales of soybeans to China for 2026/27, with 519,000 MT of business. That brings 2026/27 US soybean export commitments to China to 2.781 MMT. Of the total for the week, 264,000 MT were known via daily sales announced by USDA. Another 132,000 MT of sales were announced via daily export sales announcements since the period covered by the report with another sale of 132,000 MT announced today, taking total commitments to 3.045 MMT. Other activity for China for the week included 2025/26 net sales of 4,127 MT sorghum (4,179 MT new sales) and net sales of 3,177 running bales of upland cotton (3,182 running bales of new sales). Activity for 2026 delivery including net sales of 154 MT beef (161 MT new sales) and 9,697 MT of pork (9,724 MT new sales).

—Black Sea disruptions ignite wheat rally; corn, soybeans stabilize

Wheat surges as export routes seize up; favorable weather caps row crops

Wheat futures surged overnight Thursday as escalating attacks and tightening shipping restrictions in the Black Sea forced traders to add a larger geopolitical premium to prices. Corn and soybeans posted only fractional rebounds, with improving U.S. weather forecasts continuing to limit concern about domestic crop losses.

At the morning break, September corn was up 1 1/2 cents at $4.50 1/2, while August soybeans gained 1 1/4 cents to $11.79 1/4. August soybean meal slipped 80 cents to $314.80 per ton, and August soybean oil edged up five points to 69.22 cents per pound.

• Wheat was the clear leader. September soft red winter wheat jumped 17 3/4 cents to $6.78 1/2, while September hard red winter wheat climbed 13 3/4 cents to $7.46 1/4.

Black Sea risk moves from threat to disruption. The wheat rally reflects a shift in how traders are assessing the Russia-Ukraine conflict. The market is no longer responding merely to the possibility that shipping could be interrupted; portions of the region’s grain transportation network are already operating under severe restrictions.

Russia has limited shipping through the Sea of Azov, a route that normally handles roughly one-fourth of its grain exports. Three major Russian terminals at Novorossiysk and Taman have also restricted truck deliveries because of heightened security risks. Those terminals have combined annual capacity exceeding 20 million metric tons, compared with total Russian seaborne grain exports of about 50 million tons.

Ukraine’s export system is under similar pressure. Russian attacks have reduced Ukrainian Black Sea grain-handling capacity by about one-third, while a commercial vessel carrying corn from Chornomorsk recently sank after being struck off Odesa. Shipowners, insurers and grain merchants are consequently facing higher costs and greater reluctance to enter the region.

The timing magnifies the market impact. Russia and Ukraine are harvesting wheat, meaning storage, inland transportation and port capacity should be operating near seasonal peaks. Grain that cannot reach vessels may back up at elevators and farms, while importers must consider sourcing more wheat from the U.S., European Union, Canada, Argentina or Australia.

That does not mean Black Sea exports will disappear permanently. Grain usually finds an alternative route when the price incentive becomes large enough. But rail diversions, Baltic ports and smaller land corridors cannot immediately replace the speed and capacity of established Black Sea terminals.

Wheat rally still faces a technical test. Wheat’s gains had already narrowed from earlier overnight highs. At 6 a.m. CDT, September SRW wheat was up 24 3/4 cents and September HRW was 27 1/4 cents higher, indicating some profit-taking as prices approached the daytime session.

That retreat does not erase the bullish fundamental development, but it shows that traders remain cautious after this week’s technical deterioration. Wheat futures rallied sharply during July, leaving the market vulnerable to liquidation whenever the Black Sea headlines temporarily quiet.

The next test is whether wheat can finish near the upper portion of Thursday’s range. A strong close would suggest commercial and speculative buying is absorbing profit-taking. A weak close well below the overnight highs would reinforce the view that the market is still trading a volatile headline premium rather than beginning another sustained leg higher.

Longer term, the supply cushion is thinner than headline global production totals imply. World wheat production is projected below consumption in 2026-27, while drought has reduced U.S. winter wheat output and heat and dryness have threatened portions of the northern spring wheat crop. That makes the market more sensitive to transportation losses from the world’s largest exporting region.

• Rain keeps corn and soybeans on the defensive. Corn and soybeans were unable to follow wheat substantially higher because Midwest forecasts remain generally favorable. Rainfall through Saturday is expected to target eastern South Dakota, southern Minnesota, northeastern Iowa, southern Wisconsin and northern Illinois, with localized totals exceeding 2 inches.

The rain arrives during an especially important period for soybeans, which are moving through pod setting and filling. That helps explain why soybeans suffered heavier selling Wednesday and managed only a token rebound overnight. Forecasts calling for cooler temperatures through early August further reduce the immediate need to retain a large weather premium. Favorable rain expectations pressured soybeans and corn sharply in Wednesday’s session.

Corn may receive less benefit than soybeans because some yield potential was determined during pollination and the earlier heat. Still, additional moisture can improve kernel development and limit further deterioration. Traders therefore have little incentive to chase corn higher until there is evidence that rainfall totals will disappoint or that late-summer heat will return more aggressively than currently forecast.

The small gains in corn and soybeans should consequently be viewed as stabilization following Wednesday’s liquidation rather than confirmation that the recent price correction has ended.

• Soy product split highlights policy uncertainty. The soybean complex also lacked internal strength. Soybeans and soybean oil were fractionally higher, but meal remained lower. That mixed performance suggests the overnight soybean gain was primarily a modest corrective bounce rather than a broad improvement in oilseed demand.

Soybean oil remains especially sensitive to EPA decisions on small refinery exemptions and renewable-fuel compliance. The administration is considering extending the Sept. 1 deadline for refiners to demonstrate compliance with 2025 biofuel mandates while the EPA works through pending waiver requests. Any action that reduces or delays refiners’ need for renewable-fuel credits could be interpreted as negative for biomass-based diesel demand and soybean oil. See related item in this dispatch.

High petroleum prices provide underlying support for biofuel feedstocks, but policy uncertainty is preventing soybean oil from fully capturing that advantage.

Bottom line: Thursday’s trade is effectively two separate markets. Wheat is pricing an immediate threat to export availability from the Black Sea, while corn and soybeans are pricing improving U.S. production conditions.

The Black Sea disruption is serious enough to support wheat and could eventually benefit U.S. export demand. But wheat must hold a meaningful portion of its overnight gains to confirm that the rally has staying power.

Corn and soybeans remain weather driven. Until forecasts turn hotter and drier — or export demand strengthens — the improving rainfall pattern and recent chart damage will make row-crop rallies difficult to sustain. Thursday’s USDA export sales report could provide the next demand signal, but weather and war remain the dominant forces.

—War premium returns to the world grain trade as Black Sea chokepoints tighten
Paris wheat leads the global rally — about $7.28 a bushel in U.S. terms — while Russian FOB offers climb to $236 a ton and traders ask whether Baltic ports can absorb rerouted Russian exports
 

International grain prices pushed higher again Thursday, and the reason is less about crops than about chokepoints. Escalating attacks on Black Sea export infrastructure are layering a war-risk premium onto world wheat values at the very moment the Northern Hemisphere harvest would normally be pressing prices lower — and a hot, dry finish to the European growing season is amplifying the move.

• Paris wheat leads the advance. September milling wheat futures on Euronext jumped €8.00 per metric ton to €234.50. At current exchange rates of roughly $1.14 per euro, that is about $267 per ton, or $7.28 per bushel — and the day’s gain alone was worth about 25 cents a bushel. The rally leaves Paris futures roughly $24 a ton (about 65 cents a bushel) above September Chicago wheat, which settled Wednesday at $6.60¾, an equivalent of about $243 per ton. Two forces are at work: disruption fears on Black Sea export routes and a European crop that is shrinking in the heat. EU grain production is now projected to fall more than 9% from last year — the steepest annual decline in over two decades — with extreme heat trimming crop prospects in France and Germany.

• Paris corn confirms Europe’s tightness. August corn futures gained €1.00 to €246.25 per ton — about $281 per ton, or $7.13 per bushel in U.S. terms. That expiring old-crop contract is thin, but the message is unmistakable: European corn is priced more than $100 a ton above U.S. values (September Chicago corn settled Wednesday at $4.49, about $177 per ton). Europe will need imports, and U.S. corn is emphatically competitive into that gap.

• The Russian math is the heart of the story. Russian FOB wheat is reportedly offered at $236 per ton for August shipment from the country’s deep-water ports — about $6.42 per bushel. That price carries a growing war-risk premium. Ukraine’s drone campaign effectively closed the Kerch Strait to shipping on July 10, cutting off the shallow-water Azov route that normally carries roughly a quarter of Russia’s grain and sunflower oil exports. SovEcon and IKAR peg Russia’s July wheat exports at only about 1.5 million metric tons — half the five-year average for the month and the weakest July since 2017. This week, terminals at Novorossiysk (NZT and KSK) and Taman (ZTKT) — more than 20 million tons of combined annual capacity — began limiting truck deliveries as maritime security risks mounted.

• Can the Baltics take up the slack? Not fully. That is the question hanging over the market: how much additional export capacity do the Baltic ports hold if Russian exporters seek safety and assured grain loadout? The arithmetic is sobering. Russia’s deep-water Black Sea ports beyond the strait can handle roughly 4 to 4.5 million tons a month — adequate for July, but well short of the 5 to 6.5 million tons Russia typically ships monthly during the August–October export peak. The Baltic option — the Vysotsk terminal, Lugaport at Ust-Luga (about 7 million tons of annual capacity) and a planned terminal at Primorsk — offers perhaps 15 million tons a year combined, or roughly 1.25 million tons a month, and the rail network serving southern Russia’s grain belt was never designed to move those volumes north. The Baltics are a relief valve, not a replacement. If Black Sea constraints persist into the peak season, the implied shortfall of 1 to 2 million tons a month would have to be found elsewhere — and that is precisely what Paris, Chicago and Kansas City are starting to price.

• Palm oil grinds higher, too. October palm oil futures on Bursa Malaysia rose 15 ringgit to close at 4,679 ringgit per ton — about $1,145 per ton, or roughly 52 cents a pound, at about 4.09 ringgit to the dollar. Support came from a crude oil rebound on Middle East tensions, which flatters palm’s biodiesel economics, along with firm Indian physical demand; cargo surveyors put Malaysian palm exports for July 1–25 up 8% to 16% from the prior month. At 52 cents, palm still holds a wide discount to Chicago soybean oil (August settled Wednesday at 69.17 cents a pound), which should keep price-sensitive Asian buyers engaged and lends indirect support to the whole vegoil complex.

The U.S. takeaway. The world price structure is being rebuilt from the Black Sea outward, and U.S. grain sits on the cheap end of it. Chicago wheat futures near $243 a ton equivalent stand below European values by a widening margin and essentially at parity with Russian FOB offers once freight and risk are considered — a competitive position U.S. wheat has not enjoyed in several seasons. The same is true, more dramatically, for corn. The caution: this is a logistics-and-weather rally, not yet a demand rally. If Russia reopens its corridors or insurers grow comfortable with the risk, the war premium can deflate as quickly as it appeared. Until then, every drone strike near a loading berth is worth money to wheat — and U.S. exporters are positioned to collect some of it.

—Ag markets Wed., July 29: Chart breaks deepen grain selloff as better rain forecasts spur liquidation

Weather starts the retreat, but technical selling accelerates the decline

Agricultural futures came under broad pressure July 29 as improving Midwest rain forecasts weakened crop/weather concerns, while deteriorating technical charts turned routine profit-taking into more aggressive long liquidation.

The fundamental and technical signals reinforced one another. Better rain prospects gave traders a reason to reduce bullish positions in corn and soybeans, but closes near session lows, breaks of chart support and new multiweek lows likely activated sell stops and momentum-based selling. Cotton and lean hogs experienced similar technical damage, while cattle futures continued trying to establish near-term bottoms.

Broader risk aversion added to the defensive tone. U.S. stocks fell sharply after the Federal Reserve held rates at 3.5% to 3.75%, with three policymakers dissenting in favor of a quarter-point increase. The combination of hawkish Fed pressure, higher bond yields and escalating Middle East tensions reduced investor willingness to hold risk-sensitive positions.

•Corn uptrend nears a breaking point. December corn fell 8 3/4 cents to $4.71 3/4, finishing near the daily low and erasing Tuesday’s corrective rebound.

Forecasts calling for rain in important Midwest growing areas supplied the initial bearish catalyst. Reuters reported that expected late-week rainfall weighed on both corn and soybeans, with the moisture considered particularly beneficial as soybeans enter pod setting.

Technical considerations then magnified the decline. December corn’s inability to build on Tuesday’s 6 1/2-cent recovery suggested the bounce was corrective rather than the beginning of another sustained move higher. Wednesday’s close near the session low showed sellers remained in control into the finish and placed the contract’s daily-chart uptrend in serious jeopardy.

That matters because the recent rally had attracted trend-following and weather-based buying. Once prices began violating short-term support, some of those traders likely exited positions automatically or voluntarily. The result was a combination of profit-taking, weak long liquidation and technical selling rather than a market response solely to a single weather forecast.

USDA’s latest crop ratings still leave room for renewed weather concern. Corn was rated 63% good to excellent as of July 26, down four percentage points from the prior week and 10 points below a year earlier. The crop was 78% silked and 25% in the dough stage, meaning rainfall remains important as much of the crop moves through grain fill.

The near-term problem for corn bulls is that a market can recognize underlying crop risk while still declining if that risk is already priced in. Unless forecasts turn hotter and drier again, or December corn quickly recovers lost chart support, technical traders may interpret Wednesday’s action as evidence the weather rally has run its course.

•Soybean break below $12 intensifies the selloff. November soybeans led the grain complex lower, falling 27 1/4 cents to $11.92 3/4. The contract closed near the daily low, hit a two-week low and broke below the psychologically important $12 level.

Better rain prospects carried added importance for soybeans because the crop is entering its most weather-sensitive reproductive period. USDA said 80% of soybeans were blooming and 47% were setting pods as of July 26, both eight percentage points ahead of their five-year averages. The crop was rated 63% good to excellent, down three points for the week.

The forecast therefore gave traders a fundamental reason to remove some weather premium. But the break below $12 made the decline technically more consequential. Round-number levels are closely watched by speculative and commercial participants, and a decisive move beneath them can prompt additional selling even when the underlying news has not changed materially.

September soybean meal fell $3.40 to $317.90 and also reached a two-week low. September soybean oil dropped 148 points to 68.66 cents, its lowest level in three weeks. Weakness across all three legs of the soybean complex confirmed the bearish tone and indicated the decline was not confined to weather-sensitive soybean futures.

Soybean oil’s failure to rally alongside crude oil was particularly revealing. Brent crude jumped nearly 8% to $90.74 per barrel and West Texas Intermediate rose more than 6% to $84.46 as renewed Middle East airstrikes revived fears of supply disruptions.

Ordinarily, a major crude rally can support vegetable oil through biodiesel economics and higher competing energy values. Soybean oil’s sharp decline despite that outside support amounted to a negative market signal: Long liquidation and weakening technical momentum were more powerful than the bullish influence from petroleum.

For soybean bulls, the immediate task is to reclaim $12 and stabilize the chart. Failure to do so could encourage traders to test successively lower support areas, particularly if western Corn Belt rainfall becomes more widespread than previously expected.

•Wheat holds relatively firm despite weak row crops. September soft red winter wheat declined 1 3/4 cents to $6.60 3/4, while September hard red winter wheat slipped 3/4 cent to $7.25 1/2. September spring wheat gained 2 1/2 cents to $7.05.

Wheat’s relatively restrained losses represented a technical pause rather than a decisive bearish breakdown. The winter wheat markets finished nearer their daily lows, but they avoided the more serious support violations seen in corn and soybeans. Spring wheat’s modest gain showed that buyers remained willing to defend parts of the wheat complex.

Black Sea supply risks continued to provide underlying support. Three major Russian grain terminals restricted truck deliveries because of increased shipping risks, while attacks on vessels and port infrastructure complicated regional grain flows. A missile strike also hit Taganrog, a Russian grain hub on the Sea of Azov.

However, large global wheat supplies and the advancing Northern Hemisphere harvest limited the market’s ability to convert geopolitical concerns into sustained gains. Wheat was caught between supportive export risks and bearish pressure spilling over from corn and soybeans.

Technically, that relative strength is important. Wheat did not rally, but it also did not collapse when the rest of the grain complex weakened. If corn and soybeans stabilize, wheat may be positioned to respond more forcefully to additional Black Sea disruptions. If row-crop selling continues, however, wheat will have difficulty maintaining independent upward momentum.

•Cotton posts a bearish divergence from crude oil. December cotton fell 100 points to 79.53 cents, finishing near the session low as profit-taking, weak long liquidation and broader financial-market risk aversion pressured prices.

The technical action was more bearish than the one-day decline alone suggests. Cotton bulls received no traction from the powerful crude oil rally, even though higher petroleum prices can increase polyester production costs and improve cotton’s competitive position against synthetic fibers.

When a market fails to respond positively to what would normally be supportive outside news, traders often treat that failure as evidence of underlying weakness. Cotton’s close near the low reinforced that interpretation and suggested the market remained vulnerable to additional technical selling.

The broader macro backdrop also worked against cotton. The sharp equity-market decline and increasingly hawkish Fed outlook raised concerns about economic growth and discretionary consumer spending. Because cotton is closely tied to apparel demand, it is more exposed than food commodities to deteriorating consumer sentiment and risk appetite.

• Cattle charts show early signs of bottoming. August live cattle rose 42.5 cents to $227.90 after reaching a two-week high early in the session. August feeder cattle gained $1.20 to $344.275.

The cattle markets continued corrective rebounds from their recent lows, and the technical structure in August live cattle increasingly suggests a near-term bottom may be forming. Buyers have begun defending declines, while the market has shown an ability to recover after recent selling pressure.

Still, the close well below the early high showed that the bottoming process is not complete. A confirmed reversal would require follow-through buying, closes above recent resistance and evidence that rallies can be sustained into the end of the session.

Fundamental support remains tied partly to extreme Plains heat. Oppressive temperatures increase livestock stress, reduce weight gains and can disrupt normal marketing patterns. NOAA’s longer-range outlook also warns that above-normal temperatures and below-normal precipitation could increase rapid-onset drought risks across parts of the Great Plains and Corn Belt.

Lower grain prices provided some additional support to feeder cattle by reducing prospective feed costs. But feeder futures remain historically expensive, making the market sensitive to technical resistance and shifts in risk appetite.

•Hog reversal threatens the uptrend. August lean hogs plunged $2.425 to $100.675, closing near the daily low and at a two-week low.

The decline followed a nine-week high Tuesday, creating a sharp downside reversal that likely attracted heavy technical selling. Traders who bought the recent rally were suddenly holding positions in a market that had failed at new highs and then broken short-term support.

That sequence is often more damaging than a gradual decline. The inability to extend Tuesday’s strength suggested buying momentum had become exhausted, while Wednesday’s close near the low indicated sellers retained control through the end of trading.

The daily-chart uptrend is now in jeopardy. The $100 area may provide psychological support, but a sustained break below it would further weaken the chart and could trigger another round of long liquidation. Conversely, a quick recovery would suggest Wednesday’s decline was an abrupt correction rather than the start of a broader trend reversal.

Bottom line: July 29 demonstrated how fundamentals and technicals can combine to produce a much larger market reaction than either factor would generate alone.

Improved rain forecasts initiated the selling in corn and soybeans, but breaks of chart support, closes near session lows and new multiweek lows accelerated the retreat. Cotton’s failure to follow crude oil higher exposed weak underlying momentum, while lean hogs suffered a classic reversal after becoming technically overextended.

Cattle provided the principal exception, as corrective buying and improving charts raised the possibility of a near-term bottom. Even there, however, the failure to hold early highs showed that confirmation is still needed.

Weather will remain the primary driver for crop markets during August, but the charts now matter more than they did earlier in the rally. Corn and soybeans must quickly recover broken support to prevent additional fund liquidation. Without that recovery—or a renewed weather threat—the path of least resistance has shifted lower.

■  SCREWWORM

—USDA adds $25 million Arizona fly hub as Mexican cattle trade resumes

Douglas site would extend sterile-fly coverage across the western border

USDA Secretary Brooke Rollins’ commitment of $25 million for a sterile New World screwworm fly dispersal facility in Douglas, Ariz., serves two closely linked purposes: strengthening USDA’s western-front defenses against the parasite and providing additional reassurance ahead of the planned Aug. 24 reopening of the Douglas port to Mexican cattle. USDA has not yet selected the specific site or finalized an operating plan, but said construction could be completed within several months if suitable infrastructure is available.

The distinction between a dispersal facility and a production facility is important. The Arizona site would not necessarily breed hundreds of millions of flies. Instead, it would receive sterile insects or pupae produced elsewhere, prepare them for release and deploy them over targeted areas. Locating that capability in southeastern Arizona would shorten transportation times and extend aerial-release coverage across the western portion of the U.S.-Mexico border.

USDA currently relies on the jointly operated facility in Pacora, Panama, which produces about 100 million sterile flies per week. A renovated plant in Metapa, Mexico, is ramping toward another 100 million per week, while USDA is constructing a much larger South Texas production facility designed to produce 300 million flies weekly. An operational dispersal center at Moore Air Base near Edinburg, Texas, can release as many as 100 million flies per week.

The Arizona investment therefore addresses a geographic gap, but not necessarily the larger production constraint. A dispersal center is valuable only when sufficient numbers of sterile flies are available. Until the Texas breeding plant reaches full operation and Mexico’s additional capacity is proven reliable, USDA may still have to prioritize where limited flies are released.

Sterile insect technology works because female screwworm flies generally mate only once. When a female mates with a sterilized male, her eggs do not hatch, gradually suppressing the wild population. However, USDA says sterile releases must be paired with surveillance, animal-movement restrictions, treatment and rapid reporting. They are not a substitute for border inspections or on-farm biosecurity.

Investment helps support the border-reopening case. The timing is politically and operationally significant. USDA is preparing to resume cattle imports at Douglas after more than a year of disrupted trade, even though screwworm has now been detected in Texas and New Mexico. That changes the policy calculation: the objective is no longer simply to prevent the parasite’s first U.S. introduction, but to contain existing cases, suppress the population and manage livestock trade without adding unacceptable risk.

Rollins said every animal entering at Douglas will undergo multiple veterinary inspections, including inspection by USDA veterinarians before entry. Any animal failing APHIS requirements will be rejected, and a confirmed screwworm detection would immediately suspend imports through the port. Reopenings at Santa Teresa and Columbus, N.M., would come later and remain dependent on Mexico’s compliance and USDA’s continuing risk assessments.

USDA’s selection of Douglas reflects its assessment that Sonora has one of Mexico’s strongest animal-health systems and presents the lowest current import risk. Federal and Arizona personnel have also submitted nearly 1,000 flies trapped near Douglas during the past year for testing; none was identified as New World screwworm.

Bottom line: the $25 million commitment strengthens USDA’s ability to respond quickly if screwworm pressure moves toward Arizona, California or the western livestock corridor. It also gives the administration a tangible biosecurity investment to point to as it reopens cattle trade over objections from producers who fear additional exposure.

Still, the announcement should be viewed as an infrastructure commitment rather than an immediate expansion of sterile-fly supply. The facility’s location, design, release capacity and completion date remain unsettled. Its ultimate value will depend on whether USDA can simultaneously increase fly production, maintain intensive surveillance and enforce inspection protocols without allowing trade considerations to override changing animal-health risks.

The reopening could eventually restore some feeder-cattle supplies and reduce pressure on an exceptionally tight U.S. cattle market, but it is unlikely to produce an immediate or dramatic decline in beef prices. Import volumes will return gradually, while the domestic herd remains historically constrained and the screwworm threat continues to add inspection, treatment and transportation costs. Reuters reported that the prolonged cattle-import disruption contributed to record beef prices, while the reopening itself has divided cattle producers over the balance between supply relief and disease risk.

—Screwworm’s active U.S. footprint shrinks again as total holds at 42

USDA’s containment and eradication push trims active infestations to eight across five Texas counties — with no wildlife or fly-trap detections reported
 

The New World screwworm’s active presence in the United States receded again this week even as the cumulative case count held steady — a split that is fast becoming the central storyline of the outbreak. The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) now lists eight active cases across five Texas counties, down one from the level shown Wednesday, while the total number of confirmed U.S. animal detections remains at 42. The latest move to inactive status came in a cattle case in Crockett County, Texas.

That divergence — a flat total alongside a falling active count — is the clearest signal yet that federal and state containment efforts are working. Of the 42 cases confirmed since the parasite reappeared on U.S. soil in early June, 34, or roughly 81 percent, are now classified as inactive, meaning treatment has been completed and the infestation resolved. A rising active count would describe an outbreak still outrunning the response; the current trajectory describes the opposite — a response that is finding infestations and closing them faster than new ones appear.

Figure 1. Case status of U.S. New World screwworm detections. Source: USDA APHIS.

Where the active cases are. All eight active cases are in Texas, clustered in the Big Bend and Edwards Plateau country of West Texas, with a single outlier along the Rio Grande in Starr County. Crockett County — once among the most heavily affected, with 11 detections in all — now carries just one active case after this week’s reclassification. The remaining hot spots are Brewster County, with two active cattle cases; Pecos County, with two in sheep; and Sutton County, with one in a dog and one in a goat. Starr County accounts for one active case in cattle. The most recent active case was confirmed July 10, in cattle in Brewster County.

Figure 2. Active New World screwworm cases by Texas county, as of July 30, 2026. Source: USDA APHIS.

By species, the active caseload breaks down to three in cattle, two in sheep, two in goats and one in a dog — a spread that reflects the parasite’s indiscriminate appetite for warm-blooded hosts rather than any single vulnerable sector.

Table 1. Active U.S. New World screwworm cases by county and species. Source: USDA APHIS.

Figure 3. Active cases by species. Source: USDA APHIS.

Why the trend looks encouraging. Beyond the raw counts, two absences matter as much as any number in the ledger: APHIS continues to report no findings in wildlife or feral animals and no fly-trap detections. That combination is significant. Wildlife or feral-animal infestations would suggest the screwworm is slipping beyond the reach of managed treatment and into hosts no one can round up and dress. Positive fly traps would suggest a breeding population establishing itself in the wild rather than isolated infestations arriving on individual animals. So far, neither has materialized — the cases being found are turning up in owned, treatable livestock and pets, and they are being cleared.
 

Taken together, the shrinking active count, the accumulation of resolved cases and the clean wildlife and trapping picture point to an outbreak that is being contained rather than one that is spreading on its own. USDA officials have framed full eradication as an 18-to-24-month effort, and nothing in this week’s numbers argues against that timeline.

How the U.S. got here. The screwworm was declared eradicated from the United States in 1966, pushed steadily southward over the following decades using the sterile insect technique until a biological barrier was maintained at the Darién Gap in Panama. That barrier gave way as the parasite worked its way back up through Central America and Mexico in 2024 and 2025. The first U.S. case of the current outbreak was confirmed June 3, 2026, in a calf in Zavala County, Texas, near the Mexican border; cases then appeared across a string of Texas counties and, in one instance, a dog in Lea County, New Mexico.

The eradication machinery. The sterile insect technique remains the core of the strategy. Screwworm flies are mass-reared, sterilized with radiation and released in overwhelming numbers; because female screwworms mate only once, a mating with a sterile male yields eggs that never hatch, collapsing the next generation. The long-running COPEG facility in Panama produces about 100 million sterile flies a week, and USDA has spent roughly $21 million modernizing Mexico’s Metapa plant, expected back online this summer. On the domestic side, USDA completed a sterile-fly dispersal facility in Texas in February and broke ground April 17 on a $750 million production plant at Moore Air Base near Edinburg — slated to reach 100 million flies a week by November 2027 and 300 million at full capacity. USDA Secretary Brooke Rollins has cast the domestic plant as a way to put sterile-fly production “in American hands” rather than leaning on foreign facilities.
 

What is still unresolved. The encouraging domestic numbers sit against a harder backdrop south of the border. Mexico reported roughly 1,300 active animal cases as of mid-April, with the nearest confirmed infestation about 90 miles from the Texas line in Nuevo León — a reminder that the pressure on the border is continuous. The U.S.-Mexico border remains closed to Mexican cattle imports, and Rollins has said Texas ports will not reopen until the threat is significantly pushed back. That closure carries its own cost: analysts have pegged the disruption at roughly 1.1 million head of cattle that would ordinarily move north, weighing on a Texas cattle sector that generates about $13.6 billion in annual sales. Animal-health officials also continue to watch for a quieter risk — that fear of quarantine could discourage producers from promptly reporting suspected cases, the very step the containment strategy depends on.
 

Bottom line: for now, the direction of travel is favorable. The active caseload is falling, the resolved share is climbing past 80 percent, and the wild population shows no sign of taking hold. The figures to watch in the weeks ahead are simple: whether the active count keeps trending down, whether any case turns up in wildlife or a fly trap, and whether the parasite’s advance in Mexico forces new detections along the border. As of this week, each of those indicators is pointing the right way.

Source: USDA Animal and Plant Health Inspection Service (APHIS) confirmed-detections dashboard and program updates; USDA press releases; U.S. Department of Agriculture. Figures as of July 30, 2026.

—Reopening Mexican cattle trade reflects a changed screwworm risk

With the pest already detected in the U.S., the economic case for a prolonged border closure has weakened

Southern Ag Today authors K. Aleks Schaefer and Rylee Smith argue (link) that USDA’s decision to begin a phased reopening of the border to Mexican cattle imports in August is controversial but economically and scientifically justified. The original closure was designed to delay the arrival of New World Screwworm, or NWS, but confirmed U.S. detections have fundamentally changed the policy calculation: officials must now determine whether continued restrictions provide enough additional biosecurity protection to outweigh mounting costs for cattle producers, feedlots and consumers.

Mexico supplied roughly 1.2 million feeder cattle annually to the U.S. before the restrictions. At the height of the disruption, monthly imports were more than 150,000 head below levels predicted by historical trading patterns, sharply reducing the number of cattle available to U.S. feedlots.

That supply loss had an outsized effect because the U.S. cattle herd was already historically tight. Schaefer and Smith’s research found that feeder cattle prices rose rapidly after the closure, reaching nearly $100 per hundredweight above expected levels by July 2025. The persistence of those price effects illustrates how closely integrated the U.S. and Mexican cattle sectors have become.

The reopening argument is not that NWS no longer poses a serious threat. Rather, it is that a complete import ban becomes harder to justify once the pest is already present domestically. The relevant benefit is no longer preventing the first introduction, but slowing additional introductions, protecting unaffected regions and giving eradication programs more time to work.

That distinction is critical. Keeping the border closed may still produce meaningful benefits if imported cattle present a significant reinfestation risk or if restrictions improve the effectiveness of surveillance and eradication efforts. But those benefits must now be weighed against continuing market damage rather than against the much larger benefit of keeping NWS entirely outside the country.

A phased reopening offers a practical middle course. It can restore part of the feeder-cattle pipeline while preserving inspections, geographic controls and other safeguards designed to reduce disease risk. It also allows USDA to adjust import volumes or suspend movements again if surveillance indicates that reopening is accelerating the spread.

The broader lesson is that biosecurity policy cannot remain fixed when the underlying risk changes. Border restrictions may have been economically defensible when they were buying time before the first U.S. detection. Once NWS entered the country, however, the threshold for maintaining those restrictions became higher.

Upshot: The authors’ conclusion is therefore persuasive, but conditional: reopening is the right decision only if USDA maintains rigorous surveillance and can demonstrate that imported cattle are not materially undermining eradication efforts. The economic burden of the closure is clear and continuing; the remaining biosecurity benefit must be equally clear to justify extending it.

—Screwworm response working, but sterile-fly supply remains the test

NCBA’s Woodall says more cases were expected as agencies race to expand capacity

In a Beef Buzz report by Senior Farm and Ranch Broadcaster Ron Hays for the Radio Oklahoma Ag Network (link), National Cattlemen’s Beef Association CEO Colin Woodall said the coordinated response to New World Screwworm is functioning largely as planners intended. USDA, state animal-health authorities and cattle organizations had spent roughly 18 months preparing for the pest, he said, allowing officials to test procedures, establish communication channels and respond quickly when cases were detected.

Woodall pushed back against claims that additional screwworm cases show the response has failed. The current strategy was never expected to eliminate the pest immediately. Instead, it is designed to detect infestations, contain outbreaks and buy time while sterile-fly production is expanded to the level needed to suppress the reproductive population.

USDA has indicated that roughly 500 million sterile flies per week may ultimately be required. Until production reaches that scale, Woodall said, more cases should be expected. That distinction is important: An increasing case count can reflect the biological reality of an under-supplied control program rather than an operational breakdown by federal or state agencies.

The response has also become broader than a conventional livestock-health campaign. Woodall cited cooperation involving USDA, the Environmental Protection Agency, the Food and Drug Administration, the Department of Homeland Security and the Defense Department. That whole-of-government approach reflects growing recognition that a serious animal-health emergency can disrupt food production, interstate commerce, rural economies and national security.

The immediate policy challenge is therefore one of capacity and execution. Surveillance and rapid treatment can limit losses, but they cannot substitute for sufficient sterile-fly production. The response will ultimately be judged less by whether isolated cases continue to appear than by whether officials prevent uncontrolled geographic spread while expanding fly releases.

A planned sterile-fly facility in South Texas is central to that effort. Woodall said the U.S. Army Corps of Engineers is helping move the project forward at “warp speed,” but he cautioned that the facility is considerably more complex than a standard agricultural building. It requires advanced biosecurity and specialized equipment to sterilize flies safely, including systems involving radioactive cobalt.

That complexity creates a difficult balance. Moving too slowly leaves the cattle industry exposed, but cutting corners could create laboratory, worker-safety or community risks. The involvement of the Army Corps and multiple regulatory agencies may help accelerate construction while maintaining the technical safeguards required for a high-containment facility.

Woodall also emphasized that describing the response as successful does not minimize the threat. Screwworm remains a costly management problem that can increase veterinary expenses, restrict cattle movement, disrupt trade and cause serious animal-welfare losses. Producers may bear substantial costs even when the broader containment strategy is operating effectively.

Producer education remains one of the strongest defenses. Woodall credited the Texas and Southwestern Cattle Raisers Association, Texas Cattle Feeders Association and Texas Beef Council with helping producers identify suspicious wounds, understand reporting procedures and coordinate with government agencies.

His central recommendation was straightforward: Producers who see an unusual wound or possible infestation should contact their veterinarian immediately. Early detection gives animal-health officials the best chance to treat affected livestock, investigate nearby herds and prevent a localized case from becoming a wider outbreak.

Bottom line: the broader takeaway is that the screwworm campaign is a race between the pest’s ability to reproduce and the government’s ability to manufacture and distribute sterile flies. The coordinated response appears to have improved detection and limited bureaucratic delays, but its long-term success still depends on reaching the required production scale before infestations become more numerous and geographically dispersed.

■  TRADE POLICY

—Commerce finalizes Spanish olive subsidy rates

Duties of up to 25.21% keep the long-running U.S./EU trade dispute alive

The Commerce Department’s International Trade Administration has issued the final results of its countervailing duty review of ripe olives from Spain, finding that two Spanish producers received government subsidies during the Jan. 1-Dec. 31, 2023, review period. Commerce calculated a 4.80% subsidy rate for Agro Sevilla Aceitunas S.Coop.And and a 25.21% rate for Angel Camacho Alimentación, S.L. and its cross-owned affiliates.

The agency will instruct U.S. Customs and Border Protection to collect cash deposits at those rates. Imports from other Spanish olive producers not individually reviewed will be subject to an 11.08% cash-deposit rate.

The decision extends a long-running trade dispute between the U.S. and European Union over whether European agricultural support programs unfairly subsidize Spanish olive exports.

■  TRANSPORTATION & LOGISTICS

—BNSF warns UP/Norfolk Southern merger would raise freight rates

Katie Farmer says proposed safeguards are narrow, temporary and unlikely to preserve rail competition

BNSF Railway Chief Executive Katie Farmer sharply criticized Union Pacific and Norfolk Southern’s latest merger filing, arguing that the proposed transcontinental railroad would reduce shipping options, raise freight rates and ultimately increase prices for consumers. In a July 29 report by FreightWaves, Farmer said the supplemental information submitted to the Surface Transportation Board (STB) does not resolve the proposal’s central problem: The applicants have not demonstrated that the merger would preserve or enhance competition under the agency’s stricter merger standards.

Farmer characterized the latest submission as Union Pacific and Norfolk Southern’s fourth attempt to file a complete application. Although the railroads added details about customer protections and gateway access, she said those provisions remain complicated, heavily qualified and available to only a small portion of shippers for limited periods.

Her strongest criticism focused on the proposed Committed Gateway Pricing program, which is intended to preserve traffic exchanges at major gateways such as Chicago, St. Louis and the U.S./Mexico border. Farmer said the program would apply to only about 1% of rail shipments, expire after several years and could result in higher rates for many participating customers. From BNSF’s perspective, that makes the proposal less a durable competitive safeguard than a temporary concession designed to help the merger clear regulatory review.

The market-share argument will be central to the opposition campaign. Railfax data cited by FreightWaves estimates that the combined Union Pacific/Norfolk Southern system would handle roughly 37% of North American rail traffic. Farmer arrives at the larger 50% figure by adding the approximately 13% share associated with Canadian National, which recently announced an operating agreement with the merger partners. That does not mean Union Pacific and Norfolk Southern would own Canadian National or directly control half the market, but the coordinated network could give the alliance substantial influence over routing, pricing and gateway access.

The dispute highlights the strategic stakes of the proposed merger. Union Pacific and Norfolk Southern are likely to argue that a coast-to-coast system would eliminate interchange delays, improve service reliability and help railroads compete more effectively with trucking. BNSF, however, is warning that the same network efficiencies could come at the expense of competition, particularly for captive agricultural, energy and industrial shippers that have access to only one or two rail carriers.

For agriculture, the outcome could be especially important. Grain, fertilizer, ethanol and feed shippers frequently depend on access to competitive interchange points to reach export terminals, processing plants and livestock regions. Any reduction in routing alternatives could strengthen railroad pricing power and widen transportation costs between producing regions and end users.

Upshot: The STB therefore will have to determine whether the promised service improvements are substantial, enforceable and widely available enough to outweigh the risks of greater market concentration. Farmer’s comments signal that BNSF intends to challenge not only the merger itself but also the effectiveness of every proposed competitive safeguard. The regulatory battle is increasingly likely to center on whether the transaction creates genuine new competition or merely a larger network with limited protections for shippers.

■  WEATHER

— NWS outlook: Flash flooding risk in New England through Thursday; while flash flooding risk continues across Four Corners and Southeast through Friday… …Severe thunderstorms and flash flooding possible from the Plains into the Midwest through Friday… …Dangerous heat continues for the South through Saturday and expands into the Southwest, Intermountain West, and northern High Plains late this week into this weekend.
 

—Corn Belt rain offers timely yield support as southern Plains bake

Midwest moisture pressures grain prices as Plains heat intensifies

A high-stakes rainfall event is moving into some of the Corn Belt’s most moisture-sensitive areas, offering potentially meaningful protection for corn and soybean yields heading into August. The National Weather Service expects repeated thunderstorms from the Plains into the Midwest through Friday, with heavy downpours and localized flooding possible as a frontal boundary interacts with unusually moist, unstable air. The heaviest rain should migrate into the Upper Midwest and middle Mississippi Valley on Friday.

The projected corridor of more than 2 inches from eastern South Dakota through southern Minnesota, northeastern Iowa, southern Wisconsin and northern Illinois is especially important because portions of that region entered the event with worsening moisture conditions. The July 21 U.S. Drought Monitor showed deterioration across Minnesota, Iowa and Wisconsin, while drought and crop stress were also expanding across the Dakotas and Nebraska amid unusually hot weather. That gives the coming rainfall considerably more yield value than an identical storm would have in an already-wet region.

For corn, analysts say the rain is best viewed as yield-protective rather than automatically yield-building. Fields that suffered irreversible pollination problems cannot fully recover, but improved soil moisture can support kernel retention, grain fill and test weight. The accompanying cooler period through Aug. 4 may be nearly as important as the rain because lower temperatures will reduce evaporation and crop-water demand, allowing more of the precipitation to enter the root zone.

Soybeans may receive an even larger benefit. Much of the crop’s yield potential is determined during August pod-setting and seed-fill stages, making timely moisture during the next two weeks especially influential. A broadly verifying rain event would reduce immediate concern about premature pod abortion and provide a better moisture reserve before warmer temperatures return.

Market impact: The near-term weather signal according to traders is bearish for corn and soybean futures because it reduces the probability of widespread late season yield losses. Markets may place particular weight on northeastern Iowa, southern Minnesota and northern Illinois because rainfall there can influence national yield expectations. A successful event could encourage additional long liquidation, especially if weekend forecasts maintain follow-up rain chances for the northwestern Corn Belt.

However, the forecast does not eliminate weather risk. Thunderstorm rainfall is inherently uneven, and localized totals above 2 inches can coexist with nearby areas receiving much less. Training storms could also produce flooding, ponding, hail or wind damage. Traders will therefore focus less on headline rainfall projections and more on observed coverage, radar totals and whether the driest counties receive meaningful moisture.

The return of above-normal warmth after Aug. 5 is another reason the rain should not be interpreted as an all-clear signal. NOAA’s Climate Prediction Center favors above-normal temperatures across nearly the entire country during Aug. 6-12, with the strongest warm signal centered on the southern Plains. The same outlook favors below-normal precipitation from the Dakotas and Nebraska through Kansas, Oklahoma and Texas as upper-level ridging expands eastward.

Southern Plains become the main weather concern. The Southern Plains remain the sharpest agricultural risk area. Persistent highs of 100 to 110 degrees, coupled with limited rainfall, would accelerate moisture losses across Kansas, Oklahoma and Texas. The greatest immediate threats are to sorghum, cotton, pasture conditions and livestock performance. Heat raises cattle water requirements, reduces weight gains and places additional strain on already-stressed grazing resources.

For the Hard Red Winter wheat belt, the developing pattern is less about the nearly completed 2026 harvest than about pasture recovery and soil-moisture reserves ahead of fall wheat planting. Periodic rain across northern areas should improve planting prospects, while continued dryness farther south could leave producers seeding into a depleted soil profile or delaying establishment while awaiting moisture.

In the Mid-South, early-August rainfall should provide useful support for soybeans and cotton, but the benefit could prove temporary if above-normal heat returns during Week Two. Faster evaporation and renewed crop-water demand would again place pressure on shallow-rooted or poorly developed fields.

Upshot: Overall, the forecast shifts the weather premium away from the central and northern Corn Belt without eliminating it. Corn and soybean markets face additional pressure if the rain verifies, but Southern Plains heat, uneven storm coverage and the possible return of a broader August ridge should prevent the market from completely discounting weather risk.

■  REFERENCE LINKS TO KEY TOPICS

Index to links of special reports & other items of note

