1. Soybean and cereal futures lower overnight
Soybean and grain futures were lower overnight as investors took a risk-averse approach amid global inflation concerns.
Equity markets were sold off yesterday with the S&P 500 falling to the lowest level this year before narrowly recovering in the overnight session on the same continued demand concerns that are fueling inflation around the world.
The US Federal Reserve is expected to raise its key interest rate again today in a bid to cool down the economy and curb red-hot inflation. How much the fed funds rate will rise is a bit uncertain, although traders seem to have priced in a 75 basis point hike for this month and already expect a similar increase in July.
As for the weather, extremely hot weather is looming over most of Illinois, Indiana and Ohio this week with temperatures forecast to reach 110 degrees Fahrenheit in some areas, according to data from the National Weather Service.
A little rain in the Northwest Corn Belt can improve humidity, but hot, dry weather is expected to stress newly emerged plants across much of the Midwest, said Donald Keeney, agricultural meteorologist for Maxar.
Dry weather is also prevalent across much of the Delta this week. Some rain is possible in the southeastern region later this week, but showers will be limited and temperatures will be warm, Keeney said.
Soybeans for July delivery fell 4 3/4¢ to $16.93 3/4 a bushel overnight on the Chicago Stock Exchange.
Corn futures were down 2 3/4¢ at $7.65 1/2 a bushel.
Wheat futures for July delivery fell 2 3/4¢ to $10.47 1/2 a bushel, while Kansas City futures lost 6 3/4¢ to $11.35 ½ a bushel.
2. Record gas prices aren’t deterring drivers, says AAA
Record gasoline prices haven’t dampened demand as the US summer driving season progresses, according to data from the American Automobile Association, better known as AAA.
Regular gasoline prices rose Tuesday to a record national average of $5,016 a gallon, the auto services company said. That’s up from $4.47 a gallon a month ago. Premium gasoline prices yesterday were at $5,693 a gallon, down from $5,116 a gallon last month, AAA said.
Diesel prices on Tuesday were at $5,775 a gallon versus $5,568 a month ago. Meanwhile, drivers who bought E85 paid $4,337 a gallon at the pump yesterday versus $3,849 a month earlier, the company said in a report.
Despite the high prices, travelers continue to hit the road.
“Based on the demand we’re seeing, it seems like the high prices haven’t really deterred drivers,” said Andrew Gross, a spokesman for AAA. “If prices stay at $5 or higher, we may see people start to change their daily driving habits or lifestyle, but that hasn’t happened yet.”
Domestic gas inventories fell by 800,000 barrels to 218.2 million barrels last week, while demand grew by 220,000 barrels to 9.2 million, according to data from the Energy Information Administration.
Reduced supply combined with increased demand is contributing and will continue to contribute to higher prices as the summer season progresses, AAA said.
While the company attributed the rise to rising oil prices, crude futures have actually moved lower in recent days.
US oil futures fell nearly 4% last week to $117.51 a barrel as of this morning. The June 8 price hit $122.11 a barrel, the highest since March 8, before retreating in the past seven days.
Still, the gasoline prices consumers pay at the pump continue to rise.
California is the most expensive US market at $6.43 a gallon, followed by Nevada at $5.65 and Alaska at $5.56 a gallon, AAA said.
Most Corn Belt states, including the Dakotas, Minnesota, Nebraska and Iowa, are paying between $4.70 and $4.88 a gallon, the company said. Illinois drivers pay $5.56 per gallon, on average, and Indiana consumers pay $5.05 per gallon.
3. Heat Advisories and Warnings Continue in the Eastern Midwest
Heat advisories and watches continue today across much of the eastern corn belt, according to the National Weather Service.
In eastern Iowa and much of Illinois, heat index values are expected to reach 105 degrees this afternoon.
Those working outdoors today are advised to exercise extreme caution due to the heat wave, the NWS said in a report early this morning.
In northern Indiana and southern Michigan, index values may exceed 110 degrees today, the agency said.
“Extreme heat and humidity will significantly increase the potential for heat-related illness, particularly for those who work or participate in outdoor activities,” the NWS said.
In the southern plains, meanwhile, it’s going to be hot and mostly dry for growers harvesting their hard red winter wheat. Temperatures will peak near triple digits and only a small chance of rain is forecast, the agency said.
About 53% of Texas wheat was harvested as of Sunday and 32% of Oklahoma wheat was in the bin, USDA data shows>