Highlights
After Wednesday’s less than expected retail inflation report for June at 0.2%, yesterday’s inflation at the wholesale level report for June was 0.1% and the resulting 12 month inflation rate was the smallest in nearly three years. It means the economy has entered a period of disinflation even with a very tight labor market. The run of softer inflation readings will bring an end the Federal Reserve tightening money supply campaign. Lower interest rates will reduce the value of the dollar versus other currencies, which will make US products more competitive in the world marketplace. The US dollar has been down five consecutive days and lost 3% of its value versus other currencies. That is 20 cents a bushel on corn, 40 on beans and 24 on KC wheat.
Yesterday’s midday weather model runs took some rain out of the Northern Plains with cooler temperatures. The Eastern Corn Belt will see some precipitation through the next week, but there is a higher chance of moisture blocking ridge in the 11 to 15 day forecast. Note all CBOT commodities were sharply higher before the midday weather update.
The Ukraine Export Corridor Deal is set to expire on Monday. The UN did tell Putin it would reconnect Russia to the SWIFT banking system. No response from Putin yet. We do not know if the EU has backed off its “no way” will Russia be reconnected to SWIFT.