November canola is down $8.30/mt, December soybean oil is down .29 cents/pound, November European rapeseed is down .50 euro/mt and September Malaysian palm oil is down .28%. December oats are down 6 3/4 cents/bushel while November European corn is now up .75 euros/mt. August crude oil is up $1.58/barrel, August ULSD is up $.1800/gallon, and the September Canadian dollar is up .00415 at .71285. The September U.S. Dollar Index is down .360 at 100.680 and the August Brazilian real is up .00200 at 0.19605.

Energy markets pulled back considerably through the morning with credit being given to President Trump's assurance that the Strait of Hormuz is open to all but Iranian shipments, suggesting that the idea of a U.S. fee of 20% has been dropped. If that was truly the reason, the impact of headline algorithm selling should be short lived given the IRGC's continued attacks on vessels trying to pass through the Strait without their permission. Traffic has nearly ground to a halt on the recent developments with reports from the shipping industry suggesting that they are not going back in for oil once they finally get out (after months of basically being held hostage) until the U.S. and Iran formally agree on who is in control. When combined with the Russian ban on diesel exports through the end of July, you get a U.S. diesel market that remains sharply higher despite crude oil's retreat.

Soybean oil has turned quietly lower on the day (on likely profit taking) with losses in canola more dramatic despite the strong diesel market. Improved forecasts for the Canadian Prairies may be behind canola's weakness that has seen almost all of Monday's impressive gains given back by midday.

Wheat has turned higher on the deteriorating outlook for Russian exports amid intense fighting with Ukraine while corn and soybeans recover most of their earlier losses as well.

Outside markets are reacting to a much weaker than expected June CPI release, and it was already expected to be cool. Headline CPI fell from 4.2% in May to 3.5% in June (with 3.8% expected) while core CPI fell to 2.6% from 2.9% in May, also below expectations of 2.8%. That allowed treasuries and stocks to jump with the U.S. dollar declining on the lower interest rates. With the cool inflation report, the market dropped the pricing in of a second rate increase completely (that had been expected for the December Fed meeting).

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