Crop ratings reveal the poor spring wheat crop to the world.
A sharp rally in spring wheat overnight occurred on the collapsing wheat condition reports, representing the crop to the world as caring condition ratings near 1988 levels. Spring wheat was up as much as 11 cents overnight before retreating a bit. Soybean futures also rebounded considerably on a resurgence of palm oil prices which carried bean oil values to over one dollar gains. Non-threatening Central Plains and Midwest weather kept corn on the defensive.
The N Plains and the Canadian Prairies have returned to an arid weather forecast for the next two weeks, which is expected to underpin US wheat futures. Spot corn futures are supported by central Illinois bids that are 45-60 cents over for June and July purchasing. This also supports US wheat futures, which could have seen an early seasonal low as wheat is pursued aggressively at harvest for rations.
NASS indicated that 90% of the US corn crop is planted, and 64% emerged, with 75% of the US soybean crop planted and 41% emerged. US spring wheat conditions were a low 45% GD/EX and 14% P/VP in one of the lowest ratings looking back to the 2012 drought. 39% of US pasture conditions were P/VP suggesting a forage shortage with US hay acres at their lowest level since 1908. NASS will release its initial US corn crop ratings on June 1st, next Tuesday.
The Midwest forecast is non-threatening, but arid weather conditions will hold across the N Plains and the Canadian Prairies into June 8th. The drought here will deepen with the recent rains, only providing temporary relief. The Western US drought will become more severe with heat building as the 90's become more widespread. The Western US is quickly pushing to its worst water shortage in decades. Whether the dry soils of the Western US can promote a high-pressure Ridge that progresses east with time should be closely monitored. Heavy rains are focused on the Central Plains, leaving the Dakotas and Canadian Prairies dry. 10-day rainfall totals are estimated in a range of 2-6.00” across Nebraska and Kansas. The best chance of rain is Wednesday/Thursday. Midwest temperatures will be variable without any extreme heat. Highs will range from the 70’s to mid 80’s. Any heat will be centered on California with many days in the 90’s.
Cattle futures yesterday absorbed the bearish cattle on feed report, which is moderate losses. With box beef prices usually still strong, this could promote buying interest on the live cattle side. Negotiated cattle markets were quiet to start the week. The outlook is steady as beef prices are still rising. However, next week’s kill will be reduced by the holiday, limiting the chance of higher prices. Boxed beef started the week strong. Choice boxes were up $2.66, and select rose $1.08. The choice/select spread widened to a $24.44 choice premium.
The May Cold Storage report showed that total US beef stocks fell for the 4th consecutive month. The end-of-month April beef stocks of 454 Mil Lbs were down 6% from March and were 5% less than a year ago. This occurred with record April beef production and record-high April retail beef prices.