Mixed start for today, after yesterday's chart-based liquidation.

Grain futures are mixed this morning, with the only old crop corn seeing a moderate bounce from Tuesday's chart-based liquidation. Favorable Central US weather and the uncertainty surrounding 2021 crop seedings has the marketplace anticipating strong yields with all of the summer still in front of us. An early start with adequate moisture is good, but the weather has been unpredictable and shifting at every lunar cycle.

Rumors that China was rolling/canceling some old crop corn purchases to new crop and that US ethanol producers were backing away from the cash market have proven unfounded. The overnight recovery bounces on old crop corn is hesitant because of technical damage, while farmer selling has essentially ended. The state-based corn demand is ongoing with China continuing to export more than 1.0 MMTs of US corn weekly. Record large US corn export demand is forecast into early 2022. Corn export demand for old and new crop is still woefully too low on paper.

US ethanol margins are at their highest profit margin in years while US consumers turn to normal driving habits and the Biden Administration promotes green fuels as a stepping stone to electrification. Today's weekly EIA Biofuel report should highlight the recovery in the weekly US ethanol grind amid low US ethanol stocks. And the Senate Finance Committee will be debating a package of clean energy tax credits today that would increase ethanol/renewable biodiesel demand.

Corn futures are below where they stood in mid-April when the Brazilian winter corn production loss was far less. The decline in world and CBT ag futures is based on speculative liquidation. The CBT break will act to stoke demand at a time of declining old-crop supplies/stocks. Moreover, the 2021 US growing season is just starting, and a dire drought across the Dakotas and S Canadian Prairies is concerning. Grain futures have been liquidating since making a high after the first week of May and looks to be placing a washout low either ahead of or after the upcoming three-day weekend. The extended range GFS model offers the season's 1st hot/dry high-pressure Ridge that would produce extreme Central US heat. Confidence in the forecast this far out is low, but the timing for a hot/dry weather scare starting around June 10th is about right.

Below normal rainfall is forecast for the Northern Plains and the Northern 1/3 of the Midwest while all the rainfall action stays farther south across the Central and Southern Plains and through the Midwest. The Northern Plains drought will deepen with the recent rains, only providing temporary relief. North Dakota is ground zero from the drought, with producers reporting germination issues. A Ridge of high pressure will build across the Western US, which will shove the jet stream northward. This will produce a downstream Trough across the Plains that allows storm systems to produce rain every 2-3 days. 10-day rainfall totals are estimated in a range of 1-3.00″ across Nebraska/Kansas and N Texas. The best Plains rain chances are on the weekend. Central US high temps range from the 70's to mid 80's.

What is interesting in today's forecast is that the GFS 11-15 day forecast produces a strong Central US high-pressure Ridge that slowly retrogrades west. This Ridge would promote extreme heat/dryness for the Midwest and should be monitored. For now, clouds and rain will keep the Central US cool over the next 10 days, with a potential warming period in the 11-15 day period. If this forecast verifies after the Memorial Day weekend, current attitudes will be shifted from anticipating better than trend line yields.

Cattle futures mounted a recovery yesterday but gave that rally up again into the close, stalling at prior week's highs. Tuesday's light cash trade was steady for the week at $119-120, and the trend looks to hold for the rest of the week. Boxed beef prices continued to climb, with choice boxes gaining $2.09 and select was $.87 higher. Feeder cattle have rallied to levels on the fall contracts that are back to desirable levels to do catch up hedging. Feed values could be scoring this low this week or into the next week's opening, and risk is for another sharp recovery in grain pricing.