Grain futures start Friday on the softer trade side ahead of a three-day weekend

Grain futures start Friday on the softer trade side ahead of a three-day weekend

Grain futures started firm overnight on follow-through technical buying, with corn having traded at limit up. Still, by morning, gains turned to a softer trade, as the market awaits announcements of rumored sales to China yesterday on the USDA/FAS reporting system. Spring wheat is performing the best on spread against the other wheat and feed grains, as forecast models have turned dry for the northern Plains and the northern one third of the Midwest over the next 10-12 days. There are chances of showers in the 13-15 range, but confidence is extremely low.

It was cold across the N Plains and the far Northern Midwest with temps in the mid to lower 30's. Some patchy frost may have occurred that could have stunted emerging corn and soybean seedlings. However, widespread losses are doubtful, but the cold will slow plant growth. Also being noted this morning is the acute dryness across Northeast China and the spring wheat areas of Russia.

The coming forecast has near daily storms producing near to above normal rain from the Central/Southern Plains through the SW and C Midwest. The Western US holds in a dangerous drought pattern that looks for fuel considerable heat this summer. The big question is whether the Western US drought pushes east? The Northern Plains drought will deepen amid the dry forecast. The dryness looks to extend the Northern ½ of the Midwest. This area is drying out fast. A Ridge of high pressure will build across the Western US, which will shove the jet stream northward. 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. The extended range offers an eastern US Ridge that spurs heat across the Ohio Valley.

Yesterday's cash cattle market was steady while feeder cattle fell $2 on the board on the corn rally. The cash beef market continues to inch higher, with the choice cutout gaining $0.49 and select gained $0.05. The choice cutout spread widened to a $25.88 choice premium. The beef export pace has remained at a record pace and accelerated since March. Moreover, record prices have not slowed the sales pace. Export sales last week hit a 16-week high of 61.5 Mil Lbs. The cumulative export rate is now 116% of last year. Moreover, outstanding sales are 187% of a year ago. The USDA raised their annual export forecast in May, but they could still be 700-800 Mil Lbs (20-25%) too low based on commitments.