Grain futures start Thursday morning session sharply higher.

Grain futures were higher from the opening tick overnight, advancing double digits for spring wheat and soybeans on concerning weather, with the euro and the afternoon turning drier than the GFS that midday tried to suggest chances of rain by June 11. Soyoil futures have scored new contract highs while worry over a drought builds for North Central US crop areas. It is all about the weather with tight old-crop supplies meaning that the US cannot lose a bushel of new crop production. The hot/dry weather forecast for the N Plains and the W Midwest has the traders' attention following a spring in which rainfall fell only sparsely across the same area.

Thursday morning weekly export sales data from the USDA is delayed until Friday morning due to Monday's Memorial Day holiday. Even though sales will be minor, as they should be, Friday's price action will be primarily focused on the North American forecast going into next week. Corn crop ratings have likely seen the best for the summer this week, and the market is coming to grips with the possibility they will see a much lower rating number next Monday afternoon.

China is reporting that recently US/China trade and economic talks have been a success. This week, there have been two calls that lasted about 50 minutes each that included USTR Ambassador Tai and US Central Bank Chair Yellen. China praised the normalization of trade talks and a desire to seek common ground. The US is closely watching to see if China lives up to its Year 2 purchase pledge of $43.5 billion US ag goods.

The North Central US weather forecast is crop yield threatening with extreme heat and limited rain into mid-June. A seasonally strong high-pressure Ridge has produced record heat across the Western US in recent days. This Ridge will slowly progress east over the next 7-8 days limiting rainfall and producing above to much above normal temps for the N Plains and the northern half of the Midwest. The Dakotas will register highs in the 100's from Friday into the weekend. And the often too wet GFS model has cut its 10-day rainfall totals by 40% and is coming more in line with the arid EU/Canadian model counterparts. There is a rain chance late in the 6-10 day period for the N Plains/NW Midwest before dryness returns in the 11-15 day timeframe. The lack of rain and budding heat is concerning for summer weather trends amid soil moisture profile that is in sharp decline. It is worrisome that the Western US drought looks to push eastward with time into the W Midwest and the N Plains.

Cattle futures had a strong recovery yesterday on news that JBS restarted operations yesterday throughout the country. Initial cash trade for the week started better than expected. Some cattle in Texas sold for $119-120 or steady to $1 higher. Light trade in Nebraska and the Western Midwest was steady with a week ago at $120 live and $191 dressed. A firm outlook is offered for the rest of the week. Cattle slaughter on Wednesday remained light at 105,000 head, off 15,000 from a week ago as JBS came back online. The combination of the holiday week and the light daily runs had the beef market sharply higher. The choice cutout jumped $5.60 to $340.16, and the select value gained $5.43 to $311.88. The choice/select spread continues to gain, reaching $28.28 for the 2nd highest week on record for early June.