Another overnight grain rally that needs to overcome day session selling.

Again for the 4th time this week, grain futures are higher in the night session, which begs the question for the 4th time this week, will they sell the opening?. Increasing concerns for the drought in the Northern Plains and the northern half of the Midwest during June is now becoming a conversation with an expanding area/warm 2-3 week forecast. Searing upper 90's across the Dakotas on Thursday, ongoing dry weather forecasts dramatically raise the drought risk for 2021 US corn/soy/spring wheat crops. Crop ratings will show declines next Monday afternoon.

US balance sheets are tight, and we must grow a perfect crop, with US corn/soybean or spring wheat yield losses not tolerable. Demand is expanding for corn, given the Brazilian shortfall occurring on their 2nd corn crop, and the US ethanol industry is picking up usage as driving is returning to normal. China also has a considerable amount of new crop corn, soybeans and wheat to secure. Anything that threatens the potential for trend line yields look to create sharp rallies that can quickly produce new price highs for corn and soybeans.

China will remain an active importer of world wheat in 2021/22 despite a bumper harvest estimated at 129 MMTs (vs last year's crop at 127 MMTs). China's National Grain and Oilseed Information Center said today that China will import 8 MMTs of wheat in 2021/22, down slightly from last year's record of 9.8 MMTs, but still the 2nd largest total on record. China has already secured more than 2.0 MMTs of French wheat. China will likely use wheat as feedstuff for its hog and poultry industries.

The overnight forecast models have reduced rainfall in their forecast for the N Plains and the N Midwest over the next 2 weeks. The biggest cut came from the GFS with yesterday's wet midday solution now seen as an errant outlier. Limited rainfall is forecast across the Plains and the northern half of the Midwest over the next 2 weeks. The Dakotas, Nebraska, Iowa, Minnesota, and Michigan will be particularly dry. The best rains will drop across the Gulf States, Delta, and the southern half of the Midwest. Some areas of Louisiana and Mississippi will endure flooding amid saturated soils and new rains of 3-5.00″ next week. The combination of too much rain over the Gulf States while drought deepens across the N Plains and the Northern Midwest will produce a fall in NASS weekly crop condition ratings for the next 2-3 weeks.

Yesterday's cash cattle trade showed small numbers moving in Kansas at 119-120, steady with earlier week sales and last week's market. The boxed beef market continued its advance through Tuesday, but gains were slower than in recent weeks. The choice cutout moved $.39 higher, and the select value was up $1.28.

The beef cow kill has been strong all year and reached a new high in early May. Slaughter rates have slightly eased from the May high but are well outside the 5-year range. The cumulative slaughter is currently 109% of last year and the largest since 2010. The dairy cow kill is running at just 98% of a year ago. April 2022 live cattle made new contract highs yesterday, February 22 cattle will likely do the same thing today. Notice how January 22 feeder cattle are close to making new 60-day recovery highs, it is within $4.00 of the April contract high. Deferred live cattle pricing, which continues to rise, is absorbing implied higher corn costs.