Dakota rains lead overnight grain price decline.

Grain futures turned sharply lower overnight as the driest areas of the Central US, most notably Western and Central Dakotas, received several widespread thunderstorm clusters from Tuesday into the early morning hours of Wednesday. The heaviest rain dropped across the Western Dakotas with amounts of .2-1.25″ with lighter totals in the east. This was the 2nd day where needed rain fell, and the moisture will benefit Dakota crops. As this rain is occurring, vast swaths of the Central Plains and the Western and Northern Midwest continue to struggle with heat/dryness with just a few spots of rain since the closing days of May. Highs ranging from the mid 80's to the mid 90's will be commonplace across the Plains and W and N Midwest over the next 10-14 days, which will elevate evaporation rates and dramatically lower soil moisture. The drying trend is especially worrisome for Iowa amid its deepening drought.

This will be the 3rd day of the index fund roll, with traders likely to see the premium cash markets as supporting a rally in July futures into 1st notice day. Cash market premiums prevail, and US export, crush or ethanol demand shows no sign that 9-year high prices are rationing it. Look for July futures to firm against new crop futures on spreads. Ahead of FAS weekly export sales and the June WASDE report on Thursday, CBT futures are lower on profit-taking. December corn futures has an open chart gap that will produce support at $5.9275. The Central US weather forecast is hot/dry, US corn/soybean crop ratings are expected to fall on Monday. It will be difficult to create a sustaining top in corn currently with so much potential concerning weather for the Midwest, and the USDA caught with corn carryouts and Brazilian crop sizes that need to be reduced.

A broad area of dryness extends from California into Michigan and includes Iowa, Minnesota, Wisconsin, Michigan, Nebraska, and Kansas. Widely scattered showers will persist across Illinois, Indiana, Ohio, and Kentucky into Friday. The GFS model has another chance of rain for the Dakotas on Friday with rain totals of .25-1.2″”. The 6-10 day forecast (next week) looks dry across the Plains and the W Midwest as a tropical storm system spins in the Gulf. Temperatures stay well above normal, with highs in the N Plains and W Midwest ranging from the mid-80's to the mid-90's.

Cattle futures mounted a rally yesterday, while feeder cattle struggled as corn prices lifted. The cash cattle market was lightly traded Tuesday. Cattle in Nebraska sold for $120 live and $190-191 dressed, steady with last week. The boxed beef markets were softer on Tuesday. The choice cutout gained a penny, and select fell $2.99/cwt. The early week price action is suggesting that a late seasonal top is forming in the beef market. The nearby live cattle/lean hog spread has been negative for the past 3 weeks. This has not happened since 2001. August spreads are near even money, while the October spread at $27 is the lowest since 2011.