Grains higher overnight on concerning Midwest weather.
A mostly higher night session except for Chicago wheat, as a drier/warmer weather pattern for the Central US becomes concerning. Heading into today's USDA crop production data at 11 AM, traders lean slightly bearish on wheat while friendly corn and neutral soybeans. Expectations are for US corn exports and ethanol usage to create a reduction and ending stocks by 100-200 Mil Bu in both old and new crop forecasts. Soybeans, both old and new, are already near pipeline minimums, and it would be a bullish surprise for the USDA to lower them below 120 Mil Bu.
Brazil's CONAB released their crop reporting data for corn and soybeans this morning. They lowered the corn crop to 96.4 MMTs but raised the bean crop to 135.9 MMTs.
It was another day of 90's across the N Plains/Western US, which is really taking a toll on crops, according to producer sources. And even reflecting on North Dakota rainfall of Tuesday/Wednesday, ground reports of rainfall were far less than radar estimates. Most ground rainfall reports were less than 1.00″, which will not produce any lasting crop yield assistance. The EU/Canadian/GFS forecast models offer below to much below normal rainfall for the Central US, warm to hot temperatures into June 24th. Following a trend that extends backwards for months, the GFS model is the wettest while the EU the driest. The EU model has virtually no rain for a large swath of the Midwest and Plains over the next 10 days. Illinois/Indiana are included in this arid weather trend. The GFS has some rain, but totals range from .2-.8″ and fall well below normal. The Canadian model is like the arid EU forecast.
The major weather models hold limited rainfall over the next 10-14 days, which looks to place the Northern Plains and the W and N Midwest into one of the driest on record classifications in June. The extended range forecast can now look forward into June 25th and there is just no indication of a pattern change. For many Midwest and N Plains areas, this June is so far (including the forecast) drier than 2012 – the last major North American drought. A broad area of dryness extends from California into Michigan and Kentucky and includes Iowa, Minnesota, Wisconsin, Michigan, Nebraska, Missouri, Kansas, and Illinois. The GFS model has reduced rainfall chances for the Dakotas with a passing cold front on Friday/Saturday to .1-.85″ with coverage no better than 50%. Like the EU/Canadian models, the forecast is then arid after that. The forecast models are still playing with a tropical storm in the Gulf that would push north into Louisiana and then slide slowly east. 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. This is a deeply concerning hot\dry weather pattern.
Cash cattle trade for Wednesday was mostly steady with last week. Small numbers sold in Texas steady to $.50 lower at $119.50-120. Kansas cattle sold for $120, and cattle in Nebraska changed hands at $120-121. Boxed beef values were steady on Wednesday. The choice cutout gained 4 cents and the select value gained $1.69. The cash cattle market has held within a $3 range for the last 8 weeks. Fed supplies have been large, but strong demand has driven beef prices to historical levels and kept cattle prices steady. CME futures this week suggest that an early seasonal low as scored in April, with a much stronger cash market rally to unfold well into 2022. There's a good chance that the summer low for cattle was scored on the June contract last week on the cyber-attack news on JBS.