Grain prices erode premiums on potential weekend rain.
Grain futures opened higher overnight on declined ratings. Still, they immediately started to extract premium's again as the euro evening forecasts continue to show a chance of Midwest rains this coming Sunday. The forecast models are apart on coming Midwest rainfall totals due to the uncertainty of a tropical system expected to develop in the Bay of Campeche in the next five days. The developing tropical system is the reason that rain will return to the Midwest on Sunday and linger next week amid a temporary relaxation of a high-pressure Ridge. The Canadian forecast model is the driest, followed by the European/GFS holding better rainfall chances.
Some weather forecasters are concerned that Central US heat/dryness will return, with July heat potentially becoming an issue for corn pollination. The coming tropical system looks like an interlude in a generally hot/dry Central US weather pattern that looks to return in late June and July. The 2021 growing season has produced early stress with at least 10-12 weeks of important growing season ahead. NASS indicated a 4% fall in US corn GD/EX ratings to 68%, while soybeans witnessed a 5% GD/EX drop to 62%. Both are below their 10-year condition rating average for mid-June and likely to fall farther next week amid this week's hot/dry weather. Data that's compiled on Sunday would likely reflect another 2-3% GD/EX rating decline for Monday's report. Moisture starved corn is rolling tight on limited soil moisture across the W Midwest. Next week's Midwest rain is timely, but after weeks of dry spring weather, Midwest crops require regular rainfall if there is any chance for 2021 corn/soybean yields to reach trendline. Private yield estimates are in decline based on condition ratings, extreme heat, and soil moisture shortages.
The forecast models offer 4-5 days of hot/dry weather with heat to reach into the 90's to lower 100's across the Plains/Midwest into the weekend. A cold front and fetch of tropical moisture tied to the Bay of Campeche tropical storm are forecast to produce Midwest rains that start on Sunday and linger through the next week. Rainfall amounts will range from .75-2.00″. Temps will cool to seasonal mid-70's to mid-80's for highs. Rainfall placement/amounts will be extremely critical for Iowa's crop amid a deepening drought. The forecast models differ in rain amounts and locations, with the Canadian model offering an arid 10-day forecast, while the GFS/European models have rain chances in the 6-10 day period. The EU model is the wettest for Iowa/Illinois, while the Canadian model is the driest, while the GFS is in between. The 6z GFS forecast is less wet for Iowa and has heavier totals for Illinois/ Indiana. Temps are warm to hot into the weekend, with 90's and lower 100's noteworthy, followed by seasonal 70's/80's into June 24th.
Live cattle and feeder cattle futures were higher from the start yesterday with a firm outlook again offered today. Surprisingly, the cash cattle trade got underway in Nebraska, where small numbers moved at $124 or $4 better than last week. Cattle markets in the rest of the Plains were quiet, but the early North trade sets a higher tone for the week. The cash beef trade was sharply lower to start the week as a seasonal top is confirmed. The choice cutout broke $2.09 to $335.47, and the select value was $1.80 lower at $303.41. The choice/select spread is at a record for mid-June at $32 choice premium.