Grain futures posted sharp overnight recovery.

Grain futures recovered sharply higher overnight with no follow-through selling on the reopening. The realization is that the coming rains will not be enough to break the ongoing dryness across the Western Midwest corn belt, with temps to return to above normal by the end of June. Thursday's price decline was overdone as the market spiraled into liquidation with a lack of the old pit trading locals that would have provided liquidity when the market spiraled into nonstop algorithmic selling.

This week's hot/dry weather has taken a toll on W Midwest and N Plains crops, with yield potential to fall off the table unless immediate soaking rainfall arrives. By soaking rainfall, 2-4.00″ rains are needed, not the dust settling rains that 20% of Iowa has received in recent days. W Midwest corn/soy crops are under acute drought stress with recent day high temps reaching into the 90's/lower 100s. Crop ratings are anticipated to decline next Monday afternoon again by 2-4%. Several days of heat are forecast for the W Midwest before a few light showers move through on Sunday. Iowa's best chance of showers is late Sunday across the southern quarter of the state. The Ensemble Forecast models offer the needed soaking rain for the E Midwest States, with the west short-changed.

Apparently, we have another holiday to be closed for the federal government, as the US Gov't is closed today for Juneteenth, a new Federal Holiday that was signed into law by Biden on Thursday. This means that the CFTC data and any new US daily export sales announcements will be available on Monday. There are rumors that China was active in securing US new crop soybeans on Thursday's sharp break. Confirmation of that demand will have to wait.

According to NOAA, cyclone 3 has a 90% chance of forming in the Gulf of Mexico, with landfall to occur in SE Louisiana this weekend. The remnants of the storm will soak Louisiana, Alabama, and Georgia on Sunday/Monday. The 3 primary weather models have differing degrees of wetness, with the GFS offering 1-3.00″ of rainfall for Iowa and the parched areas of the W Midwest. The Canadian and EU models are in the range of .5-2.00″. The Ensemble models seem to have the best handle on the pattern and are keeping any heavy rains across Indian/Ohio/S Illinois, leaving a good portion of the W Midwest and the N Plains in drought with rains of 1-1.50″. If the long-range models are correct in that a Western US Ridge returns, July could be a very hot/dry month for the W Midwest. The concern for US Central weather stays high. The tropical system will produce an interlude with scattered Midwest showers.

Cattle futures opened lower yesterday, with feeder cattle opening to a new recovery high before also succumbing to the complete commodity liquidation selling that manifested across all industries. Even hogs were down the expanded limit after being limit down the prior day. Cash trade for Thursday was again light, with sales similar to earlier in the week. However, sales were generally around $124 or $4 higher for the week. Boxed beef prices were again lower on Thursday. The choice cutout fell $2.92, and select was down $2.72. The select cutout has led to the decline in the last 2 weeks, pushing the choice/select spread to a historic $39 choice premium. At the high last week, the select cutout had rallied $96 in just 12 weeks. A seasonal correction that is to follow could unfold much faster than the rally.