A sharply lower overnight trade on Midwest rains.
Grain futures came in sharply lower overnight on weekend rains for Iowa, Illinois, Wisconsin arrived. Several rounds of rain occurred across the Central US on the weekend, with severe weather producing considerable storm damage of downed corn and hail stripped crops. Some estimates have damaged crops in the millions of acres. It will take days to quantify the damage better and if blown over corn is able to partially stand back up? Traders are trying to best balance the benefit of Midwest rain with storm-damaged crops.
A seasonally cool week lies ahead for the Central US amid the recent rains. This afternoon's crop ratings are anticipated to decline 2-4% out of the GD/EX category for corn and soybeans, with stability seen for next Monday's data which will anticipate a modest recovery. Last week's intense heat and dryness took a toll on Central US crops, including spring wheat. The big question is as we go forward, do they price in the prospects of improved weather or the likely return of early July/dryness for the Plains and northern Midwest? Weak longs were pushed out of the marketplace last week in the grain trade, which brings about a more sideways consolidating trade this week. Last week Thursday's extreme lows are anticipated to hold this week, as the market braces for next week's acreage data and weather models that reach into July.
Traders are awaiting confirmation from FAS/USDA that China booked 400-500,000 MTs of US new crop soybeans last Friday, and the CFTC will release their Commitment of Trader's report this afternoon. US weekly corn exports are forecast at 60-70 Mil Bu with soybeans at 7-12 Mil Bu. July CBT options expire this Friday, with cash corn, soyoil and soybeans trading well above futures.
US weather has the overnight forecast models similar in their depiction of the US weather pattern; they vary somewhat with rainfall and temperatures this week. A seasonally cool weather pattern prevails this week as a Ridge of High pressure is set to return to the Intermountain West's dry areas on the weekend.
The next chance for showers/storms is with a Midwest front late Thursday and Friday. This system looks to produce another round of .5-1.50″ of rain from Iowa through the Eastern Midwest. The European model is slightly farther east with Iowa rains, but all the models hold the Plains and Minnesota in a dry pattern with warm to hot temperatures returning on the weekend and next week. Record heat is projected across the Western US starting on the weekend, and portions of that heat will be released eastward. A Ridge west/Trough east pattern would return hot/dry weather to the US Plains and the W Midwest during July. The recent and coming rains will aid the US corn/soybean crop, but concern on the US July weather pattern is elevated.
Cattle futures were higher last week, but well off midweek highs amid the broad-based commodity fund liquidation that hit Thursday into Friday. The cash cattle market also traded higher last week across the Plains with live sales in Nebraska $4 higher at $124 live and $195 dressed. The Southern Plains traded cattle at $122 or $2-3 higher for the week. While the beef market corrects, the early week outlook is steady. The boxed beef market fell sharply through the week, affirming a seasonal top. The choice value was down $14.28 through the week to $323.28 and the select value dropped $21.60 to $283.64. The choice/select spread was at an all-time high on Friday, at a $39.67 choice premium. It is anticipated cash cattle trade will hold steady to firmer due to the extreme disparity between live cattle and the box beef market during congressional scrutiny of packers and the margins. Again, Covid will be the blame as it has been for everything.