Crop ratings lift spring wheat prices.
Overnight, grain futures started higher, with spring wheat sharply higher on the decline in ratings and a collapse in the spring wheat ratings. The lower ratings were met with eager selling on row crop pricing. The forecast for soaking rainfall in Iowa/Illinois has ratings that will be stabilized/slightly improved next week for corn and beans with cooling temperatures for a while and increased rainfall prospects.
NASS indicated a 3% fall in US corn GD/EX ratings to 65%, a 2% drop in soybeans to 60% GD/EX, while spring wheat ratings imploded 10% to just 27%. With 27% of the US spring wheat crop heading, the time and chance for yield improvement are quickly fading. A sizable 55-75 Mil Bu plus decline in US spring wheat production lies in the offing, which is likely to maintain strength and the prospect of a rally in Minneapolis wheat futures back to recent highs.
Essential this week will be if rains can reach into the Dakotas, Minnesota, Nebraska, and NW Iowa? Old crop July contracts should be the upside leaders into 1st notice day on premium cash markets. A back-and-forth market is expected heading into the June Stocks/Seeding report on June 30th. As US spring wheat ratings showed in late May, rain stabilizes conditions but is unlikely to return crop ratings to prior levels.
The overnight forecast models are similar in their depiction of the US weather pattern; they vary somewhat with rainfall and temperatures. The EU model is the wettest with 2-5.00” of rainfall across Iowa/Illinois, while the GFS offers 1-2.50”. The models struggle in forecasting the amount of rainfall from T storms. A seasonally cool weather pattern prevails this week as a Ridge of High pressure is set to return to the dry areas of the Intermountain West 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 storms linger through the weekend, with total rainfall adding up to 1-3.00” across Illinois, Missouri and portions of Iowa. 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.
Cattle futures ended Monday with modest weakness while the cash markets were quiet to start the week. The early week consensus is for steady cash trade as the US Senate convenes hearings surrounding the cattle and beef markets this week. The boxed beef market continued to deflate on Monday. The choice cutout was down $2.08, and select was $2.15 lower. National pasture condition ratings worsened last week to 39% poor/very poor, up 3% from the prior week. AZ is by far the worst in the country at 90% P/VP versus average of 44%. In the Plains cattle states, conditions deteriorated in the Dakotas. P/VP in North Dakota was up 6% at 66%, now the worst ratings on record. In South Dakota, P/VP ratings jumped 7% for the week to 61%, a new high for the year. On average, just 11-15% of conditions in the two states are rated P/VP. High feed and forage prices are likely to drive liquidation.