Again spring wheat leads overnight grain rally.

Wheat futures opened higher overnight with row crop prices mixed. Then a strong rally developed throughout the night as the North American forecast showed a drier and warmer weather forecast continuing to be offered in the northern Plains and NW Midwest into mid-July. Crops in this area are short to very short of soil moisture, leading to the risk of falling yield potential during July. As a result, Minneapolis July wheat made new contract highs above their June 7 high of 843 .6 and are now targeting the 2017 high of 868.4.

Friday's CBT open interest totals showed a decline of 35,664 contracts in corn, 40,671 contracts in soybeans, and 5,878 contracts in wheat. The significant fall in Friday's corn and soybean open interest reveals massive long liquidation. Monday afternoon's corn/soybean crop condition ratings are anticipated to hold steady or improved 2% in the GD/EX category, with spring wheat ratings falling another 1-3%. Drought stress is now building in southern Canada on spring wheat.

China announced that it would start securing domestic pork supplies to stabilize prices for its state reserves. Hog prices have recently plunged 65% from January into June on rising supplies. The last time that China's Gov't bought domestic pork for its reserve was back in March of 2019.

The 3 primary weather patterns agree that the old May/FH June weather pattern is returning. A strong high-pressure Ridge will hold across NW Canada and the NW US over the next 2 weeks. This will produce record heat for the Pacific Northwest, with 90's and lower 100's returning to the N Plains and NW Midwest in the 7-10 day period. Dry weather will prevail from Iowa north and west, including Nebraska, Kansas, Wisconsin, Minnesota, and the Dakotas. The drought will become extreme over the American West, including Oregon and Washington. And the Canadian Prairies are included in this hot/dry pattern worsening their crop conditions. Heat will surge from the Pacific Northwest late week, and as the high-pressure Ridge elongates, it will include the Northern Plains and the NW Midwest. By July 4, much of the N Plains and the NW Midwest will be back in the 90's.

It was a higher close last week for cattle futures and a better cash trade. The June CoF report did not hold a bearish surprise, and prevailing price trends will resume today. The CoF report showed a May feedlot marketing rate at 123% of last year (123% expected), a placement rate of 93% (95% expected), and a June 1 feedlot inventory at 100% of a year ago (101% expected). Cash cattle trade for last week was very light and in a wide range across the Plains. Volume in the North was thin and scattered across the week at $124-125 or $2-3 higher. Late week trade in the south was also minimal, with sales at $118-122 or steady to $4 lower. The boxed beef market added to their losses last week. The choice cutout fell $18.72 to $304.56, and the select value was down $7.43 at $276.18. A correction is expected into late July, when seasonal lows tend to form.