Will the trade turn grain futures lower the day after the crop report?

After a mixed overnight session that gave the hint of turn-around Tuesday, grain futures firmed into the close of the morning session. US crop ratings yesterday showed stability following a week of needed rainfall across Iowa and the Central Plains. Stable ratings are also anticipated for next Monday's release but thereafter a return of sizable soil moisture draws across the Plains and Minnesota will allow ratings to decline again seasonally into August. Corn is 26% pollinated, with 50% pollination in the next 10-12 days.

Soybean oil pushed sharply higher overnight as canola pushed to near limit gains again, and Malaysian palm oil futures ended 122 ringgits higher and have found newer 30-day highs. The canola/rapeseed market increasingly must work to outright eliminate world demand amid talk of a sub-16 million ton Canadian crop. Brazilian soybean fob offers for Sep-Oct delivery are quoted at $1.30-1.45 over, vs. Gulf offers of $1.15-1.25. Recall Brazilian beans were quoted below CBT futures just seven weeks ago. Once again, it appears Brazilian exporters flooded the global marketplace at harvest only to face the need to ration available supplies during the autumn months. As a result, the US soy market will be the first to experience the return of sizable demand.

Heat and dryness are occurring in Ukraine, putting their corn crop at risk. Soil moisture there is adequate but will be drawn down rapidly amid near-zero Rainfall and sustained temps in the upper 80s and low 90s. Already world corn demand will be funneled to the US as Brazil's crop is trimmed further. The loss of any Ukrainian production raises real questions as to whether global demand can be met this year.

Today is the day after a USDA crop report, and the prior 7 crop reports since January 1, six out of seven have seen heavy selling arrive in what would be today's action. Today will be a strong sign on whether last week's lows are major bottoms, and a new leg up is forming for row crop pricing with oncoming demand showing up early for new crops, and the concerns that yield expectations of the USDA will have to be lowered.

The Central US forecast is wetter in the Great Lakes Region over the next 72 hours but is otherwise consistent with previous runs. Additional showers will move across Iowa, Wisconsin and the whole of the eastern Midwest Thurs-Sat. Cumulative totals of 1″ will blanket this region, while the ongoing boost in soil moisture will sustain temps at or below normal. Rainfall of .50-1.00″ is also probable across the eastern half of Kansas and pockets of South Dakota this weekend. The 5-day forecast is nonthreatening, but the story of US weather into the very end of July is two-fold. Strong/expansive high-pressure Ridging returns to the Plains & Western Midwest July 18-28. Meaningful precipitation beyond the weekend will be pushed into the Delta/Southeast and East Coast. Little/no rain is expected elsewhere in the second half of the month. Searing heat returns to Canada, with highs in the 90s to gradually inch into the Plains and Upper Midwest. Max temp readings of 92-95 will be common west of the MS River in the 6-15 day period.

Cash cattle trade yesterday was reported in Nebraska with sales volumes very thin. Prices were steady to $2 higher from last week at $125. The better, early-week trade sets a bullish tone for the week. The boxed beef market was sharply mixed to start the week. The choice cutout fell $3.59 to $275, and the select value gained $1.36 to $258.77.