Overnight grain trade consolidates prior 3 days gains.
Grain futures consolidated overnight as rains moved east from Iowa and Minnesota into Illinois, as that is the last of the rain for the North Central corn belt for the next ten days. Lack of producer selling is keeping any setback minimal, and the open interest decline yesterday also implies that short-sellers are losing interest in the market. However, concern for upcoming heat and dryness with record temps to be scored in the Canadian Prairies and Northern Plains is becoming concerning.
Bismarck, North Dakota, is forecast to endure a 7-8 day stretch where high temps will reach above 100 degrees with 3-4 days where highs are above 105 degrees. This historic heat reaches southward into South Dakota, east to Minnesota and north throughout the Southern Canadian Prairies. Highs across Nebraska and Iowa will reach into the mid 90’s to lower 100’s. The combination of drought and extreme heat will be particularly rough on reproducing crops. With 18.5% of the corn and 21.5% of the bean crop in this area, USDA National yield forecasts are highly optimistic.
Overnight China reported a dramatic rise in its pork supplies, with April-June pork production surging to its best levels in 7 years at 13.46 MMTs, up 40% vs last year. The National Bureau of Statistics indicated that China January-June pork production rose 36% to 27.15 MMTs. Such production explains China’s sagging pork price decline and the Gov’t willingness to place excessive production in the freezer. As a result, China’s feed demand will stay record large on the expanding herd.
NOPA will be out with their June Crush report today. The average June crush estimate is 160 Mil Bu, with soyoil stocks pegged at 1,620 Mil pounds.
The forecast models agree and are consistent with prior day runs. The Western US high-pressure Ridge that has spawned its historic drought will be pushed east and north by the monsoonal flow out of Mexico. The mean position of the Ridge shifts to Colorado early next week and elongates to produce extreme heat across the North Central US and the Southern Canadian Prairies. The US Climate Prediction Center has issued an extreme heat warning for the Northern Plains and NW Midwest. High temps are forecast to reach into the 100’s with some readings topping 110 degrees. Such heat will place acute stress on NC US and Canadian crops. The mean Central US Ridge position holds during the 11-15 day period with some de-amplification.
On Wednesday, cash cattle sales were quoted in Nebraska, with thin volume at $123 or down $1-2 from both Monday and last week. The late-week outlook is steady. Beef cutout values closed $.46 lower for choice and $2.99 on select. The choice cutout has declined in 23 of 24 of the past business days.