Concerning heat keeps overnight grain prices firm.
Grain futures pressed higher overnight, with Minneapolis wheat finding continued profit-taking and spread unwinding after failure to take out Sunday nights 944.4 high from Monday's devastating crop condition ratings. Soybean struggled overnight on news that the Biden Administration may delay the biofuel mandate announcement for 2021 and 2022. The Biden Administration was expected to send the mandate proposals to OMB in June, but it did not. The lack of financial scoring will now delay the biofuel mandate target announcement until the fall. Soyoil saw the news as slightly bearish, which weighed on soybeans. A Reuters story highlighted that a small group of bipartisan US Senators might propose a bill to end the US ethanol volume mandate. The bill may never make the Senate floor, and the news is just political posturing.
Despite the biofuel news, private Canadian Crop estimates are in sharp decline amid the ongoing drought. A Canadian canola crop of 14 MMTs or less produces a serious shortage of world vegoils. The US soybean crush rate would have to be elevated to produce an adequate supply of soyoil.
The forecast models agree and are consistent with prior day runs. However, a strengthening Central US High-Pressure Ridge becomes static and produces an extended hot/dry weather period. Extreme heat builds south and east from the N Plains over the next 2 weeks amid a strengthening high-pressure Ridge. The EU model is hotter than prior day runs while the GFS is a few degrees cooler. The ease back in the GFS was needed, but widespread 90's to lower 100's will be the result with higher confidence. Some areas of the Plains will have to endure 103-109 degrees. This Western Ridge has a history of extreme heat/dryness since May and should not be underrated.
Cattle futures continue to struggle at the beginning of the week technicals on the August cattle starting to slip through major moving average support. Meanwhile, cash cattle markets were untraded on Tuesday on limited demand. The outlook at midweek now is for steady to a dollar lower as the beef market continues to slide. The boxed beef market was down a dollar 61 on the choice cutout and $0.91 on select. Seasonally box beef bottoms at the end of July, but there are thoughts that it may take until mid-August. Concerns are building that there will be further herd liquidation as the drought intensifies and feed costs are too much of a burden because of the large area of forage shortfalls.