Russia blows up a Ukrainian grain port.
Grain futures moved sharply higher overnight, with wheat futures gaining $0.50 at one time as Russia destroyed one of Ukraine's grain export ports of Mykolaiv, circumventing the potential of significant grain exports leaving Ukraine in any hyped safe passage corridor. This port handles just over 1 MMTs of grain a month and has to be rebuilt. This Russian attack casts considerable doubt on a corridor with US/UK warships in the Black Sea; this corridor will not occur.
China is back from holiday and has reopened its economy from the strict Coved lockdowns. Additional economic fiscal incentives are being timed in China for the recovery, creating more world inflation. China is in need of soybean coverage for August/September, with South America unlikely to be able to fulfill any sizable amount. Also, the Biden administration is considering dropping all tariffs imposed upon China to help fight inflation.
EU weather crop potential continues to be on the decline as weekend rains were considered below expectations and a much drier forecast impacts FSU grain crops as well for the next two weeks. Also, frost/freeze will impact southern Parana during June 10-15th.
This afternoon the NASS is expected to offer the first crop ratings for the corn crop this afternoon, and it’s anticipated to be high with the GD/EX.
Ideal weather conditions are now in place in the Midwest, with showers falling across the Central Plains, Iowa, and S Wisconsin over the past weekend. The best rain fell in Kansas with totals of .25-1.25”. A favorable forecast continues for this week with cool temperatures and additional rainfall. The GFS, euro, and Canadian forecast models become progressively drier in the two-week timeframe, with heat building across the S Plains and into the W Midwest. The less reliable three-week forecast has a warm/dry Central US weather trend that hits before the seasonally warm July 4 holiday.
The cattle trade is called mixed, further consolidating trade as Friday did. Last week’s cash trade in the North mainly was at $138-140, with the dressed trade at $222. It was mostly two dollars lower from the previous week as the South also was lower at $135. Last week the choice cutout increased $2.51 while select jumped $4.28 on robust Memorial Day sales in good grilling weather across most of the country. Last week the cattle market also benefited from money flow in short-covering alongside a recovering stock market. Feeder cattle had substantial gains in last week’s feed price collapse that may feeder cattle giving up.