Threatening US and European weather takes focus.
Grain futures are firm to higher this morning after a mixed overnight session. Threatening US and European weather are creating support while the outside markets have equities and energies sharply lower after yesterday’s post-Fed meeting rally. The Federal Reserve did react with a .75% interest rate hike with a minimum of two .50% interest rate hikes due again in July and September.
The Central US weather forecast again is threatening over the next two weeks with heat/dryness under an amplified high-pressure Ridge. The more accurate EU weather model has limited rain for the Central US for the remainder of June. This high-pressure Ridge holds across the Central US and, due to the weakening jet stream, shows no sign of locking in. Numerous high-temperature records have already been set over the past three days. Over the next two weeks, temperatures of 90/100° and heat and dry weather will be apparent, pulling US crop condition ratings lower into the pollination season for corn around July 5-20.
Also, the weather in Europe continues to maintain excessive heat/dryness over the next week before temperatures start to ease. No meaningful rain is offered for another week while the European winter wheat and barley crops are now under fast yield retreat. Based on weather forecast outlooks, markets will be volatile when they reopen Monday night after the three-day weekend.
Live cattle and feeder cattle had a strong session on Wednesday, which may get checked today with the higher grain trade and the sharply lower stock market. The cash markets in the plains traded as high as $139 while the north experienced a $4-6 higher explosion to $145-149. Even the dressed trade was $6 higher at $230. The north/south live cattle spread pushed out to a record-high of $11 North premium this week. Southern plains cattle traders suggest the increased number of dairy and Mexican cattle that can't sell on the grid and are weighing on negotiated prices in the South.