Turn-around-Tuesday for grains.
Grain futures turned higher overnight with wheat finding buying interest from Egypt’s GACS tendering for world optional origin wheat, along with China lowering their Covid restrictions for international travelers. It’s anticipated that China will soon be adjusting its zero Covid control strategy, which could help turn its country out of its economic slump. It’s anticipated that China will be restocking with Energy, Ag, and Metal prices recovering overnight in potential improved world raw material demand.
Yesterday’s crop ratings put out by NASS showed corn and soybeans dropping 3%, with corn down to 67% and soybeans at 65% GD/EX. Spring wheat crop ratings were near steady at 59% GD/EX. The ratings are now below the five-year averages but still above last year. End-user buying has materialized during the recent break ahead of Thursday’s important acreage and stocks data.
The winter wheat harvest is 41% complete and should reach the halfway point by this weekend. The Kansas wheat harvest is 59% completed with combines across the far northern counties already. HRW wheat yields continued to be reported as disappointing, and a fall in US wheat production is forecasted in the July report.
Egypt is tendering for wheat for August/September, and October would suggest that it could secure a significant amount of wheat depending on price offers. Eyes will be on Russia to see how willing the art offer wheat for export. It’s anticipated that Europe will capture the bulk of the tender with the current cash wheat market still holding far better than what futures are offering.
The EU and GFS models agree that the Central US and Gulf states have chances of showers over the next two weeks. Large portions of the Midwest will hold in a below-normal rainfall and variable temperature pattern. A high-pressure Ridge will be compressed south and west and then rebuild across the Intermountain West producing extreme heat into the Plains. The models are struggling with the mean position of the Ridge in July. Limited rainfall is forecasted for the Central Midwest into July 8, with temps in the mid-’80s to mid-90s.
Cattle futures are anticipated to be steady-firmer this morning while the June live cattle are in their last week of trade, expiring on Thursday, June 30. June cattle are currently discounted to cash. Expectations are for the cash trade to stay steady with last week while the Cattle on Feed report continues to reflect a large supply of cattle available, as the total on feed in June was a record for the month. Supplies are anticipated to tighten longer-term, keeping deferred contracts well above the summer contracts in a bear spreading fashion.
Beef carcass values were firmer yesterday and held good gains into the close on strong buying for the Choice grade. Choice box beef gained $3.70 while select was $0.22 higher. The load count was light at 99 loads. Feeder cattle will deal with the renewed potential of rising feed values with the upcoming Thursday crop report.