It's a Turn-around Tuesday on a Wednesday.
After a mixed night session, grain futures are higher this morning (Turn-around Tuesday’s style on a Wednesday) as the massive rain, and recession washout culminated after a three-day weekend yesterday. The fear of a global recession and the technical selling of index funds exiting the grain trade has created a bullish atmosphere for valuations at price levels that have been achieved. Considering a 2.7 million-acre fall in seeded soybean acres and multiple weeks of crop condition ratings declined, extreme oversold conditions should create a bottom ahead of the July 12 crop production report.
Even though rains this week will improve current declining conditions, yesterday, the NASS showed the GD/EX ratings and corn falling 3% to 64% in soybeans declined 2% to 63%. Spring wheat gained 7% and now stands at 66%. Also, the US winter wheat harvest is at 54%, with Kansas at 83%. It’s anticipated Kansas will have its crop harvested at the end of this week.
The Ukraine Grain Union forecasts that Ukraine will harvest 20.8 MMTs of wheat and 27.3 MMTs of corn this year, with annual exports of 10 MMTs of each.
A narrow line of thunderstorms has created heavy rainfall of .75-3.00” of rain that fell from central SD to central Ohio overnight. Rainfall on either side of that line range from traces to one inch. The southern half of Illinois and most of C and S Indiana were missed by the rains overnight. Temperatures have ranged from the upper 80s to upper 90s, with crops under continual stress do the acute heat.
Today the GFS is much wetter/cooler than the EU model. The EU has continued to remain the more correct model. Excessive heat will prevail across C US for a few more days, with Midwest highs ranging from the upper 80s to low 90s under the high-pressure Ridge. The Ridge retrogrades westward to the Intermountain West this weekend with showers/storms pushing across its eastern flank, producing Midwest 10-day rain totals of .50-2.00. Iowa/in, Illinois and Ohio are favored with the best totals. A new round of heat is forecasted to return beyond the next 10 days.
The cattle trade was not immune yesterday to the widespread commodity selling and finished lower. The decline in the cattle markets is small compared to what other Ag markets endured. Even yesterday, feeder cattle should have been sharply higher on the massive feed grain declines, but still, it closed lower. This morning the cattle trade since anticipating a firmer start. Cash markets remain at a standstill on Tuesday, with better interest anticipated to surface later today. The mid-week cash outlook is steady. Box beef prices yesterday showed choice gaining $0.84 while select was lower by $0.60. The percentage of cattle grading choice had been at record seasonal levels but has now fallen back to the five-year average as of late June.