Grain future bolt higher on concerning weather.

Grain futures opened Sunday night sharply higher on threatening the US and European weather. Both crop areas are forecasted to have hot/dry weather, with dryness in Europe extending into Ukraine, threatening row crops in both regions of the northern hemisphere. Extreme heat moves into the US Plains and W Midwest with little meaningful rain chances over the next two weeks. The retreat experienced in the overnight session of $0.20 in corn/soybeans and $0.30 in wheat is tied to the US dollar bolting to new multi-decade highs above 107.50. This has created sharply lower world financial markets and other commodities, including crude oil, to start the week.

The July WASDE crop report is out Tuesday at 11:00 a.m., and expectations are for a decline in soybean ending stocks due to a/and acreage of the 2022/23 crop year with the carryout reduced to 210 Mil Bu, which is up 70 Mil from June. Corn ending stocks are expected to increase 50 Mil Bu to 1,450 Mil Bu, and wheat ending stocks up 20 Mil Bu to 640 Mil Bu. Historically, all three of the US ending stocks numbers are historically tight and highlight the concerns with the impending weather for both US and European areas, given Ukraine’s significant absence from the export market likely through the end of the year.

The EU and GFS models show an extended period of hot/dry weather that impacts the Plains and most of the Midwest over the next two weeks. A Ridge of high pressure will amplify over the Intermountain West and push eastward with regularity. This would produce extreme heat across the Plains, Delta, and the W and S Midwest. Cooler temperatures will be in the far northern portions of Minnesota, Michigan, and Ohio, with the Ridge riding rain chances across the north. High temperatures will hold in the mid-’80s to lower 100s into July 25. The GFS ensemble maintains a drier trend into late July with rising temperatures.

The cattle trade was soft on Friday, and its anticipated cattle futures will open lower this morning on the week outside markets, along with feeder cattle struggling with the resurgent feed values. Last week’s cash cattle trends mainly were steady to lower for the south with the firmer trade towards the north. Commitment reports show index funds continued to liquidate, and they’re at a five-week low of 14,300 contracts of ownership. Hedgers are holding a net short that is the smallest since April 2020. Live cattle are struggling near term with consumers watching their expenses. Still, the herd liquidation will start to affect beef supplies that will begin to contract at the end of summer, which should promote a longer-term bull market in the December 22 contracts and forward.

The EU and GFS models show an extended period of hot/dry weather that impacts the Plains and most of the Midwest over the next two weeks. A Ridge of high pressure will amplify over the Intermountain West and push eastward with regularity. This would produce extreme heat across the Plains, Delta, and the W and S Midwest. Cooler temperatures will be in the far northern portions of Minnesota, Michigan, and Ohio, with the Ridge riding rain chances across the north. High temperatures will hold in the mid-’80s to lower 100s into July 25. The GFS ensemble maintains a drier trend into late July with rising temperatures.

The cattle trade was soft on Friday, and its anticipated cattle futures will open lower this morning on the week outside markets, along with feeder cattle struggling with the resurgent feed values. Last week’s cash cattle trends mainly were steady to lower for the south with the firmer trade towards the north. Commitment reports show index funds continued to liquidate, and they’re at a five-week low of 14,300 contracts of ownership. Hedgers are holding a net short that is the smallest since April 2020. Live cattle are struggling near term with consumers watching their expenses. Still, the herd liquidation will start to affect beef supplies that will begin to contract at the end of summer, which should promote a longer-term bull market in the December 22 contracts and forward.