NOAA issues Drought Expansion Alert.
Grain futures were mixed overnight, with row crops firm on concerning weather for next week, especially with the NOAA issuing an unusual Drought Expansion Alert for the Plains, SW, and W Midwest. Wheat continued to drift back to near last week’s lows, on hopes that Ukrainian grain exports may see an opportunity with Russia stating that the document signed later next week in Istanbul. The futures market is placing hope on implementing the document, even though Russia continues to rage war against Ukraine with new deadly rocket strikes overnight. Even if the implementation of the grain document is completed, getting logistics working will be challenging. Export elevators are damaged, and moving grain into Odessa will be challenging. History shows that signed initiatives and documents during wars without a treaty are difficult to implement.
The grain markets are torn between believing that Ukraine exports have potential, along with the deflationary effects of the outside markets, which have been applying downward price pressure on grains, while the prospects of yield potential for corn can be on the decline. Rains are occurring currently for the Central and Eastern Midwest that carries in the weekend. Still, the Central US from the plains eastward into Iowa, Missouri, and Arkansas will endure extreme heat and dryness in the coming weeks. It’s hard to find days in the coming week where high temperatures won’t be in the 90s to lower 100s carrying into August. Supply loss potential is driving a recovery rally in corn and, to a lesser extent, beans, as US crop conditions will continue to decline.
Cattle prices gave up big gains on the week yesterday, with August live cattle slipping to the lowest level since July 11 with a close of 135.40. Cash trade activities all sales in the north from $144-$147, which is two dollars weaker than last week. In the South, most cattle traded at $137, with a few at $136 in Texas. Today’s COF report at 2 o’clock has on feed estimates of 100.3%, placed 94.1%, and marketed 100.6%. The semi-annual cattle inventory report should show 850,000 head below year-ago levels.