Grain futures produce a mixed overnight trade.

Grain futures produced a mixed overnight session, with wheat futures staging a spectacular recovery on the prospects that the Egyptian wheat tender will be taking US SRW wheat. At the same time, corn and soybeans struggled on the chances of improving moisture next week in the 8-10 day models. Support for row crops came as the European drought intensified with record temperatures again yesterday, having analysts suggesting that EU corn yields could fall as much as 20% from the USDA’s balance sheets.

GASC, the wheat buying agency for Egypt, is implementing a direct tender seeking wheat into November, with their current tender offers to extend into Thursday. Concerns are arising about the prospects of the Ukraine Grain Corridor as Russia continues to fight intensely in eastern and southern Ukraine with the stepped-up bombing. Curiously, the well advertised and proposed signing of the Grain Pact has yet to produce an actual date, location, and time with the supposed event within 48 hours. Also, Putin is demanding all sanctions be dropped against Russia, and only minimal unfreezing of some banking assets is all that is being offered from NATO to move fertilizer and grain.

The ongoing extreme heat across the Plains, Delta, and SW Midwest will prevent US corn yields from reaching above trend yield potential. August weather will be the determining factor for soybean yields while the EU drought losses continue to mount. The weather models are placing meaningful rains across the W Midwest and central plains in the 10-15 day period, even though this morning, the GFS backed some of those rains off a bit. Rains of .4-1.25” are anticipated across NE, IA, M all, and the E Midwest late next week. The mean position of the high-pressure Ridge shifts back towards the SW US, allowing a northwest upper airflow through the Central US. Rain will be produced in the Western Midwest, but model fits will shift exact locations.

Cattle futures are anticipated steady better this morning, even though live cattle futures remain caught in a well-established trading range. Cash trade is still developing this week, with light trade reported in parts of Texas with deals at $136, which is $0.50 lower than last week’s waited trade. The northern trade is still inactive on the week. Beef cutouts had choice jumping $2.02, with select gaining $1.07. Choice carcass values of $200+ are strong for this time of year, keeping buying support under the cattle market overall. While live cattle remain range bound, feeder cattle have completed technical breakouts and are poised to challenge the most recent highs.

The NASS July COF report is out this Friday. Average trade estimates have the June marketings at 102%, feedlot placements at 95%, and the inventory number at 100% last year. If realized, the feedlot inventory will be at the lowest since August of last year. The semi-annual cattle inventory data is anticipated to show the herd declining by 850,000 head.