Heat on the way to the Cornbelt.

Grain futures moved sharply higher overnight on yesterday afternoon’s crop rating declines across the board for row crops and spring wheat, along with weather models that continue to bring heat and dryness back into the central corn belt in the early part of August. Grain prices have broken the cycle of Monday being the high and the rest of the week being a series of selling days.

With crop ratings likely to be again steady lower next Monday along with the following week, just on a presumption of current forecasts remaining on track Current soybean yield projections would have soybeans at 50.5 BPA and corn near 173.5 BPA. With the heightened necessity of trend line yields this year, the importance of August weather cannot be understated. Carryouts could quickly be back to pipeline supplies.

The veracity of the bearish attitude that is been displayed in the grain complex over the last 60 days over the Ukrainian export corridor opening, and concerns of a recession are now in reverse. Overnight a new round of missile attacks it Ukraine’s coast including the port of Mykolaiv, damaged port infrastructure. The new rocket attacks prevent vessel owners from taking war risks for marine transit. Presently no Ukraine grain offers are offered in the world market, and importers are turning to reliable supplies like the EU. Until proven otherwise, it’s become highly skeptical that an export corridor will function as they tighten grain energy supplies to world end users.

The EU drought continues to worsen with another two weeks of hot/dry weather occurring right during their pollination. The corn crop has many knifing the expectations of the USDA’s 68 MMTs for Europe in July to potentially down to 53-54 MMTs. Down a stunning 14-15 MMTs. This 20% fall in yield has EU traders seeking out Brazilian corn to bridge their supply gaps. The EU will now become the world’s largest corn importer ahead of China due to their shortfall. The EU does not buy GMO corn which is why they only source from Brazil. This will displace buyers from Brazil and send them to the US.

Weather models now forecast that the extreme heat will be heading to the Midwest with an ongoing drying trend for the NW Midwest. Both the GFS and GFS ensemble models have the warmest forecast, while the EU model is slowly coming around to calling for 100° heat as far east as Northern Illinois on August 5. The Central US weather pattern is yield-threatening, with crop corn condition ratings expected to slip lower again into mid-August.

Live cattle are called steady lower, while feeder cattle are called sharply lower on the sharp advance in feed grain values. Live cattle digested last week’s cattle on feed report and quickly found buying across the live cattle side is retail beef carcasses traded higher on Monday. Choice was $0.99 higher, and select added $2.50. The movement was light at 90 loads. Pasture conditions continue to worsen yesterday, with Texas now 89% in the poor/very poor ratings while Missouri increased to 51% P/VP. With the outlook firm, cash cattle are not anticipated to trade until Wednesday or Thursday.