The grain trade moves lower at the restart of trade this week.

This morning’s grain trade on return to business has wheat trade leading downward pricing with the weakening of the Black Sea cash wheat market. Also, the EU weather model includes moderation in the E Midwest temps beyond the middle of next week, but it is still questionable whether needed rain arrives, which is still far less certain. What is still in place is a pattern of warmer than normal temps, and a lack of rain remains in the E Midwest. Meanwhile, world weather patterns remain less than ideal, with dryness still maintained in China’s winter wheat and corn areas and dryness resuming in E Ukraine and S Russia.

The world wheat market had priced in a Russian crop size of 80-82 MMTs and now has to deal with the loss of Turkish import demand and swift harvests in the US, Ukraine, and Russia. We are getting the feast before the famine mentality on balance sheets, and the US winter wheat harvest should reach 55-60% completed on June 30 and will likely be near completion by mid-July. This is ahead of normal and would imply an earlier seasonal wheat bottom. World wheat trade flows will start to pick up in August and tighter wheat balances will be felt into early 2025.

Brazil’s Foreign Trade Chamber (CAMEX) at the Ministry of Economy voted to uphold an 18% tariff on ethanol imports from the United States. This decision has drawn criticism from U.S. industry groups, who argue the tariff unfairly disadvantages American ethanol producers in the Brazilian market. The U.S. has previously threatened to impose retaliatory tariffs on Brazilian goods if the ethanol tariff remained in place. Brazil has defended the tariff as a necessary measure to safeguard its domestic ethanol industry and ensure a stable supply of biofuels for its transportation sector.

Tropical storm Alberto soaked southern Texas on Wednesday and will move deeper into eastern Mexico in the next 12 hours. Rainfall in late Friday in E Mexico is estimated at 5-12″. Regional flooding is anticipated. The good news for Mexico is that a more normal monsoonal pattern will spread into the Western corn-producing areas into late June. Seeding dates have been impacted, and vegetation health in Mexico as of June 16 is abysmal.

The GFS and EU/Canadian models are all at odds over the positioning of rainfall in the next 6-10 day period. The GFS allows better shower activity in IL, IN, and OH June 26-27. The EU and Canadian models keep rainfall confined to the NW corn belt. The Canadian model projects amplified high-pressure ridging to blanket the E Plains. Midwest and Delta beyond June 29. All forecasts allow temps to moderate next Wednesday-Friday as high-pressure relaxes briefly. A structural heat dome is not indicated nearby, but confidence and extended range details are low. For now, the concern is the ongoing lack of rain projected in the E Midwest, TN, and KY. The soil moisture loss there will be rapid as temperatures reach the 90s on Friday and again next Tuesday.

Cattle futures were softer on Tuesday, with a steady outlook this morning. Packers reportedly actively raised cash cattle bids in the northern market in an attempt to obtain supplies, as cattle numbers are tight. So far, feedlots have passed, suggesting there could be another significant increase in the average cash price this week. Cattle supplies are more plentiful in the Southern Plains so that prices won’t be as strong there.

The upcoming June Cattle on Feed report will be out on Friday. The average trade estimates call for the May marketing rate to be 101% last year, the placement rate to be 101%, and the June one feedlot inventory to be expected at 99% last year. This will mark the second month that the inventory was below last year, and it would be the lowest June 1 inventory since 2017. Battle lines are drawn on August cattle, targeting 185, which was the March high, while downside support is the gap just under $180.