Seasonal selling overwhelms overnight strength.

After an initial firmer trade overnight, grains softened into the early session hours on continued chart-based selling, and algorithm traders did not find opposition to the seasonal trend sale. Central US weather forecasts have improved a bit from last week, with several rain chances for the E Midwest. Yet the trade is not likely getting enough yield concern given the widespread flooding across North and Western Midwest.

Flooding resulted in some areas of the western and northern Corn Belt over the weekend due to excessive rains. According to World Weather Inc, an active jet stream with no potential for a blocking pattern is expected through the next 10 days and probably two weeks. That will bring more precip to saturated locations but also allow some timely lighter rains to move into dry southern and eastern areas of the Corn Belt, Delta, and Southeast. The Southern Plains will be mostly dry during the next 10 days. Russia’s New Lands and Southern Region will be cooler during the next 10 days, with some needed showers likely.

This afternoon’s corn and soybean crop ratings anticipate a 2-4% decline due to heat/dryness in the E Midwest and flooding in the Northwest Midwest.

India is considering cutting duties on wheat imports to keep prices in check as supplies tighten. Currently, India taxes wheat imports at a 40% rate. India has already imposed limits on wheat stocks held by wholesalers to 3,000 MT and 10 MT for retailers. These limits will remain in place until the end of March, and traders have been given 30 days to bring their stocks to permissible levels.

This Friday is the 2024 US Final Crop seedings, with expectations at 90.35 Mil acres of corn, 86.75 Mil acres of soybeans, with all wheat seeding pegged at 47.65 Mil acres. These reflect a total seedings gain of 750,000 acres from the March intentions. Compared to last year, nearly 1 Mil acres have been enrolled in the CRP program with potentially 1 Mil acres of corn/soybeans to be entered into the Preventive Plant option.

Currently, the NW Midwest/N Plains flooding is one of the worst on record and is not being given enough yield focus by the market. Similar to 1993, rain makes grain was the mantra until the November crop report when yields were slashed for flooded areas. Meanwhile, dryness across the SE US and Delta is forecast to worsen amid hot temperatures, with high-pressure ridging to hold well into mid-July. US corn and soybean crop potential is not increasing, and the bigger question going into Friday is where the money managers will desire to hold a near-record large short position through the June report. Algorithm traders are just locked in on seasonal trends and chart-based selling until met by a greater opposing force. Unfortunately, it requires acknowledgment of yield concern and or new end-user demand taking advantage of recent price slides.

Better rains are slated to drop across the E Midwest while heavy thunderstorms maintain a wet pattern across the N Plains and NW Midwest. The recent heavy rainfall across the N Plains and Midwest has produced dangerous flooding, with crops in low-lying areas that are reported to be standing and watered. A lengthy dry period is needed across these areas, while the major forecasting models are far apart in terms of weather patterns beyond the next five days. The GFS maintains existing weather pattern. Near to above-normal temperatures and a Ridge riding storm systems are featured for the pattern over the next 10 days. Longer-term, the Ridge returns to the Central and Eastern Midwest with another round of heat/dryness.

Friday’s cattle on feed report was considered bearish, with the placement numbers well above expectations. USDA estimated there were 11.583 million head of cattle in large feedlots (1,000-plus) as of June 1, down 7,000 head (0.1%) from year-ago but 152,000 head more than the average pre-report estimate implied. May placements topped year-ago by 4.3%, whereas traders expected a 1.5% decline. Marketings increased 0.2% from last year, slightly less than expected. Last week’s cash trade was held off until late Friday, with the live trade in the north up $2-3 at $198-199, while dressed sales were $6-8 higher at $310-314. Live sales in the South jumped $3-5 at $189-191. Sales in all regions are at a record high and are $10-16 higher than a year ago.

Cattle slaughter last week totaled 620,000 head, which was up 5000 head for the week but 29,000 head fewer than a year ago. Slaughter in the last two weeks has been the lowest since 2016 while carcass weights have been higher. Box beef prices picked up $4.56 on choice and $5.15 on select. Estimated slaughter margins were down $18/head at $125. Feeder cattle are indicated $1.00-2.00 lower initially. It’s the close that will be important and if trader demand shows up.