Short covering develops overnight ahead of tomorrow's data.

This morning, short covering is a feature on the grain trade after continued heavy selling from the HTA deliveries and technical features from algorithm traders pressing momentum on rain forecasts. This morning’s Stats Canada report featured all wheat acres at 26.64 Million versus an estimate of 26.94, and canola seedings at 22.007 Million acres versus a guess of 21.52 Million.

The March crop intentions report reflected 6.3 million fewer acres than the 2023 final seedings. Nearly 1 million acres were placed in the CRP program in 2023. It’s likely that 1.25-1.70 million acres will be put into the Preventive Plant program for 2024 amid the excessive rainfall across the NW Midwest/N Plains. This leaves 3.5 million acres unaccounted for. Traders have speculated that NASS will find extra corn and soybean acres accordingly. However, with prices compressed, producers have likely decided to leave acres idle in the S Plains due to unfavorable margins on fragile land. There are strong opinions on either side of the average estimate of corn acres tomorrow for 90.35.

Saudi Arabia is issuing a tender for 595,000 MTs of wheat for arrival from September through December. Jordan is also tendering 120,000 MMTs for late summer wheat. This follows purchases from Egypt and Algeria, as prices have reached levels stimulating world demand. Wheat should soon enter a seasonal low, where at least sideways trading will start to develop. An uptrend will likely develop later this fall if corn and soybeans are not weather-challenged in July/August.

The upcoming forecast has the southern plains remaining hot along with the Delta and southern third of the Midwest, which is under the influence of a high-pressure Ridge. Numerous days with highs ranging from upper 80s to mid-90s. Ridge-riding storms are the feature of the next 10 days of varied Midwest rain totals. The EU model reduced 10-day rains across the Central and Eastern Midwest with heavy rainfall of 2-4.00″ focused on the NW Midwest and the northern plains. It is raining again across southern North Dakota and South Dakota this morning. Warmer temperatures and drier weather look to develop in the Midwest after July 6, but models need to verify.

It was a sharply higher session again yesterday for cattle and feeder cattle, with June cattle gaining $3.45 to close at a record high of $192.92 ahead of Friday’s expiration and are pricing in higher fed cattle trade for the week. Packer bids in the north were quoted steady with last week, but feedyards are passing in those bids and offer cattle for sale at $200 or higher. Asking prices in the South are quoted at $192-194. August feeder cattle picked up $2.725 yesterday and could be on track for a record-high weekly close. The CME cash feeder Index gained $0.41 to a record high of $258.31. Based on last week’s Cattle on Feed report and slaughter reports, the June 1 feeder cattle supplies are at 13.9 million head, down 722,000 head, which is down 5% from last year and a record low.

The CME lean hog index is up 7 cents to $89.92 as of June 25, while the pork cutout value firmed 21 cents to $95.52, potentially signaling a halt to the recent price declines. For futures to build on Wednesday’s strong corrective gains was likely tied to short covering ahead of today's USDA report. Additional strength will be needed in the cash index and wholesale pork values.

The Hogs and Pigs report will be out this afternoon at 2:00 p.m. The average for all Hogs and Pigs on June 1 is 100.8% of last year. The average estimate on Kept for Breeding is 97.3%, and Kept for Market is 101.2%.