The grain trade finds further buying since Monday's heavy selling.

Grain futures are finding continuing strength this morning after Monday’s washout. The US dollar has slid well below 104.00 (currently 103.43), breaking weekly continuation support, causing the massive short position to think about the prospects that exports could be improving. The recent excessive price slide since the end of May has created the cheapest corn and soybeans in the world at the Gulf.

Rumors are building that China has woken up to the cheap prices in the US and has possibly purchased 4-6 cargoes of US beans off the PNW for August/September. China is also inquiring about additional supplies. Brazilian soybeans ex Paranagua are offered at $1.12 over versus US Gulf at $0.90 over. Brazilian soy oil premiums have rallied sharply to $1 cent over Chicago versus 4.5 cents under several weeks ago. Brazilian FOB corn is $0.95-1 died 00 over versus US Gulf at $0.80 for August/September. Ukrainian corn is offered at $1.10-1.15 over in limited volume. US corn, soybeans, and even SRW wheat are priced for sale.

The US economy has shown signs of slowing, and the prospect of several Central Bank rate cuts is increasing through year-end. The Brazilian real has fallen to 5.4 versus one US dollar, down from its low of 5.75:1 USDA just a few weeks ago. Strengthen in the real places economic pressure on Brazilian farmers heading into a new growing season that starts on September 1.

The EU wheat crop continues to move lower in production capabilities with the German Farm Co-op lowering their crop forecast to 20.20 MMTs, down 6.2% from last year. Also, the German rapeseed crop is forecast to be down 10% at 3.8 MMTs. Following the recent French lowering of wheat and rapeseed crops, it’s becoming apparent that the final EU soft wheat crop will be below 120 MMTs. Even with 6.9-7.2 MMTs durum production, the final all-EU wheat crop could be 127 MMTs or less. The harvest is now underway across Germany, and all eyes will closely follow wheat quality measures.

Cash market bids continue to rise with US soybean processors, and ethanol grind is looking for supply that is being held tight-fisted. Ukraine sees a “few” showers before more hot/dry weather patterns return. Brazilian corn values were remarkably strong amid their harvest. Look for Chicago futures to be well supported on nearby breaks, with Dec corn respecting 4.00 and November soybeans in the lower $10.20-10.40 range.

Forecasts show a large difference in rainfall potential. 2-6.00″ of rainfall will fall across the Gulf states and the southeastern US, while limited rain will now fall across the NW Midwest, the N Plains, and the Western Canadian prairies. A strong-high-pressure Ridge across the western US will push northward into Canada. This Ridge sends the jet stream northward and creates an NW area upper airflow through the Central US, thereby limiting rain for the western US. Climate guidance suggests the Dakotas and NW Midwest are at risk of rising temperatures and limited rainfall with an eastward progression of the Ridge in 9-10 days.

Live and feeder cattle futures were mostly higher on Tuesday, with a mixed outlook anticipated this morning. Cash trade remains quiet, with expectations of a weaker cash trend in the coming weeks. Last week’s cash market is significantly above current CME values, with large discounts supporting the board but not creating a sizable lift. Choice cutouts were down $2.23, it’s and select fell $3.23.

The July Cattle on Feed report will be out this Friday. The average trade estimates look for a marketing rate of 92% of last year, a placement rate of 97%, and a July one feedlot inventory of 101%. The marketing rate will be lowered due to fewer working days during the month this year. If realized, June's placement rate would be the smallest since 2015.