The grain trade is on retreat into the weekend.

Wheat futures are mixed while row crops retreat, heading into a weather weekend after strong weekly gains. Forecast models have low confidence in the 11-15 day period, as the GFS model wants to produce a tropical storm system for the and E US next week in the life for cooler temperatures to spread across the Eastern half of the US after August 8. Meanwhile, the Canadian/EU models are warmer and drier. Confidence that this is reduced beyond August 8, with Sunday nights forecast producing a volatile start to next week.

Short covering occurred in the grain trade on Thursday, with open interest for corn dropping 4227 contracts and soybeans falling 16,766 contracts. Wheat was up 453 contracts.

Wheat futures found their strength overnight (diminishing in the morning with softer row crops) as French wheat crops fell 2%, with half of the crop now rated good/excellent. This is the lowest-rated French wheat crop since 2016 when similar cool and wet weather produced a disastrous harvest, and the smallest since the 1980s. The 2024 harvest has reached 41%, and crop quality is the issue amid low test weights and the difficulty of meeting milling grade qualities. Private traders are now lowering their estimates of the French crop to 25-27 MMTs, well down from early estimates as high as 34 MMTs. At some point, the premium of Paris wheat will draw Baltic wheat into France, adding to their deliverable stocks.

The Brazilian Real has fallen 17% over the past year due to meager economic growth and ongoing government spending, which has reached 50% of GDP in recent months. There is talk that the Lula Administration is preparing to raise taxes and cut government spending to manage its way out of the looming crisis, with an announcement to come in early August. Without some economic austerity measures, the Brazilian real will keep weakening amid a Lula-managed economic decline.

The weather models for the Central US have lost their consistency beyond the next 10 days regarding weather forecasts beyond August 8. The GFS model forms a tropical wave to impact the E US early next week, allowing cooler temperatures to invade the Eastern half of the Central US after August 8. Meanwhile, the EU and Canadian models do not reflect this tropical system or the cooling. After a lengthy period of calm following Hurricane Beryl, the Atlantic is showing signs of activity with the extended range forecasts impacted. This means confidence for forecasts beyond the next 10 days is sharply reduced. The nearby 10-day forecast has changed little, with warm to hot temperatures and below-normal rainfall for the Plains Canadian Prairies and the Western Midwest. The coming heat will push crop maturity and increase row crop stress in areas where soil moisture is low. The best rain for the W Midwest occurs late in the 10-day forecast, and even there, confidence is low.

Live and feeder cattle closed higher on Friday, with live cattle posting the best strength, while feeder cattle closed higher but well off session highs. October live cattle produced the highest close since last October. Both the August and October contracts are priced below current cash market quotes. Deferred live cattle prices are reluctantly following the nearby as did feeder cattle futures. Meanwhile the cash index for feeders gained $0.67 to $259. Cash trade for Thursday was light and limited to Kansas, where sales were quoted $were two higher for the week at $1 90. Delivered trades were quoted at $196 for steers and $194 for heifers. Very light trade was quoted in Texas at $190, but the Kansas trade was enough to set the tone for the higher trade.

Box beef was mixed, with choice gaining $0.22 and select off $1.15. The choice value is down $1 for the week, and select has lost $4. October live cattle have technical targets near $191. The deferred weakness in live cattle is due to another fear of a fourth-quarter correction. Seasonality for cattle turns bearish from mid-August to mid-October after buying to feature Labor Day grilling is done.