Turnaround-Tuesday removes Monday's reversal higher.

The grain trade overnight attacked the reversal that corn, soybeans, and wheat produced and stayed shortsighted on the focus of US corn and soybean yield potential. What is not being considered with the black box trading is that China could become a large buyer of US soybeans. China has only purchased an estimated 1 MMT of US soybeans, with the USDA anticipating that they will likely secure 20 MMTs of US-origin beans from August into January, which is China’s normal buying window for US beans. The lack of China buying currently and farmers unloading old crop supplies allows the algorithm computers to continue to throw sell orders a daily basis that meets lack of support.

Monday’s open interest showed a gain of 4,571 contracts of wheat and 850 contracts of corn, while soybeans declined by 8,509. Soybean oil was down 11,189 contracts, and meal lost 7,225 contracts. This implies downward momentum is losing participation.

Corn and soybean ratings released yesterday showed corn climbing 1% in the good to excellent category to 60% while soybeans fell 1% to 67%. Meanwhile, spring wheat was off 3% and registered 75% good or excellent. Corn showed that 77% of the crop has been pollinated, while 44% of the soybean crop is setting pods.

NASS will start its Farmer yield survey for the August crop report and incorporate FSA program data to adjust corn, wheat, and soybean seeded acreage along with anticipated harvested area.

The USDA/Risk Management Agency is increasing the premium subsidy rate for the Enhanced Coverage option to 65%, regardless of Congressional inability to pass a Farm Bill. The current subsidy rate is 44%, and the elevated subsidy will reduce the need for ad hoc disaster assistance in the future.

The heat is building across the Central US into August 8 before more seasonal temperatures return. There is a risk of crop-damaging wind and thunderstorms impacting East Iowa into Illinois. Derecho windstorms can produce corn green snap this time of year. A high-pressure Ridge fans extreme Central heat for the next eight days, with highs in the mid-90s to lower 100s across the Plains and Midwest highs from the mid-80s to the upper 90s. The heat will push crop maturity with limited rainfall to drop across the Plains and portions of W Midwest. To the east, Ridge riding storms will occur over the next four days, with dry weather starting Friday. A series of these Ridge riding storms will produce strong straight-line winds called Derecho, producing 80-100 mph winds. Rain is not evident until the 9-14 day window, with confidence low as the EU model is struggling with the development of any tropical storm systems in the Eastern Atlantic. Meanwhile, the Central and Eastern Midwest is anticipated to be well watered.

World weather forecasts show the drought worsening across Ukraine amid a lack of rain, but varied temperatures are developing across Europe, with a little less heat across the Black Sea over the next 10 days. Meanwhile, dryness continues to worsen across Northern Brazil and Argentina. Planting of the Brazilian soybean crop starts in 30 days.

Live and feeder cattle futures tumbled on Monday, with a wave of fund selling overwhelming livestock markets heading into the end of the month. A steady/week outlook is offered for early trade this morning, and snow that feeder cattle paced Monday’s decline against the mix of weakness, deferred live cattle, and the firming of corn values. Meaningful trade interest in the negotiated fed cattle market is anticipated Thursday with a steady outlook.

Packers last week bought 73,164 head on a negotiated basis, with 57,696 for 1-14 day delivery and 15,468 415 for 30-day delivery. For the year, the Packers have bought 2.22 Million head on a negotiated basis, which is the lowest since 2015 and the second lowest on record. On a percentage basis, 17.8% of Fed cattle purchases have been on a negotiated basis, which is the lowest on record. 65% of the purchases have been on a formula basis, which is a record high.

Yesterday, October, cattle were repelled again by the continuation downtrend line that had resistance just under 189.00. Trendline support off the April lows for October live cattle comes in at 184.00. October feeder cattle closed below trendline support, and a close below 254 died 00 would open up a large round of technical selling. Yesterday was an outside-day down, meaning October feeders traded above Friday’s high and closed below Friday’s low and almost below last week’s lows. Feeder cattle continue to have a poor chart-based scenario that is becoming very bearish looking.

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