The first weather weekend is on the way.

This morning, grain prices are relaxing from yesterday’s rally as winter wheat prices continue to extend their losses. The strength in the US dollar yesterday continued today, with the dollar up $0.51 at 105.32. Trading weather gyrations is becoming the norm as we enter the weather market season. July temperatures and rainfall determine US corn yield, and the coming heat/dryness starts to elevate concern that a new Midwest weather pattern could emerge. What weather patterns develop into July will be debated and will grow in the coming weeks.

To date, June weather across the Central US has been dry, with recent heat working on soil moisture. Shallow-routed corn and soybean crops are struggling across the Central and Eastern Midwest. This coming week’s good/excellent ratings will likely see a decline of 2-4% on the Monday progress reports. If the extended range forecast is verified, we will see a further decline in the green index (crop condition reports).

Currently, the more often correct EU model offers 10 days of above too much above normal temperatures and below normal rainfall. Ridge-riding storms will produce an abundance of rain across the NW Midwest and the N Plains, with convective activity leaking southward into the Central Midwest from time to time. High temperatures range in the mid-80s to lower 100s, with the heat forecast persisting into the last days of June. This hot/dry weather will raise the need for a US weather pattern change in early July. Long-term weather model forecasts have been worrisome of a warmer/drier Midwest forecast. If this starts to verify as we get towards early July, the speculative index fund grain trade will be caught short unless it is already reducing its net position earlier.

France’s ag ministry rated the country’s soft wheat crop as 62% good or excellent as of June 10, unchanged from the previous week and the lowest for the date since 2020. Winter barley conditions increased by two points to 65% good/excellent. In the first production forecast for this year, the ag ministry projected the winter barley crop would fall nearly 11% from a year-ago.

On Monday, the NOPA will release its estimate for May soybean crushing. Estimates have the May crush rate at 177 Mil Bu, with soyoil stocks falling to 1,765 Mil pounds. Midwest crush plants came back online from seasonal maintenance in April. The record May soybean crush rate was set last year at 177.9 Mil Bu.

Ukraine’s ag ministry raised the country’s grain production forecast to 56 MMT, including 28.5 MMT of corn, 21 MMT of wheat, and 5 MMT of barley, up 3.6 MMT from its prior outlook. The ministry forecasts oilseed production at 22 MMT, including 13 MMT of sunflower seeds, 4 MMT of rapeseed, and a record 5 MMT of soybeans. The ministry expects Ukraine to export 43 MMT of grain in 2024-25, including 25 MMT of corn,15 MMT of wheat, and 17 MMT of oilseeds and oilseed products.

Western Midwest corn basis bids are strong, which suggests that the NASS is showing two large corn stocks being held by farmers. US corn stocks represent a record 88% of world exportable supplies, which makes the importance of a new crop US corn yield hitting their record trendline-setting corn yield of 181 BPA that the USDA wants to carry on their balance sheets (similar to refusing to lower South American soybean and corn production until a larger US yield is assured. The history of the USDA lowering yields a year later is extensive, but nobody cares to remember).

Live and feeder cattle futures burst higher on Thursday as an improving cash trade surfaced. Cash cattle trade developed Thursday in the Southern Plains at $1.00 to $2.00 higher prices than last week. Some feedlots in the Southern Plains and most in the northern market continued to pass on those bids in hopes of even better prices. Some live sales in the north were quoted at $192-195, which was $1-4 higher than last week. Box beef values had choice gaining $0.71, which was a 42-week high of $318.31, and select picked up $0.32 at $299.25. August cattle found support just under the 100 and 200-day moving averages and recovered from what would have been technical damage to the charts if they had closed at that level. The discount to cash has widened on higher cash prices this week. This means breaks will find support until the cash trade decides to go into the summer slump.

The pork cutout dropped another $1.99 on Thursday to $97.02 amid heavy pressure on all cuts but hams and picnics. More concerning is the slowdown in pork movement over the past two days despite heavy price pressure. The hog trade is in search of a washout low with all the bullishness for summer strength washed out. At some point, cheap pork, compared to expensive beef should take hold if consumers are truly concerned about inflation costs at the grocery store.