Grains are softer to start the week.

Grain and soybean futures are lower to start the week, as some areas of the NW Midwest at pickup favorable rains along with Russia’s wheat crop being raised substantially by IKAR, a private Russian analyst, to 95 MMTs. They have the crop in a range of 92-97 MMTs based on the expansion of spring wheat seeding and record high yields. The massive crop will cause interior Russian grain supplies to swell amid limited export capacity. The USDA has Russia down for exports of 40 MMTs of wheat, if logistics can work right, they could potentially lift that number to 41-42 MMTs.

Over the weekend, the Democrats pushed through what they call an Inflation Reduction Bill, with all 50 Democrats voting for it and VP Harris casting the tie-breaking vote. A positive for the ag sector in this bill is that it extends the $1/gal bio-based diesel tax credit through 2024. In 2025 the biodiesel credit will be replaced with a clean fuel tax credit that would vary depending on the carbon rating of the fuel. It also includes Safe Aviation Fuel, which mostly uses ethanol as a feedstock. Until this occurs, SAF will provide a subsidy of up to $1.25/gal that would eat airlines. Ethanol and biodiesel are treated favorably in the bill, boosting future demand.

Needed rainfall did fall across Minnesota/N Iowa overnight with totals ranging from 1-4”. It’s estimated that at least half of Iowa missed the rain, along with most of Nebraska, Missouri, and Kansas. It’s anticipated that corn and soybean ratings will fall 1-2% out of the GD/EX category. A strong high-pressure Ridge holds across CO/KS/and even the next 8-9 days before weakening. The Ridge will limit any precipitation across the already drought plagued areas. However, there will be several Ridge riding storm systems that provide moisture for the Central and Eastern Midwest in the next two-week timeframe. The only benefit is the hottest days of summer have passed, with temperatures now for the Plains/Midwest in the 80s to upper 90s.

Live cattle futures did close higher last week and a firm outlook is anticipated this morning. The previous week’s cash trade firmed with Texas and Kansas cattle selling for $136, while Nebraska traded $140-142. Sales in IA/MN were quoted at $143-147. The cash outlook is firm to start the week. Box beef values did slip lower last week, with the choice down $4.62 while select was down $3.58. Estimated slaughter margins last week were $362/head. This was $285 less than a year ago but still the second highest on record for early August. As of Friday’s weekly close, all 2023 live cattle contracts or above 150.00. Feeder cattle are undervalued.