Geopolitical concerns and uncertain weather drive markets.

Grain futures opened lower last night on steady to better crop ratings, as a wetter euro forecast, and geopolitical concerns with Nancy Pelosi’s trip to Taiwan raised tensions. Asian equity markets fell on the anticipated Pelosi visit with Hong Kong down 2.4%, Shanghai off 2.3%, and US equity futures are also lower. Speaker Pelosi is expected to spend Tuesday and Tuesday night in Taiwan raising political worry with China’s unrelenting pledge of dire consequences with their military on high alert. So far, China has been nonspecific on what any consequences will be. Obviously, the grain trade anticipates slower Chinese grain procurement.

US crop conditions had corn steady at 61% in the good/excellent category while soybeans gained 1%. The gain in the soybean condition was considered a very surprise amid the heat/dryness that lingers across the N Plains and NW Midwest. 80% of the US corn crop has now soaked with 44% of the US soybean crop setting pods. 97% of the US spring wheat crop has headed. Current US models with crop ratings suggest a corn yield of 173-174 BPA with soybeans at 50.7 BPA. FC Stone and Markit will be releasing their state-by-state yield estimates today and tomorrow.

After a vessel loaded with corn left the Ukrainian port yesterday it’s anticipated it will take 2-3 weeks for the stranded boats that are there to exit before new cargo loading ships can develop. Many of the stranded ships have cargoes of corn that have been hold since late February. It’s anticipated that some of the corn will be rejected by importers upon arrival due to extremely low quality. Also, insurance companies are struggling to find appropriate pricing to charge on a vessel returning to Ukrainian ports with escorts to load grain. Pres. Putin wants to review the Black Sea grain agreement with his Turkish counterpart this Friday. The current agreement is only for 120 days and must be re-approved by all sides. There are only 109 days left as of today.

The drought in Europe continues to worsen with the next two weeks showing limited rainfall and high temperatures in the 90s/lower 100s in France and Germany. The EU corn crop is under acute stress with yields in sharp decline.

US weather models are showing different resolutions, with the euro forecast holding better chances of rain for the Western corn belt, while the GFS remains drier with more heat in place. Iowa has reported that 49% of soils were short to very short in this week’s hot weather with dryness will push Iowa soil moisture into the 60-65% short or very short. If the GFS verifies grain prices recover sharply into next week. If the euro forecast verifies, then the lows made 10 days ago will be retested.

Cattle futures were higher yesterday and a steady better opening is anticipated again today. Cash markets remained quiet while box beef prices advanced. The choice cutout gained $1.36 while select was higher by $0.65. Poor pasture conditions again in Texas which are the worst since 2011 with Nebraska having the worst ratings since 2012 will continue to drive beef cow herd liquidation.