Grains extend their short covering rally overnight.

Grain futures extended their rallies overnight, despite the US dollar firming ½ a percent, as short covering remained the feature ahead of Friday’s NAS S September Stocks and Final Grain Report due out at 11:00 p.m. CT. Rising interest rates that will continue into the year-end will keep a bid under the US dollar despite yesterday’s massive technical reversal after the UK central bank stepped in to stabilize its bond market.

Wheat futures rallied overnight to near last week’s highs but retreated a dime into the morning close on news that Putin wants to annex Eastern Ukraine after his supposed successful vote by October 1. The Safe Grain Corridor remains open as of the day, but the future is in question regarding how Ukraine and its Western supporting allies treat the annexation. Ukrainian Pres. is scrambling to convince Western allies to double their truck fleet to move grain out of Western Ukraine into Europe.

Inside Russia, the seeding of new crop wheat is way behind normal due to excessively wet weather that is saturated soils. Russian 2023 winter wheat production will be down amid reduced winter wheat seeding and the growing threat of winterkill as seedlings will be poorly established ahead of winter. Also, it’s becoming a matter of fact that winter wheat seeding in Ukraine will be will way below normal due to lack of fertilizer and fuel, and what the future of Ukraine holds in the Eastern areas.

The weather in Brazil remains favorable with ongoing rains for soybean and corn seeding. Meanwhile, the drought in Argentina expands, affecting the current wheat crop. Planting of the soybean and corn crops in Argentina starts in October and runs through December. For now, the Buenos Aries Grain exchange has increased potential soybean production to 48 MMTs while reducing the corn crop to 50 MMTs due to the switching acreage. Both are swings of 2 MMTs.

Live and feeder cattle futures tumbled lower again on Wednesday, with a steady soft outlook for early trade today. The cash cattle trade was quoted mostly steady with last week with Nebraska at $144-145 while the dressed trade was steady to $4 lower at $228. The southern plains market remained quiet. Live cattle futures are getting extremely oversold and close to significant technical support for the December and February live cattle.