Will it be another morning grain rally that gets sold?
Grain futures have run traders ragged over the last eight trading sessions, vertical for five days and straight down for the prior three. Overnight volume reflected exasperation, and early morning strength came from short covering as the GFS remains relenting on the Plains and NW Midwest concerning forecast. The current round of heat and dryness will be taking a toll on NE/IA/KS/SD as plants are pushed to crop maturity.
French milling wheat prices have not declined back to recent lows as US values have. French milling wheat is higher by $4.00/MT at $341.00, leading US values higher after testing July lows. As shrinking supplies and the near closing/restrictions on the Rhine River increase transportation costs.
China held live military exercises around Taiwan on Thursday, with the military drills including firing 11 missiles into the sea surrounding Taiwan. China has warned commercial aircraft and ocean vessels to avoid the area into August 7 due to the exercises. China is showing its military force due to the recent visit by Speaker Nancy Pelosi to Taiwan, making her the highest-ranking official to visit the island in 25 years. The 19-hour visit by Pelosi has caused concern about relations between the US and China. China is rumored to be seeking 9-12 cargoes of Brazilian soybeans for September/early October. Interesting how the media and agriculture trade groups are quiet, as opposed to if this were Trump visiting, they would be very vocal.
Weather models are starting to come together for rainfall projections of IA/NE/MN for next week. The European model is slowly subtracting rainfall while the GFS remains mostly dry. The dry GFS trend that is backed up by the GFS ensemble and Canadian models is giving more validity that the Western corn belt will again continue to struggle. A blend of the two shows a chance of a few showers across the NW Midwest from Friday into early next week. The amounts and coverage will not be what is needed or has been blatantly forecasted by the European model this week. The models do agree on Central US heat, with temps in the Plains and the W Midwest ranging from the 90s to near 100s. This heat will push crop maturity and will be detrimental to yields. Yield ratings will likely be on the decline into mid-August.
Cattle futures had strong gains across the board yesterday. August cattle put in their best close since late April, while October and December live cattle put in the best close since early May. Initial cash trade on Wednesday was steady- $2.00 higher for the week in Nebraska at $140-142. The rest of the Plains and Midwest were mostly quiet, with the outlook of steady to better. Box beef values were mixed with choice down $0.52 while select gained $0.25. August cattle have heavy resistance at the 138.50-139.50 range.