Grain trade mixed overnight.

The overnight trade ended with a firmer wheat market while row crops were lower. Wheat prices suffered heavily yesterday but are finding a short-covering rebound led by spring wheat. Russia said that the blast, which damaged an ammonia pipeline, will not be positive for the extension of the Black Sea grain export pact, as negotiations are occurring in Geneva on Friday for the extension. Also, northern European and Russian spring wheat areas will endure another additional dryness for another 10 days, with temps in the lower 100s in areas of the Newlands and Urals.

New crop corn and soybean futures are lower as the prospect of improved rain next week continues to be in the hunt. The GFS continues to be the weather model with better rain chances for the Central US. The GFS keeps trying to form a Gulf hurricane with landfall across S Texas in its 11-15 day period, something the euro forecast model does not support. The EU model has rain but is more limited in the NW Midwest, IL, IN, and Ohio. Western IA and MO hold better chances of rain along with the Delta and Gulf Coast.

The US Drought Mitigation Center will release its Weekly Drought Monitor this morning. The maps are expected to show a reduction in the Plains drought but an increase in the Midwest drought and coverage of D1 areas in the deepening of the dryness. It’s now anticipated that 40% of the US corn crop has been put in some form of a drought level, which has not been seen since the growing season in 2013.

Another dynamic day yesterday in live cattle futures after bolting sharply higher in the morning, with August live cattle hitting a high of 178.10 and all contracts posting new contract highs, sharp reversals occurred on what is now initially heavy profit-taking of this week’s extremely sharp rise. During this correction, strong cash trade continued on Wednesday, with dress trade in any quoted at $8-15 higher for the week at $300, while live sales were $4-6 higher at $191. Trade in the southern plains remains light, with live sales in TX at $181-183, $8-10 higher for the week.

Cattle slaughter at midweek is 370,000 head, up 15,000 from last week’s holiday kill and 4000 head less than a year ago. Box beef values had seen substantial gains again, with Choice up another $3.79 and Select picking up $2.12. Yesterday’s technical action will inspire a pickup in hedging via options and LRPs, as recent vertical action had prompted many to stand still and watch.