Grain futures continue sharply higher ahead of a 3-day weekend

Grain futures continued their aggressive move higher as the various weather models continue to elude the prospects of reasonable rain into the donut of the Midwest that is dry through the next seven days. As of midweek, the market has fully gone into rationing mode and is already anticipating that corn’s trend yields will be unattainable.

Yesterday’s NOPA May 2023 US soybean crush was estimated to be 177.915 mbu, well above expectations of 175.8 mbu and last month’s 173.232 mbu. Soyoil stocks were pegged at 1.872 billion lbs vs expectations of 1.94 billion lbs and last month’s 1.957 billion lbs. Both numbers were considered friendly to old crop and accelerated gains after 11 AM yesterday.

Half-inch rain fell across E IN, C/N OH, SE MI, and Western portions of OK, KS, NE, C SD, and ongoing in ND. No current forecast changes for the “donut hole” area of N IL, E IA, and Upper Midwest have been discussed previously. The EU/GFS and Canadian models overnight all ships rainfall this weekend/next week further south into the US Gulf/Southeast region, and the trend a bit drier in key areas of E Nebraska was summerlike temperatures arriving next week. After the three-day weekend, weather models will be peering at the end of June, and a pattern shift needs to be seen.

After a rough start on trade Thursday, live cattle futures closed firm while feeder cattle cut their losses in half from being lower by $4.00 earlier. Today’s open anticipates feeder cattle again lower due to the aggressive gains again made in feed grains overnight. The cash cattle trade was quoted yesterday at $185 on a live basis in Nebraska which was $5 lower for the week, while dressed sales were $4-7 lower for the week at $294-296.50. Live sales in the IA/MN region were down $2 at $188, while Kansas and the southern plains markets were still un-traded. Despite the weak cash trade and a larger kill for the week, the choice beef cutout gained $3, and select was up $0.32.

Cattle slaughter through mid-month has totaled 1.43 Mil head, down 6% from last year. This makes the largest year-over-year decline since 2014. This difference will continue to widen in the coming months, offering long-term support for beef and cattle price corrections. That is, if demand is not slipping substantially from consumer rejection.