New military action overnight in Ukraine lifts prices

Ukraine stays in the news as overnight strength returned to the wheat market leading the other commodities higher, as a draw attack on a key Russian export port has now again heightened the Black Sea grain tensions. Russian authorities closed the port of Novorossiysk following a drone strike on a Russian naval vessel. This occurred near a key export terminal called Novo which has halted cargo loading. The military vessel named Olenegorsky Gornyak can no longer conduct its combat missions and needs repair.

The port infrastructure where the attack occurred did not experience any damage, but insurance sources are now looking at raising fees or completely exiting the Black Sea due to the new Russian/Ukraine sea battles, which are threatening the shipping of grain and other goods. Last year Russia and Ukraine exported a record 62 MMT of wheat, which was 28% of the world's total. With a smaller Ukrainian wheat harvest, that total is going to be cut to 49 MMTs of corn to the USDA, which is a drop of 13 MMTs.

It’s been reported that there are massive areas of flooding in the Chinese corn crop regions where as much as 14-16.00 inches of rain have fallen in just the past week. Chinese corn crop estimates are in decline, explaining their rising domestic market prices. Add to this, the Indian monsoon has been erratic, with the Indian oilseed, cotton, and rice crop yields being at risk.

The Midwest weather 10-day forecast continues to offer Ridge riding storms across the Midwest/Delta and the northern plains every few days. Both the GFS/EU models are curtailed in their forecast rainfall totals. Models of 2-3.00“ totals are being reduced a bit, but there are still good rain chances still range in the .50-2.00” range. No extreme Midwest heat is noted, with highs averaging the upper 70s to low 90s which will help Midwest crop conditions over the next two weeks.

Live and feeder cattle futures closed higher Thursday, but a steady weak outlook is offered this morning with feeders dealing with the rebound in feed grains overnight. The cash markets were largely inactive in all regions, with feed yards looking to add a couple of dollars to last week’s market. A few loads did move in IA/MN, reportedly at $188, which was $1-2 higher for the week, while dressed sales were steady at $294. More active trade should develop today at steady-$2 higher, becoming protective of margins.

Carcass weights for June were reported at 882 pounds and have since moved higher. The latest data for the week of July 22 showed an average dear weight of 893 pounds, unchanged from last year. Seasonally cattle and beef prices tend to bottom now through mid-August and then rally into Labor Day. This should support the August live cattle ahead of expiration. Typically, we get a weaker trend from Labor Day into September which finds support by October.

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