Strong overnight grain trade softened by morning.

Grain futures were pushed higher overnight, led by the wheat trade. The drop of 5% in the good/excellent category for wheat prompted buying interest, which had Chicago wheat pushing through the 100-day MA at 5.97 to a high of just over 6.00 before retreating in the early morning hours. Corn had seen gains of three cents, while soybeans were up as much as eight cents before settling back to slightly lower at the end of the night session. Yesterday’s trade and in the overnight shows how easy it is to move markets on small new stories with such a big short position by the funds. Imagine a major story that shocks the system.

The friendliness of wheat is tied to the dryness of the N Hemisphere (US, Europe, and Russia), which is providing market support. For wheat, the focus is on dryness in Ukraine and S Russia. Russia’s supplies have a big influence on world wheat prices. Despite the lift in wheat values, Russian FOB offers are steady to weaker, with spot wheat quoted at $208 bid and $2094/MT offered for exporter sources.

Grain trade sources estimate that at least four bidders are participating in Jordan’s tender for 120K MT of feed wheat, with results expected later today. The trade is watching to see if Russia will start to lift bids as dryness will become concerning by mid-May. Total production of under 88 MMTs will firm prices, with production under 84 MMTs taking away low wheat values the world has become used to out of Russia. Forecast for NSW Russian wheat country runs in the 70s to lower 80s with no moisture for six weeks, and 14-day models do not bring any rain in.

Yesterday, China purchased two cargoes of Brazilian soybeans, but interest in chasing the Chicago rally seems to be lacking. China has used the early year price break in CBOT futures to garner coverage and Brazilian soybeans well into June. China is anticipated to auction off 100,000 MTs to swap out reserve soybeans this week, which will help to blunt import demand nearby. Argentine farmers are becoming active in advancing the new crop soybean harvest in drier weather.

The US 1st Quarter GDP report (exp 2.5%) is on Thursday. PCE Inflation data (the Fed’s favorite metric) is on Friday (exp 2.6%). The Next Fed Policy Decision is on May 1st.

The Central US weather forecast indicates wet weather conditions on the weekend for the Plains and the W Midwest, and then an active pattern will follow thereafter. The Western Midwest crop areas could receive as much as 2-3.00” of rain with the coming two storm systems, which will cause seeding delays. The Midwest weather pattern is one of being active with storms every 3-4 days into May 7, but mild to warm temperatures will offer seeding windows. 2024 is setting up to not being an early-seeded year for corn or soybeans.

Live and feeder cattle were sharply higher yesterday after a gap open stop, as support from the COF report aligned with outside macro commodity fund buying that occurred on Monday. The cash feeder Index gained $0.38 on Monday to $242.11, with April and May feeder cattle finishing just above the index. Yesterday, we saw some of the strongest gains in the August forward feeder contracts. USDA’s April estimate for quarterly OKC feeder Steers ranges from $250 in Q2, $261 in Q3, and $2 67 in Q4. Futures contracts remain under the USDA forecast for all three quarters.

The early week outlook for the cash trade is obviously higher, but negotiated markets were quiet at the start of the week. Live and feeder cattle futures did leave chart gaps on Monday, which has some traders expecting those to get close in the coming weeks. Major resistance on the charts for June cattle is $180 and $250 for May feeders.