Grain prices traded higher overnight, led by spot soybeans.

The overnight grain trade moved higher as the market added weather premium to prices heading into the weekend. World weather is directing values, with traders trying to figure out what normal weather looks like so far during the spring of 2024. Black Sea forecast offers a few spits of rain across the SW Russian winter wheat/corn area with late-month heat return as a high-pressure Ridge builds the week that recently went through frost needs rain if there’s a chance of yield recovery with the trade now openly discussing a Russian wheat crop at 81-83 MMTs. Russian FOB price offers have risen to $442/MT. The offers are still $1 8/MT below French offers, but that gap has closed.

KC Wheat Tour scouts projected Kansas yields at 46.5 bpa, above the 5-year average of 42.4 bpa. They saw production of 290.4 mbu vs. the USDA's predicted 267.9 mbu. This will be the largest wheat crop since 2021.

Crop Progress updated by Argentina’s Ag Secretary showed the soybean harvest 61% complete vs 48% last week and the 5-year average of 76%. Argy soybean crop conditions at 24% G/E vs 27% G/E last week. Corn harvest progress was reported at 33% vs 29% last week and the 5-year average of 42%. Argy corn crop conditions at 14% G/E vs 17% G/E last week.

To improve its economy, China is rolling out new measures to sustain its housing market after values have fallen 10% since the start of the year. The Chinese government has become serious and is underpinning its real estate values by securing arms and cutting interest rates. The financial markets are being supported as Chinese consumer demand could again increase.

The grain trade is dealing with the drought gripping the Black Sea and too much rain falling across the Central US. Meanwhile, Argentine corn/soy and Brazilian winter corn crops are also in decline. It would be difficult for CBOT values to sustain an extended decline at this time, causing the interest by the index funds to limit their short exposure.

The US forecast is wet across the E Plains and Midwest next week, with a brief and W Midwest planting window to open through Sunday. Heavy rainfall has produced widespread flooding from eastern Texas through the Gulf states, with some areas having a year's worth of rain in the past month. Early crop conditions across the Gulf states are the worst in recent memory due to excessive rain. The central US pattern will be active, with heavier rain shifting northward into the first week of June. Frequent and heavy Midwest rainfall delays spring planting and causes yellowing for the growth of the already planted corn/soybeans. The wet Midwest and Eastern Plains weather pattern holds into June with another storm system from May 31 to June 2, with temperatures holding below-normal levels due to considerable cloudiness.

Live and feeder cattle futures again closed higher on Thursday with a steady outlook offered this morning. June cattle quietly traded higher but stalled just under the 180.00 value and the 200-day MA. Meanwhile, the feeder cattle market offered the best gains for the day, but August stopped short of its 50-day moving average. Both live and feeder cattle markets have reached technical levels where either their rally accelerates now, or correction will unfold.

USDA said experimental tests on ground beef showed H5N1 bird flu was not present in burgers cooked to 145 degrees but reduced levels of particles in beef cooked to only 120 degrees. A seasonal top in the beef market is forming as supplies are being procured for Memorial Day weekend. Going forward, the depth of summer correction in Fed cattle prices is the question. Due to likely sliding domestic demand, August live cattle above $180 or better will be hard to hold on to. We advise hedging summer cattle when August moves into the 179-180 range.