KC wheat lead overnight grain weakness.

The grain trade was lower overnight, as Kansas City wheat led losses on better-than-expected rain fell across Western Kansas late Friday and early Saturday. This pushed the July KC/Chicago spread to a $0.20 KC premium. Meanwhile, corn and soybeans also moved lower amid the forecast for more normal central rainfall forecasts in a window to seed crops in the 5-10 day period. It’s estimated that farmers seeded 36-37% of the corn crop and 27-20% of the soybean crop as of Sunday. These are slightly below the five-year average.

The Commitment of Traders Report showed that managed money bought 20,506 contracts of corn (net -218,040), sold 222 contracts of soybeans (net -149,236), and bought 28,318 contracts of Chicago wheat (net -47,866). Funds are still holding nearly the shortest Ag positions in 4.5 years.

The May WASDE report will be out this Friday from the USDA. The report will provide the first field survey estimates of the winter wheat crop. They also updated their 2024/25 balance sheets based on the March seeding’s intention report and released their first forecast of the world 2024/25 crop production and balance sheets. The trade anticipates that the USDA will be reluctant to drop the South American crop sizes while another big Russian wheat forecast is anticipated. Premiums being paid for the Brazilian crop this early after the bulk of the harvest will imply that Brazil has their estimates closer to reality than USDA’s leading onto.

Due to the Argentine corn stunt disease, the large index fund short is being reduced alongside historical flooding in RGDS in Southern Brazil. Also, expanding dryness in the Black Sea region, including W and C Russia, seems to not be on the USDA’s radar. This sets up the USDA crop report to be another one that gets bought on any weakness when the USDA releases the data, and then a rally ensues afterward.

Unemployment data released Friday showed weak employment with the smallest job gains in six months and a higher unemployment rate. This supports the idea of possible Fed rate cuts later in the year.

Two storm systems will pass through the Central US this week through Thursday before an open slot of planting weather evolves. Global weather lasts from May 11 into the 16th with then some rain chances implied again in the 11-15 day window. It’s too far out in the forecast now to know exactly what the May 16 forward timeframe could be, but an extended shift in dry weather is not on the horizon. West Kansas may see some opportunities for rain in the next 24 hours, but it looks like less than half an inch. In world weather, it looks like it wants to stay dry in SW Russia/Ukraine while remaining too wet in southern Brazil.

Live and feeder cattle futures closed lower last week but were well off early week lows on avian flu fear worries when there was a leak and the announcement of USDA release coming up. Supportive cash trade helped, as live trade in the north started out at $185-186 and then was quoted at $186-187 in late-week trading, which was $1-2 higher on the week. Late week dressed sales were steady to $1 higher at $295-296. Live trade in the South waited until the end of the week and was $2 higher at $184.

Cattle slaughter rates have trended higher in April, and last week’s kill rose to a 13-week high of 619,000 head. The average carcass weight was 29 pounds heavier than a year ago and at 848 pounds. The uptick in production kept box beef prices softer, with Choice down $3 and Select losing $1. June live cattle are trapped in a broad range with 180-181 major resistance and 171-172 major support.

Brazil is seeking to strengthen beef trade with Japan by looking to gain a “small quota” of Japan’s beef market, saying the Japanese will see the quality. Brazil, in turn, is open to allowing Japanese wagyu beef imports into the country. Canada’s food inspection service tightened US dairy and breeding cattle import requirements due to bird flu infections in the US.