Black Sea weather dominates trade.

Grain futures are sharply mixed this morning. Wheat is sharply higher due to the intensifying Black Sea drought, and corn finds support in the corn/wheat spread. Meanwhile, soybeans are soft due to the improving production landscape domestically. This week will feature the stressful Black Sea values pouring world wheat futures higher while favorable growing conditions in the US keep buying interest subdued for corn/soybeans. The NASS release of the first 2024 corn condition ratings later today will likely show strong holdings in the good/excellent category. Wheat is the friendly trade of the week.

Russian spring wheat seeding is following significantly behind all the recent rainfall in the Volga Valley to Siberia. Many analysts are concerned that Russian wheat production already has traders pegging the crop between 80-82 MMTs but amid the two-week hot/dry forecast for winter wheat and wet forecast for spring wheat. And all Russian wheat crops below 80 MMTs are becoming assured that things won’t change by June 10. 2018 is the last year, and spring wheat seeding is just 60% complete as of this date. The weekend saw some widely scattered showers across SW Russia, but the rain coverage was very poor with high temps in the 90s to lower 100s. It’s doubtful the rain provided much yield benefit at all.

The weather issues are not in the US but in Europe, the Black Sea, Mexico, and China. There is also the Indian monsoon that is sputtering across the south. India is going to reduce its import duties, allowing a change in the balance sheets with more import demand expected and what WASDE has on the books. The weather risks from Mexico and NC China, along with Europe and the Black Sea, are growing and will positively impact US export demand in the long term. Not necessarily today, but it will have an effect by late summer as the US wheat harvest gets beyond 50%.

This afternoon’s crop progress reports anticipate corn at 87-89% seated while soybeans are at 75-77%. Both are close to the five-year average that includes 2019, with only 67% of the US corn seeded on June 2. Given current low prices, US farmers will be considering enrolling more corn acres in the FSA Preventive Plant option if they own their farmland. Estimates are that 70-72% of the US corn crop will be rated good/excellent this afternoon, with soybean conditions released next week.

US weather models show waves of showers will pass across the Central US through Wednesday. The Plains have been getting showers for the past three days, with additional rain chances extended through today. The Midwest 5-day rainfall totals are forecasted in a range of .25-1.50″, with the West favored for heavier totals. High temperatures through Thursday range in the 80s/90s, with cooling on Friday and highs in the 70s/80s on the weekend. The Mexican Ridge noses northward in the week 2 forecast with heat for the Plains and spreading Northeast. Rain chances will come from Ridge riding thunderstorms.

Last week was lower for live and feeder cattle is liquidation weighed on prices, taking August live cattle back to the 100 and 200-day MAs. August feeder cattle tested their 50-day MA. The negotiated fed cattle trade ended lower last week, with live sales in the South $one lower at $6, while live trade in Nebraska was quoted $2 lower at $190. The dressed trade gave up $3 at $301. Live sales in IA/MN range from $ 1 lower to $1 higher at $190-192. The dressed sales were mixed at $299-303.

Box beef values were mixed last week. The choice gained $2.75, with strength in the ribs and loin primals. The select was down a penny. Estimated slaughter margins rose for the fourth straight week to $113/head. The COT report through May 28 showed funds had bought 12,076 live cattle contracts against commercial selling of 10,102. The price change from week to week was $1.575. The seasonal top in the cash market was likely created two weeks ago. August live cattle are already pricing in a $7.00 summer correction with support initially at $176-177.

August feeder cattle have trendline support at 253.50-254.00 if further weakness resumes this week. August live cattle have support at 177.50 if weakness resumes as well.