The grains are firm to start on Wednesday. Will the day session get sold?

The screens are green this morning. After two days of trade talks between the US and China, the framework agreement to follow the earlier Geneva plans remains intact. Additionally, this morning’s Consumer Price Index confirmed reduced inflationary pressure, which has pushed the US dollar back down toward the lower end of its recent trading range. It is currently down $0.42 at 98.65. This is supporting a strong rally in stock indexes, as well as in energy and metal markets.

Commodity markets are currently navigating the Goldman Roll, which is prompting bull spreading and lending support to nearby contracts. The potential for old crop carryouts to be revised lower—and possibly fall below current estimates—is also encouraging spot corn purchases.

A state of emergency has been declared in 10 of the 25 drought-stricken regions of southwest Russia by the governor of Rostov. It is estimated that 510,000 hectares of grain (about 1,260,000 acres) have been destroyed. This region has been experiencing drought since early April.

US weather forecasts remain mostly benign, except for continued excessive rainfall in the Southern Plains. Rains are expected to subside by next week, which should allow harvest activity to resume. The key question is what level of disease-related losses will be discovered once combines are back in the fields and moving north. Temperatures will range from the 70s to the lower 90s, with the warmest readings in the West. This warming trend is expected to continue through the weekend and persist into most of next week. Milder temperatures are projected in the 11 to 15-day outlook as the jet stream sags southward during that period.

Meanwhile, dryness will persist across most of Western Europe over the next 10 days, with France remaining locked in drought. In contrast, rain is expected to arrive in China’s northern plains. This precipitation may have arrived too late to help the wheat crop but should benefit corn and soybean development.

Feeder cattle led the livestock market higher yesterday, while live cattle closed lower. Rumors circulated that workers walked off the job at a packing plant after reports of ICE agents being in town. This caused a slowdown in operations but did not lead to a full shutdown. Although ICE was reportedly not targeting the plant specifically, fears arose due to an investigation into drug and trafficking rings. This contributed to maintaining the large discounts between futures and the cash market.

Cash cattle trade remained mostly quiet, though some sales occurred in Texas at $235, reflecting a $4.00 increase from last week. In Kansas, offers were also quoted at $235. As the cash market searches for a peak, it is believed that available fed supplies will be no greater than last week. The ongoing question is how much financial pressure packers are willing to endure, knowing that seasonal demand typically softens, even as fed cattle supplies remain extremely tight.