WASDE data out at 11 a.m. CT.

This morning’s grain trade is firmer, supported by a wave of new data being released today, prompting short covering. First, Brazil’s CONAB updated its production estimates, putting soybeans at 169.6 MMT and corn at 128.3 MMT. Both figures are slightly above the May estimates but came in just below the average trade expectations.

Let's make it duly noted that the US dollar is again under heavy selling pressure after PPI numbers again show slowing inflation, down 1% at 97.24. It is now broken to the lowest value since April 2022. This will eventually become a supportive topic for commodities.

The primary focus today will be the release of the monthly WASDE report. For the most part, trade is expecting corn and soybean estimates to remain close to last month’s levels, within 25 million bushels. However, a surprise is possible if the USDA acknowledges the robust export pace and adjusts the carryout lower by 50 million bushels or more. The domestic wheat carryout is expected to increase by 80 million bushels, while global figures are projected to remain mostly unchanged. Once the report is out, the market will quickly shift its focus back to weather and trade developments for price direction. Traders will also begin positioning ahead of the June 30 acreage and stocks reports.

Yesterday’s positive sentiment regarding a potential US-China trade agreement has faded due to a lack of details and the reality that US consumers will still face higher product costs, even if temporarily. No agricultural trade provisions were announced. Meanwhile, the US dollar has fallen to a seven-week low, and gold has surged over $60 per ounce this morning as safe-haven demand returns. This has started to provide support to the broader commodity space and may continue to do so today.

Before the Senate Appropriations Committee yesterday, Secretary Bessent indicated that China is likely to fulfill its purchase commitments under the expired Phase 1 deal. China still needs to secure an additional $1.9 billion in US agricultural goods to meet that agreement. This will be part of the ongoing trade discussions, which are expected to progress toward a resolution by mid-August.

Weather remains mostly non-threatening, with near-daily rain chances across the northern Plains, Midwest, and Delta. The Canadian Prairies are still awaiting rainfall, which is expected next week. Spring wheat continues to lead a recovery as market skepticism builds. The Western Plains are forecast to turn drier next week, allowing HRW wheat harvest activity to resume. Meanwhile, EU and GFS models are indicating a brief high-pressure ridge in the 11 to 15-day window, which could bring warmer and drier conditions to the western Corn Belt and warrants monitoring.

Cattle futures opened lower yesterday and, excluding the June contract, remained under pressure throughout the session. Light cash trade in Texas was reported at $235, up $5 from last week, and some light sales in Kansas occurred at $238 to $240, which is $7 to $9 higher on the week. Boxed beef was stronger, with choice cuts gaining $3 and select rising by $0.91.

The cash cattle market is searching for a top, but with Mexican feeder cattle absent from the market since December 1 and heifer retention potentially near 2%, the supply squeeze continues. Reduced heifer slaughter supports the view that “the cure for high prices is higher prices.”Discounts in live cattle futures are making hedging difficult, as prices not only remain elevated but continue to trend higher. In this environment, options strategies have performed best, as shrinking put premiums can be rolled up to raise price floors. As long as last week’s price gaps remain open, August live cattle appear to be targeting the 221-222 range, while August feeder cattle are eyeing 316-320.