Two days left of active trade before the holiday weekend.

This morning’s grain trade is mixed with soybean oil leading the gains for soybeans on the likely passage of the Trump tax bill, which includes 45Z carbon credits. If fully implemented after house approval, the price value for soybean oil rises to levels that limit soybean oil exports, as we will have no capacity to provide that, and the cash crush margins keep US soybean processing at its capacity to provide. We have a price target for soybean oil showing a strong retracement to 57.50-58.50, likely on the December soybean oil values.

Winter wheat harvest is likely exceeding the two-thirds mark currently, and it will be reported at 70-72% completed by early next week. This takes hedging pressure off wheat, which should start seeing more improved demand given the recent weakness in US dollar valuations. Corn remains weak as crop ratings remain favorable in the trade, anticipating the first-ever crop to exceed 180 BPA since that level has been forecasted for eight years now. Demand remains surprisingly strong for old crop corn, with a tight carryout not a concern, given the flow of grain is not being impeded as farmers continue to move stored supplies in anticipation of a big crop. Demand looks to remain strong, and the active export pace the USDA has built in for new crop, looks to stay on track and could actually be improved upon given the US dollar's weakness as we head into the third quarter. Brazil has difficulty getting its harvest done due to excessive wetness and a lack of capacity to dry the crop. It will eventually get done at the expense of the US continuing to have an active export pace of corn currently.

India is said to be close to a trade deal, which is important for US companies to work with. India will likely open up its crop imports of GM corn to use it for its ethanol industry, but that has not been verified yet.

US weather forecasts remain favorable, with near-normal rainfall via Ridge-riding storm systems from the Plains into the Midwest. There is currently a lack of any high-pressure ridging that would pose a threat to corn pollination. As we get closer to August, soybeans remain a wildcard. Meanwhile, European crops continue to experience below-normal rainfall across Spain and France, which have been struggling. The forecast looks void of moisture for the next 10 days.

Yesterday’s cattle trade reacted violently to the news that the border to Mexican feeder cattle will reopen in stages starting July 7. By mid-August, a large portion of the border will receive feeder cattle, with all ports open by mid-September. The August and September feeder cattle contracts anticipate a supply of Mexican feeder cattle by expiration, climbing to 50,000 head per month and improving into the fall. Most cattle sales are anticipated to wait until today or tomorrow on a negotiated basis, but a small number sold in Kansas at $220-225, which was off $1-5 from last week. Lower trade is likely this week given the board reaction.

The cash feeder index is a delayed reaction; yesterday, it showed a gain of $1 at $315.07. Obviously, what develops next week will be the large barometer of what discounts remain as reflected by the board. Mexican feeder cattle account for 5% of the US Fed cattle kill, and imports will grow into October. Technical targets project that August cattle could decline to 204-205 while August feeder cattle have a target of 292-295 in the coming weeks.