Grain futures start the week firm overnight.

This morning’s grain trade is firmer, which has been a common pattern over the past several sessions, where strength in the night session tends to be sold during the day. Still, the firm tone is a pushback against recent selling, as mixed weather conditions are developing across the US. Brazilian officials also note that rainfall will be needed soon, as the safrinha crop relies on moisture from subsoil.

There is hope that the US will secure some additional trade deals this week, which would be supportive. India is in town as a potential wheat trade buyer, and Saudi Arabia has issued a tender for wheat of optional origin totaling over 600,000 MTs. Cash markets are starting the week stronger, with farmer engagement remaining minimal, especially following the recent setback in prices.

The trade expects another significant jump in US planting progress in this afternoon’s update. What may draw more market interest is where that progress occurs. Weather conditions in the Western Corn Belt remain nearly ideal for fieldwork, while the East continues to experience regional delays. Some farmers now report the need to replant certain fields. While these issues may not be widespread, they do raise questions about the lofty corn planting and production estimates currently reflected in balance sheets.

Attention is also turning to China's hot, dry weather affecting their wheat crop, where high winds and temperatures over 100 degrees are expected through Thursday. The drought is now beginning to impact their corn and soybeans as well, as June approaches. Similar drought concerns are emerging in the UK, Germany, and Poland. Overall, the outlook for wheat production across the northern hemisphere is increasingly troubled. As confirmed in Friday’s COT report, a massively large wheat short position continues to grow instead of shrinking. This presents a risk, especially since significant farmer selling from the new crop is not expected to begin for another 30 days.

Soybean oil rebounded after surviving inclusion in the current congressional bill, which passed through the Budget Committee and now heads to the Rules Committee. The 45Z biofuel subsidies appear to remain intact, but they must still pass through the Senate.

This morning, more attention is shifting to the outside markets following Moody’s weekend downgrade of US debt. Combined with the second-lowest US consumer confidence reading in history, this has led managed money traders to exit indices and resume safe-haven buying. This shift supports commodities, with gold up nearly $60.00 an ounce, while the US dollar and stock indices are experiencing sizable losses.

Heavy rain is expected across the Central US over the next 8 to 9 days before a drier trend develops. While the current cooler weather slows crop growth, warmer temperatures are forecast to return in about 9 days. Unfortunately, heavy rains are expected in the Delta and the southern Midwest, where some farmers may consider preventive planting measures. Both the EU and GFS weather models predict rainfall accumulations of another 3 to 6.00 inches in these regions.

Last week, live and feeder cattle markets saw sharp reversals to the downside on Wednesday and Thursday, forming outside-day lower signals and filling exhaustion gaps. Technically, the market is in poor shape, although the cash trade remains strong. Cattle slaughter last week totaled 566,000 head, up 7,000 from a year ago, but down 31,000 head from the prior week. Year-to-date slaughter is down 6%, while cumulative beef production is only down 3%, supported by heavier carcass weights. Boxed beef values were higher last week, with the choice cutout gaining $6.52 and select jumping a substantial $11.22.

The COT report released Friday, covering data through Tuesday, showed funds still buying cattle contracts and holding record positions in both live and feeder cattle for this time of year. Friday’s bounce could face pressure today, especially if continued stock market weakness tied to low consumer confidence weighs on beef demand. The concern is when this drop in consumer confidence starts affecting beef purchases priced significantly higher than alternative proteins.