Overnight grain trade had wheat posting modest gains while corn and soybeans softened, remaining near recent lows. Much of today’s trade will be spent getting final positions ahead of tomorrow’s WASDE report. No significant changes are expected to balance sheets, but surprises from the USDA do happen. Most interest will fall on corn, where trade expects roughly 140 million bu to be cut from ending stocks. This is from elevated exports and incorporates data from the June 30th stocks and acreage reports.

Old crop corn sales were impressive at 1.2 MMTs, this morning, combined with the new crop of 800,000 MTs, US at 2+ MMT sales, but of no interest to the trade. Brazil’s morning crop report had Corn production at 169.48 MMTs, down slightly from last month, with soybean production at 131.97 versus 128.25 last month.

Pres. Trump yesterday afternoon told Brazilian President Lula that he would raise tariffs by 50% if the government coup charges against the former right-leaning President Bolsonaro were not dropped. The US holds a trade surplus with Brazil. The last time this was used for such a purpose was against Colombia in January to receive deported US immigrants, and with Canada against Prime Minister Trudeau. Brazil exported just 3% of its goods to the US, and tariffs are not expected to impact its economy much. Brazil exports lean beef for US hamburger grind, coffee, and other ag products. The Brazilian Real fell 2% on the news, which is expected to boost Brazilian farm cash grain sales today. This is why soybeans found a late softening effect overnight, but was anticipated yesterday as the Real fell before the announcement. This tariff will not take place until August 1, allowing time for negotiations.
French milling wheat is higher this morning by $3.25, the equivalent of a $0.10 bushel gain, as Black Sea heat and dryness are hurting the finishing crop in the north. Meanwhile, the Russian harvest in the South pushes northward with slow producer selling.

Weather forecasts for the Midwest have a progressive pattern of showers that can occur almost daily. Temperatures are currently elevated and will be cool next week, in the 70s/80s. The flow of golf moisture northward into the central portion of the country looks to remain abundant. The 11-15 day window calls for near to above normal rainfall in near-normal temperatures for the Midwest.

Cattle futures have been sharply higher this week, and one reason is that the market likely had inside information that the Mexican border would be closed down again. Yesterday afternoon, Sec. Rollins again closed the border to Mexican cattle through the one port of entry after trying to reopen on July 7. This can create a higher start this morning, but given how porous the USDA is with information (it’s like trying to hold water through a combine sieve), it can help explain the massive lift in price since the beginning of the week. Given that a new screwworm infestation was reported 60 miles north of the current sterile fly dispersal grid, and 700 miles south of the US border, this triggered the closure again for Mexican cattle. For now, the closing is considered a high priority in the plan to reopen to further quarantine and target the deadly pest in Mexico.

The August premium to the feeder cash index narrowed yesterday as the index jumped $ $5.36 to 316.76. Meanwhile, the negotiated fed cattle market remains quiet with packer bids at $225-227 in the South being past. These would be $1-2 higher than last week. Cattle slaughter so far through Wednesday was 232,000 head, off 6000 from last week and 3000 less than a year ago. Yesterday’s cutout values fell sharply in the afternoon, with choice down $6.59 and select giving up $5.19. Given the sharp gains in feeder futures this week, the strength of live and feeder cattle this morning on the Mexican border re-closing after just being open for two days, will measure how much strength is left on the board.