The grain market opened softer overnight as expected, but corn and soybeans reached our targeted support zones along with wheat crowding last week's support lows, found a short covering bounce that reversed all markets substantially off of overnight lows. The fears of the Mexican and Canadian tariff threats are a bit subdued, as it’s likely that the USMCA trade agreements will keep the ag sector unfazed. Also part of the overnight strength is that the trade recognized that Friday’s WASDE report was on the friendly side. This was especially the case for corn, where new crop world ending stocks are forecast to be the tightest in over a decade.

The trade will now be more focused on US field reports, and while conditions across the US are very good, they are not perfect, and perfect weather is needed to reach current US yield estimates. There is much more talk of larger yields in the market right now than the possibility of a reduction from the current 181 bpa US estimate, which has pushed the corn complex to oversold levels. Some analysts are now starting to use lower yields in balance sheets and seeing much less bearish results. We must remember that a sub-181 bpa yield right now is just as possible as a 181 bpa or higher yield. And a 179 bpa yield (which would be a record) will significantly alter US balance sheets. Given futures being at oversold values, some weak shorts are getting nervous. We are seeing interior basis strength in the Midwest and export basis firming. Export demand remains strong.

Trade remains heavily focused on trade talks, with new tariffs announced over the weekend. This morning, the EU announced it will be working with other US trade partners facing elevated tariffs for their own trade deals. The US did see a spike in demand during the recent market break, though, easing some concern over the loss of trade. Weather models look favorable for rainfall across a large portion of the corn crop through July 24, with areas of rainfall in the range of 1-2”. Meanwhile, temperatures in the mid-upper 80s will be most common throughout the Midwest.

Last week’s explosive move to the upside on cattle had the trade closing at contract highs. We have August cattle above $222 while spot feeder cattle went out over $ $325. Last week, the Feeder Index picked up $11.54 to close at a record high of $ 323 after the USDA announced that the Mexican border was paused due to finding one animal with the New World screwworm 60 miles north of the current infected area.

Last week’s early cash sales markets were $1-3 higher in all regions, with live trade in the north later picking up $ $8 at $24, while dressed sales were also $10 higher at $380. In the South, the sales were $5-6 higher and $229-230. Of note is that box beef cutout values tumbled, with choice losing more than $11 and select giving up $12. Cattle slaughtered rose 94,000 head for the week, but it was under the year-ago level by 37,000 head at 568,000 head. The biggest concern for the beef trade is whether the Brazilian 50% tariff takes effect on August 1. 21% of all US beef imports come from Brazil, dramatically affecting the ground beef market.