Grains are universally higher this morning.

The grain trade is higher this morning as buying interest continues to resurface, with index funds actively short covering in both wheat and corn. One driver of this move is the addition of a risk premium, as more doubt is being cast over current USDA production estimates, especially for corn. As of Sunday, the US had roughly 20 million acres of corn and 28.5 million acres of soybeans left to plant, many of which continue to face less than ideal weather. This may not only prevent some acres from being planted but could also influence the need for replanting. Even with some losses, the US corn crop is still expected to be large enough to meet demand, and that is where the debate lies.

Wheat is supported by global weather developments, particularly the extreme heat in China. Soybeans are supported by product strength and less-than-ideal crop reports from Argentina. Additionally, reports are that the US and India will meet on Friday to work on a multi-level trade agreement. While this is positive, the market wants to see real progress rather than just more discussions.

Weekly ethanol production data will be released today, with analysts expecting a 1 to 2 percent increase in output. Ethanol margins have improved, and more plants are restarting following spring maintenance. A slight draw on ethanol reserves is also anticipated. Beyond this report, weather, technical indicators, and trade developments will guide price discovery today. With a three-day weekend approaching, there is increased short covering on the potential for quickly changing developments, particularly if any trade deals with India progress over the weekend.

The US dollar is trading below 100.00 on speculation that President Trump and the Treasury Secretary might use the upcoming G-7 meeting in Canada on June 15 to 17 to advocate for a weaker greenback to stimulate US manufacturing investment. A weaker dollar would also support agricultural commodities, which have faced headwinds from a stronger dollar last fall and earlier this spring.

Reuters reported overnight that Argentina will extend its export tax break on wheat and barley through March of next year to encourage more planting and boost export revenue. However, other export tax breaks are set to expire on June 30. This is expected to pressure corn and soybeans, as Argentine farmers are likely to sell aggressively ahead of the deadline.

Weather forecasts continue to show heavy rainfall targeting the south-central US, with several storm systems expected to move from the Eastern Plains through the southern Midwest and the Delta. These areas are seeing growing concern over preventive plant coverage. Meanwhile, the North Central US will remain under a dry and cool upper airflow pattern. A high-pressure ridge over the western US is expected to retrograde west and expand, allowing rain chances to reach the Canadian Prairies in the 10-15 day outlook. These longer-range models carry lower reliability. Additionally, rains are forecast to reach the southern half of China’s wheat-growing region near the end of the month. These rains may be too late to benefit the crop, which will be fully headed by then.

Live and feeder cattle futures settled mixed yesterday, with expectations for a steady to slightly softer opening today. Cash markets are still developing, but there were reports of $219 bids in Kansas. Boxed beef prices rose again yesterday, with afternoon values showing choice cuts up by $3.94 and select cuts gaining $0.85. Wrap-up buying ahead of the Memorial Day weekend is likely underway now.

This Friday’s May Cattle on Feed report will be released at 2:00 p.m. Central Time. Bloomberg’s average trade estimates are beginning to take shape, with feedlot inventory for May projected at 98.5 percent of year-ago levels, placements at 97 percent, and marketings also at 97 percent. The board continues to hold a substantial discount to the cash market, suggesting expectations for a significant summer correction. Meanwhile, the June contract sits just $6 under the Kansas bid seen yesterday, which aligns with historical norms. June futures often trade $6-10 below early May cash highs.