Grains are mixed as they brace for a 3-day weekend.

The grain trade found a round of buying in the night session, with July beans tagging 1200 again, as crude oil pushed higher towards 100. Word that the Pakistani minister was traveling to Tehran around 7 AM CST for further discussions caused crude oil prices to decline from their highs, and grain prices subsequently relaxed from their gains.  

Market attention is beginning to shift toward next week’s U.S. weather pattern, with forecasts pointing to a notable increase in temperatures across key growing regions. Areas that recently benefited from meaningful rainfall should be able to handle the heat fairly well, but locations that missed those rains could see crop stress emerge quickly if the warmer pattern holds.

Cash markets across the interior remain firm heading into the weekend as processors continue working to secure supplies while margins remain attractive. Demand has also been supported by a strong round of export business this week. Corn has been a standout, despite being one of the higher-priced sources currently available.

With little new fundamental news this morning, trading activity is largely centered on two themes: evolving global weather conditions and geopolitical developments tied to tensions between the U.S. and Iran as markets move toward the extended holiday weekend. With Iran overnight sending a drone at the UAE’s largest nuclear facility, almost like a “we dare you” mentality because of what we might do, it will not help negotiations. Oil futures remain volatile, trapped in a range of 95.00-105.00 until more is known about whether the peace deal will occur.

With the long three-day weekend, the grain trade may see volatility pick up later in the session, depending on oil price movements and headlines heading into the close.

Live and feeder cattle futures ended sharply lower yesterday, with the feeder cattle market limit down, which means futures limits are expanded by 50% today. Mexico will take advantage of opportunities to export beef to the US, since it cannot export its feeder cattle. They have imported large amounts of US corn, working to feed their cattle, and are now slaughtering them on their side of the border. The fear is that their new deal with Brazil might have Brazilian beef funneling into the US as Mexican beef. Mexico does not have country-of-origin labeling. This would be similar to the auto parts that many companies used to enter the US.

The discounts futures are carrying to the cash market are now massive. The June cattle contract, which expires in less than 40 days, is trading at a $15 discount to recent cash highs, while the August contract is at a $25 discount. Meanwhile, the feeder index yesterday was down $1.72 at $370.72, putting yesterday’s limit down close on August feeder cattle at a $14 discount with futures expected lower to start the session. Yesterday’s box beef prices had choice off $2, select gave up $5. With Memorial Day procurement having ended last week, and Father’s Day usually not seeing a large pickup in demand, the slide into the summer where hamburgers, brauts and chicken thighs become the grilling favorite starts to occur. This is likely the continued outcome of a very expensive summer due to inflation.