Grain futures start Tuesday mixed.

Grain futures are mixed this morning, as corn and soybeans react to a lower US crop condition rating again, which implies yield potential is drifting again. In contrast, the wheat futures continued their correction following Paris futures lower. The NASS Weekly Crop Condition and Progress report showed a 2% decline in US corn GD/EX ratings to 60% and a 1% drop in soybeans to 56%. The condition declines were worst than trade expectations, with the most significant drops in the E Midwest, where record yields were supposed to offset the drought losses of the west. In addition, 16% of the US soybean and 14% of the US corn crops were rated poor or very poor, which is well above last year and the 5-year average. No condition ratings were offered on spring wheat, with 23% of the crop left to harvest.

On maturity, 9% of the N Dakota soybean crop are dropping leaves, 14% of S Dakota and 3% of Minnesota, which argues that the coming rain will not yield many benefits. Crop maturity has been pushed by extreme heat and acute dryness. The weekly NASS report showed an ongoing fall of soil moisture across the E Midwest following weeks of little rain. The lack of rain is taking the top end off record E Midwest corn/soybean yields. Nearly 50% of the Illinois soil moisture is short or very short, which historically has shown that it is difficult to produce record corn/soy yields in mid-August on rain shortfalls. It is rain for the E Midwest corn/soy crops that are now important as they rush to maturity. Indiana crop conditions will fall next week without rain this week.

The reality after the Pro Farmer tour, which travels the most opportune places to produce a crop, has that the potential for the 2021 US corn yields to continue to slide and be below last year's 16 72 BPA. Also, soybean yield may not surpass last year's 50.2 BPA amid the continued crop rating declines, which are lower than last year's ratings, and the US crop rating right now for soybeans is the worst in 7 years.

Russian crop issues do not seem to be improving, as it is extremely hot and dry across Western Russian grain areas, and their corn and sunseed crops are in sharp decline. There's also a lack of soil moisture to start planting the winter wheat crop in mid-September. Russian wheat flour prices continued to be at record highs while other exchanges are in retreat. The US and world crop potentials are in decline amid adverse weather.

A series of storms are anticipated across the Canadian Prairies, and Northern Plains as a southward sliding jet stream and diminished blocking Ridge across western Canada and the Pacific Northwest allows rains to return. The rains come too late to aid crops in Canada, but they could add to soybean seed size across the Lake States. Limited rainfall is offered for Illinois, Kansas, Indiana, and Ohio as soil moisture is in fast retreat. Nearly 50% of the soil moisture in IL is short or very short, while Indiana crop conditions will decline next week without meaningful rain. The dryness is taking the top end off record yield potential. Central Indiana crops are starting to be drought-stressed, with less than 15% of normal rainfall for the past 40 days. Near to above normal temperatures will push US corn/soybean crop maturity with highs ranging from the mid 80's to the lower 90's for the next 5-7 days.

Cattle futures rallied right from the opening of the Monday session and put in sharp gains with all contracts through next April, making new contract highs. Cash markets were quiet as normal on limited demand. The anticipation is that cash bids may move $2-$3 higher this week as the cash market tries to follow the future gains on the week. Boxed beef values were higher to start the week. The choice value gained close to $3 to set a new high for the year of $348 and select gained $.87. The Cold Storage report showed the end of July beef stocks were near unchanged from June at 401 Mil Lbs but were 91% of a year ago. This was the smallest July stocks figure since 2014 and 10% below the 10-year average. Seasonally, beef stocks tend to increase into December, and the USDA forecasts year-end stocks to be 2% below average.