Wheat leads overnight price strength.

Grain futures opened sharply higher Sunday evening as anticipated on the Indian wheat export ban, with wheat futures briefly touching limit gains before retreating. Paris French milling wheat is up $17 a ton this morning, which is the equivalency of $0.50, reflecting the gains of Kansas City and Chicago in early morning trade. India’s export ban was a political one but still leaves the potential for exports to neighboring countries that struggle with food stocks. They even allowed Egypt to purchase 500,000 MTs of wheat on Sunday.

The USDA’s balance sheets for wheat last Thursday were domestically and globally friendly, and they still have more work to do. They will have to back out India’s export potential that they pegged at 8.5 MMTs and will need to lower that some 6 MMTs. Also, neighboring Pakistan was only forecasted to import 1.5 MMTs, but given their poor weather during the filling stage of wheat, their import needs could jump another 3 MMTs. This large swing still needs to be incorporated into the USDA’s world data, which supports wheat pricing to stay elevated for months to come until northern hemisphere crops can be assured abundant.

European weather forecasts have needed rainfall in Germany and Poland over the next 10 days, but France has now lost potential rain in the upcoming week. Lack of soil moisture in Spain and France is helping promote a pattern of well above average temperatures in a general cycle of widespread soil moisture losses there. The need for rainfall in France becomes immediate now, beginning in June, or they will see a collapse from their good/excellent ratings quickly. The USDA as total European wheat production projected at 136.5 MMTs, with now production cuts anticipating a 2-3 MMT reduction Spain and France account for roughly 30% of EU corn production as well.

Weather this week for the central Midwest is consistent with the weekend, through the end of May, a meandering low-pressure trough continues aloft in S/SC Canada, which funnels additional moisture into the N Plains and Midwest beginning Thursday-Friday. There will be open windows for fieldwork seeding, but the 10-day rainfall of 2-4´in MO, IL, IN and MI will push regional planting efforts into the end of May/early June. The upper air pattern sustains extreme heat across TX, okay, KS and CEO, which along with complete dryness, weighs heavily on the wheat crop health. The plains drought begins to impact row crop potential if it fails to change by mid-June.

Live cattle contracts finished last week mixed to mostly lower as the cash market supported the front-and June contract while demand concerns and available cattle supplies pressure deferred contracts. With corn having a softer tone, Friday feeder cattle found support that will likely get dismissed in this morning’s trade. June cattle are trying to find support near technical values in the 131.00-132.00 range to mount a technical inspired rally, but selling interest continues to dominate at lower highs for now whenever there’s a recovery.

The choice cutout trade is currently trading $57 cheaper than a year ago, while live steer prices are $21 higher. Live cattle price trends here forward look to be a function of beef prices in the coming weeks, which seasonally trend lower. The direction of least resistance and live cattle remain softer into the summer, with nearby live cattle prices targeting 127.00-129.00. Longer-term fourth-quarter cattle and 2023 values should sustain considerably higher values than what has been prevalent for the last two years.