Wheat ratings did not decline, leading to overnight price losses.

This morning’s grain trade is lower across the board, with wheat prices leading the decline. Yesterday afternoon’s crop ratings showed wheat staying even with last week’s 56% good/excellent compared to 27% a year ago. There is concern over continued dryness in the S Plains along with the arrival of summer-like temperatures in TX, OK, and KS, but the market must see and feel supply dislocation before adding premium.

The owner of Russian grain exporter RIF said that the company has halted handling agricultural goods at the Azov Sea terminal because the government has blocked them. The terminal ships about 4.0 MMT a year.

Argentina’s fertilizer usage is down for the 2nd year in a row. The economics minister announced that the government would lower some herbicide import taxes starting in April.

Brazilian soybean harvest has moved to 76% complete versus 80% on average. Spot basis and S Brazil have climbed into positive territory, with premiums of three-$0.18 being quoted over Chicago for May-June delivery. US exports meanwhile struggled to late summer/early autumn, but a year ago, the spot Brazilian FOB basis was quoted at $0.50 under Chicago in early April 2023. The evolution of Brazil’s cash soy market suggests production is close to a hundred 44-hundred 45 MMT versus the USDA’s current projected 155. Due to biodiesel blend mandates, Brazilian domestic soy use is expected to be large.

CPI Inflation data are due tomorrow, the #1 most important macro factor in April. Investors expect +3.4% year over year vs. +3.2% last month. Fed meeting minutes tomorrow, which include Powell’s dovish comments, say that the Fed will likely cut rates later in 2024.

The EU and GFS modeling agree that rainfall will arrive in the Dakotas and Minnesota in the 6-10 day period, with precipitation worth .50-1.50”. Warm temperatures will start to emerge this Saturday/Sunday. Meanwhile, heavy showers will continue heavy rain in Louisiana in the Delta/Southeast over the next 72 hours. Rains of 8-10” are likely in pockets of LA, AR, with elevated risks of severe conditions/tornadoes in LA/MS.

Live and feeder cattle pricing yesterday was supportive for live cattle, with June holding the key 172.00 range while feeder cattle still closed lower. April feeder cattle were higher on the session versus deferred contracts, with the sale barn action still unrelenting compared to the board’s performance over the last two weeks. Negotiated fed cattle markets saw no movement yesterday and will likely hold out until Wednesday or Thursday. Last week, the Packers bought 79,999 head on a negotiated basis, with 61,312 for one-14 day delivery and 18,600’s 87 for 15-30 day delivery. Interestingly, many of those delayed purchases will ultimately get a phone call to be picked up sooner than anticipated, which has been the case for a while.

Meanwhile, cumulative negotiated purchases for the year stand at just over 1 million head, down 8% from last year, and there has been a record low since USDA began reporting the data in 2003. June live cattle held important support yesterday, and the discount to the cash trade, which would typically be a six-dollar decline from the spring high, is quite a wide chasm. Futures are walking on glass with nerves worried about the next headline that index funds sell. Still, the board is carrying a substantial discount for demand that has still not seen a loss but is perceived for now in the minds of traders.