Mixed grain trade this morning with row crops finding chart-based support.

This morning’s grain trade is mixed with wheat softer on the prospect of some scattered showers across SW Russia amid their approaching harvest in weeks. After lifting $50/MT a ton and digesting a sizable drop in Russian crop production, the market is unable to sustain early week to rally highs. Wheat has produced a supply driven bull market on black Sea wheat production cuts of 14-16 MMTs, and pending Northern Hemisphere harvest pressure and consumers are unwilling to chase rally have wheat futures in corrective mode. Soybeans and corn are stable this morning after declining $0.40 in soybeans and near $0.20 in corn from Monday night’s highs.

It’s anticipated that Ukrainian 2020/25 grain exports are set to drop to 38-40 MMTs compared to 50 MMTs last year. This is from Ukraine’s acting Farm Minister. The decline is because smaller harvests are expected due to the war and poor weather. Ukraine has endured drought, with May being the driest month in nearly 20 years. Ongoing dry weather during June could drop the Ukrainian corn crop to 19-21 MMTs versus the USDA’s estimate of 27 MMTs. Brazil, Argentina, and Ukraine's corn harvests are down a combined 19-21 MMTs, which is the equivalency of 750-825 Mil Bu on the world scene.

Concerns are growing about China’s faltering demand and not purchasing any new crops, US soybeans. We also are seeing our ag trade deficit continue to grow as the USDA yesterday forecast it will reach a deficit of 32 Bil in fiscal year 2024, nearly double the 16.7 billion deficit in 2023. Ag imports from Mexico and Canada are also behind, with China being in third place in terms of deficit ag imports. China is forecasted to import 27.7 Bil of US goods, a reduction of 1 Bil from the USDA’s February forecast, with year-to-date soybean imports down 23% and corn down 67%.

The US has a non-threatening two-week forecast, with spot corn testing support at $4.50 in July and soybeans at $12.00 in July. Record heat across India is becoming a trade discussion, but it is premature to discuss crop losses regarding the monsoon. With recent Russian wheat shortfalls likely priced in, the grain trade is set for choppy sessions as technical support values are tested, possibly creating short-covering rallies.

Needed rains are falling in the Plains through Saturday, with varied rainfall and temperatures in the Midwest into June 10. The Midwest has planting opportunities for another 26-48 hours, followed by rain on the weekend and cool/dry weather. A short period of extreme heat lasts just a few days from June 6-seventh as a high-pressure Ridge holds across the SW US. The northern branch of the jet stream stays seasonally strong.

Live and feeder cattle prices were pushed lower yesterday as China officially delisted the Greeley Colorado plant for producing beef with ractopamine (a feed additive). August live cattle were back testing the 200-day MA but closed mid-range, while feeder cattle marked the largest losses of $3-4.00/CWT. Cash markets did not occur on Wednesday, but a small number of reported cattle traded in Nebraska at $190, which was $2.00 lower than last week. Overall, the volume was too small to call a market trend. Interest is expected to develop today in the cash market. Box beef values were mixed yesterday, with choice cutout gaining $1.50 while select was off $0.95.

Based on last week’s Livestock Slaughter in the Cattle on Feed reports, it is estimated that the May 1 feeder cattle inventory fell by 1.884 Mil head, drawing the number of feeder cattle outside feedlots down to 16.2 Mil head, which is 611,000 head fewer than a year ago. This equates to 3.6% less and is now the lowest NASS reporting of cattle available since 1992. Tightening inventories will limit placement availability going into the fall, which implies that deferred live cattle futures will start adding premiums and offer nearby support feeder prices.