Turn-around Tuesday is having a slow start.

A mixed trade this morning with corn and wheat finding penny gains. Yesterday’s release of the “commitment of traders” report showed funds holding a near-record short position of 333,000 contracts as of last Tuesday. It’s possible that after yesterday’s action, they are at 350,000 contracts, which means the latent shorts are a hair trigger for any reason that could trigger short covering. With half the growing season ahead and warm weather scheduled for the last half of July, there is still a risk of developing.

Yesterday’s crop condition reports showed corn and soybeans each rising 1% to 68% good/excellent. The condition gain was unseasonal, reflecting the recent Midwest rains and mild temperatures. It also showed that 24% of the US crop is pollinating, with 34% of the US soybean crop in bloom. Spring wheat good/excellent ratings advanced by 3% to 75%, while 63% of the winter wheat crop is now harvested.

Some early penciling of stocks to use ratios reflects the trade is likely already assuming a corn yield of 183 BPA, which would be a record by 6 bushels and above the trendline. Stocks to use ratio with the 183-yield puts support in the 3.98-4.10 range.

The French Farm Ministry has released another estimate that the soft wheat crop will fall 15.4% to 29.7 MMTs due to persistent cool/wet weather during the growing season. The yield was forecast at 6.99 MT/HA, which many traders argue is too high. Further cuts in French wheat production are forecasted at the harvest advance, with private estimates of 25-26 MMTs.

This Friday is the July WASDE crop report. The USDA anticipates keeping the corn yield at 181 BPA. CONAB will be out with their Brazilian crop update on Thursday. Black Sea heat and dryness are significantly reducing crop potential, and Indian domestic wheat values keep rising. One can say nobody buys US grain, but the US is now positioned to receive new export opportunities this fall/winter as production of corn and wheat is markedly down in the Black Sea, along with Argentina and Brazil. The Federal Reserve is anticipated to lower interest rates as early as September, weakening the US dollar.

The extended-range forecast shows a jet stream for the Midwest migrating northward with warmer and drier weather conditions. The GFS model offers extreme heat under a high-pressure Ridge in the 10-15 day window. The EU model keeps the Ridge position more over the Intermountain West, which would curtail excessive Central US heat. Moisture develops from hurricane Beryl from Arkansas into Michigan with rains of 1-3.00″. Meanwhile, the western US will hold in a warmer dry weather pattern, including the Plains and Southern Canadian Prairies. Temperatures there will range in the 80s to mid-90s.

Live and feeder cattle futures tumbled on Monday as technical selling weighed on nearby August, which pulled the whole complex lower. Weakness deferred live cattle also pulled on feeder cattle despite sharp losses in corn. Dressed steer prices by purchase taper in a $6.82 price range were the narrowest in four weeks. Negotiated purchases were the highest at $1 314, while formula and negotiated grid prices were nearly $307. Formula sales accounted for 69 % of the dress steer sales last week, and negotiated accounted for just 3% of the volume. Across all negotiated type sales last week, Packers bought 51,223 head, the lowest volume since January. 39,211 head were for 1-14 day delivery and 12,012 for 15-30 day delivery.

August live cattle have trendline support at 183.25, with moving average support at 182.50. Those values represent upward momentum support. Falling through and closing below those values sets up August cattle, challenging the early August gap at 180.00.