Wheat softens, while beans recover from a new contract low.

It's another mixed morning, with wheat softer while beans find minor short covering. Speculative selling on the recent rain across the Delta and E Midwest from the remnants of Hurricane Beryl has improved the prospects of corn and soybean yield potential. Soybeans and soymeal hit new contract lows overnight before mounting a short-covering bounce. CONAB will release their crop estimates Thursday morning, providing the short covering interest in beans.

USDA will release its WASDE balance sheets, wheat production, and crop production data on Friday. The managed money record short in corn will show up in Friday’s COT report speculators, who are also heavily short in the wheat and soybean complex. This should promote two-sided trading sessions over the next two days as users and importers look to extend forward coverage.

India has announced now that it will sell wheat from its state stocks to flour millers and biscuit makers next month at a value of $7.60/Bu, 12% below the prevailing domestic market price to slow the ongoing rise in Indian food inflation. Wheat prices have rallied during their harvest, an ominous sign of tightening domestic wheat supplies. India is currently resisting wheat imports, but many suspect that India will become a significant world importer in the winter due to rising prices in the rapidly growing population that demands additional wheat flour and vegetable oil supplies. Twenty years ago, India was an importer of wheat, and it appears they may become one on the world stage again due to their population growth and lack of increased production potential.

The EIA is reporting that world energy deficits could persist into 2025. Due to faltering demand, they had forecasted that a crude oil surplus would develop in late 2024 and continue through 2025. However, now that demand has held strong enough and OPEC will hold supplies down, the EIA is shifting its outlook. The EIA raised the forecast for Brent crude oil prices to an average of $89/barrel in the last half of 2024, up from $84/barrel in the first half of the year.

Needed rainfall is occurring from NE Texas through Michigan, providing relief to the crops. This is from the remnants of Hurricane Beryl. On the other side of this pathway is limited rain and dropping soil moisture in the SE US, which is becoming short. The forecast calls for temperatures to start warming and be generally dry in the Central US for the next 10 days. The EU model has rainfall forecasted again for the Illinois/Indiana/Wisconsin/Michigan area. This high pressure will push eastward from the western US and cause rising Central US temperatures. The Ridge in this position will produce above-normal temperatures and generally below-normal rainfall; however, monsoonal rainfall for Mexico could be directed at the southern plains. This warm to hot and dry weather pattern is forecast to persist into August. Areas that will miss rainfall this week will find themselves short to very short soil moisture. Currently, there are no tropical storm systems in the Atlantic.

The Black Sea and Eastern Europe crop areas will see limited rainfall into July 20, and the drought is now seen extending into Eastern Europe. This is impacting summer row crops but is not being focused on, with US weather currently considered ideal.

Live and feeder cattle futures tumbled again yesterday, and a soft outlook is anticipated this morning. Yesterday, the cattle market was caught in a broad commodity fund selling session with weakness and deferred live cattle, pulling feeder cattle back lower again. Cash markets will remain at a standstill likely until Thursday with weakness that the CME is now putting a bearish bias on the trade. Packers are thought to be short-bought on inventory this week, so feedyards could still work to sell at steady to slightly weaker bids if they can pick up a few dollars on the basis. Box beef values did see a sharp drop yesterday with choice dropping $4.81 and select off $0.41.

Finish steers for June showed an estimated margin on the 750-pound steer at $384/head, the most since May 2017 and largely due to the drop in the purchased feeder pricing in January. 560-pound steer calves saw a close out of $210/head, up $108 from May and the second month this year over $200.

Yesterday’s lows in August live cattle and August feeder cattle were at trendline support. If those levels are violated and closed below, a much larger technical break could be in the making.