Wheat leads overnight gains after a potential double bottom.

Grain prices are in firm short-covering mode ahead of Wednesday’s WASDE July crop report. It seems as important as Friday’s USDA numbers will be the CFTC commitment of traders report after the close. After the recent sharp decline, managed money now holds a record short corn position. Key CPI inflation information this morning came in weaker than expected, allowing silver to jump the dollar while gold gained $33 morning US dollars off $0.75, trading this morning under 104.00. This is supportive of the risk on trade. There are now rumors that we may have three interest rate cuts before the end of the calendar year, which is putting pressure on the dollar in anticipation.

Estimates heading into Friday’s report have 2020/25-grain stocks on corn at 2,312 Mil Bu, 450 Mil Bu for soybeans, and 790 Mil Bu on wheat. All will be up from the current crop year due to larger corn seeding and use of trend yields. December corn trading near $4.00 on stocks to use ratio is already showing the trade is playing at will 183 BPA on corn given the current favorable weather.

The financial squeeze is occurring for Ukrainian and Western Russian farmers, with smaller harvests and lower cash prices compared to last year. Lower protein levels of Russian wheat are growing as harvest advances. Summer row crop stress increases amid another two weeks of extremely hot and dry weather, and Russian farmers will start to become tight-fitted with newly harvested wheat. The current decline in wheat, corn, and sunflower yields will limit harvest sales.

CONAB is out with their 2024 estimates, and all corn production was put at 115.9 MMTs, with soybeans at 147.3 MMTs. The soybean production estimate was down slightly from the June number, while corn was up 1.8 MMTs. The difference between Brazil and USDA production is 6.1 MMTs in corn and 5.7 MMTs in soybeans.

US weather forecasts looked drier and warmer, with limited rainfall for the Plains and W Midwest for the next 10 days. The E Midwest is favored for any rain, with the best chance of rain being next Thursday/Friday, which is a short way past the Eastern Midwest. Until then, any Central US rainfall will be less than .35″ coverage no better than 10-15%. The models struggle with the pattern beyond the next 7-8 days. The EU is leaning warmer and drier weather to persist with the high-pressure Ridge positioning over the Intermountain West.

Live and feeder cattle futures were soft yesterday, with feeder cattle losing $2.00 in the deferred contracts. Yesterday negotiated fed cattle trade was $were to lower in the South at $188 while the dressed trade in the north was steady $2 lower on dressed basis of $312-314. Live trade in Iowa was quoted steady from last week at $1 98 after trading at $190-194 earlier in the week. At midweek, cattle slaughter totaled 354,000 head, which is 1000 more than a week ago but 24,000 head less than last year. Box values on beef continued to decline with choice off $1.61 and select losing $0.37.

Yesterday’s cash feeder Index showed a gain of $0.82 to $258.14, above all listed feeder cattle contracts. Corn prices have softened, and feeder cattle do not respond to the upside. Deferred live cattle must continue higher to support further strength on the cash feeder Index and futures.