Turn-around Tuesday puts grains in retreat.

Grain futures are lower this morning, led by soybeans, as stable crop ratings for corn and soybeans had the market refocusing back on record large yield potential. The rally in recent days has been on managed money short covering amid heavy losses in the stock market, forcing some managed funds to offset gains on the short grain trade. But recent lofty crop ratings are again pushing record yield thoughts for Monday’s WASDE crop report making some wonder how big is big.

NASS reported that US corn condition ratings declined 1% in the good/excellent category to 67%, while soybeans showed a gain of 1% to 68%. Ratings are high for this time of year. Improve crop ratings were tied to Illinois and North Dakota. North Dakota’s ratings for corn were up 8% and 10% higher in the good/excellent categories.
It’s highly anticipated that the USDA will announce more Chinese soybean purchases this morning, with rumors of 6-10 cargoes sold yesterday.

Russian spring wheat areas are forecasted to stay exceedingly wet for the next 10 days, raising crop quality and quantity concerns within the Black Sea grain market. The Russian Spring wheat crop accounts for 40% of the Russian wheat, and a break in heavy rain is needed to start the harvest and prevent acute losses of milling quality. SW Russia and Ukraine are forecasted to maintain their dry weather trend, which deepens the drought.

After the recent strength of two days in the grain trade on Friday and Monday while stock indexes were lower, today the market refocuses on record US crop potential while ignoring shortfalls in other world areas. Russian FOB wheat is at $222/MT while the South American corn basis continues to firm.

The primary forecasting models have a cooling trend with dry weather for the Central US into mid-August. He will persist across the Delta and southern plains, but cooler Canadian air will push southward this week. Dry weather dominates the Central US through next week as the remnants of Hurricane Debbie meander across the southeastern portion of the US, producing rainfalls of 4-16.00″. Catastrophic flooding will threaten livestock and crops in the Carolinas, which will be the hardest hit. Dry weather holds across the Central US, with heat returning during the 9-15 day window.

The live and feeder cattle trade experienced sharply lower markets on Monday from outside influences. A steady/better opening is anticipated this morning, with outside markets showing some relief and buying interest. There were no negotiated fed cattle markets traded yesterday, with active trade likely not till Thursday. Hedged feedyards could be coaxed the selling steady/$1 lower cash bids to grab the extra basis dollars.

Last week, the Packers bought 69,589 head on a negotiated basis, with 47,185 for a 1-14 day delivery and 22,404 for a 15-30 day delivery. It was the lightest total volume of negotiated purchases in four weeks, but the deferred volume was the most since late May. The large volume of deferred purchases for the Labor Day holiday.

Dressed steer prices last week were steady/$2 lower in a $10 range. There has been a historic correction again in this bull market for cattle over the last three days. October futures found support just above the continuation moving average support and just above the chart gap near $177. A correction appears likely in the near term as long as the outside markets hold their severe tumbling.