This morning's grain trade is mixed.

This morning’s grain trade lacks the momentum it carried yesterday. The competitiveness of corn and wheat has now shifted with the current rally. Russian 12.5% fob wheat offers for October are bid at $216/MT, and offers are at $217/MT. Little changed when US and French milling wheat futures were $0.50 cheaper than several weeks ago. The spread between US Gulf and Brazilian corn has narrowed eight cents/Bu in favor of the US, with Ukraine/Argentine FOB corn now being a bit cheaper. Rising Mississippi barge freight rates and the current grain rally are pushing back against US export competitiveness. Short-term, this makes the rally difficult to sustain without a bullish surprise, as in the USDA September crop report.

The weekly crop condition ratings released by NASS had the US corn crop at 65% good/excellent, the same as the prior week but 12% better than last year. 62% of the US corn crop is in dent, with 15% in the black layer and fully mature. Just 60% of the North Dakota corn crop is in the dough, which leaves 525 Mil Bu at risk of the cold weather.

Soybean ratings fell 2% and are at 65% good/excellent due to last week’s heat and dryness. The ratings are still 10% better than last year. Illinois soybean crop conditions improved while Iowa held steady. Weekly US ratings declined primarily due to falls in TN, OH, and ND. 13% of the soybean crop is dropping leaves, meaning 87% is vulnerable to ongoing Central US dry weather. If a smaller seed size develops, it’ll take until the October crop report to catch this. Next week’s crop report is expected to show data of 53.1 BPA. We will start seeing private corn and soybean crop estimates heading into next week’s crop report.

The Memphis Mississippi River has declined to a -5.99 gauge height, which is well below normal. It is forecast to drop another 2.00″ gauge feet in the next two weeks, rivaling last year’s record low. Low flows are raising barge rates and cutting drafts. Concerns are quickly building about the availability of barges and the cost of moving corn and soybeans to NOLA.

Weather models this week agree that an arid central US forecast will occur with limited rains falling across the Central US into mid-September. Dry weather extends into the 11-15 day window, with a tropical storm needed to boost Central US rainfall beforehand. Temperatures will cool this week before warming returns this weekend. Midwest high temps will range from the 70s to the low 80s, 2-4° below normal. Low temps up in the 40s/50s and lower 60s.

A higher trade developed in cattle yesterday alongside other ag commodities, with a mixed outlook anticipated this morning. October live cattle challenged the $180 range and retreated by a dollar. Feeder cattle, however, did firm despite the corn rally. Negotiated fed cattle markets are trying to work for steady trade sometime this week. This week's early CME strength and narrowing margins will have cattle feeders looking to sell at higher prices. Negotiated purchases have been light for the last two weeks, like a year ago when the Packers were trying to build inventory. Last week, the Packers bought 65,472 head on a negotiated basis, with 47,841 for a 1-14-day delivery and 17,631 for a 15-30-day delivery.

Cattle price trends in all categories have been lower in recent weeks. Last week, negotiated grid sales were the highest at $309, followed by forward contracts sales at $303 and formula sales at $295. Negotiated sales averaged the lowest at $290. Formula sales saw the largest volume, 102,000 head, and forward contract volume was nearly 28,000. October live cattle have found resistance just under $180.00 despite its discount to cash. The low in October cattle in August at 174-175 is trying to mark the price move of the cash trade into October.