End of the month selling continues.
Grain futures were lower overnight across the board, as the end of the month/quarter selling continues, as has been the case since the March 8 highs. Tomorrow's March Stocks/Seeding seeding report is known for data numbers to be off wildly from trade guesses. With a large range of guesses on old crop bean stocks and corn acres, an almost predictable volatile report is causing continued risk-off trading.
It's becoming apparent that the March 1st US soybean stocks are feared to be larger than expected as the record shipment pace of December boosted the number of soybeans in transit and reduced US soybean stocks as of December 1. Soybeans in transit are difficult to count, and the industry expects that 45-50 Mil Bu of those beans that were lost in transit will be found back in Wednesday's March report.
The Australian Bureau of Meteorology has called La Nina dead in the Equatorial Pacific with a neutral ENSO outlook now offered into mid-2021. The warming of the Pacific in the mid-latitudes ended the La Nina phenomena. The long-range ENSO forecast models call for a mild La Nina to return later this year while other solutions are neutral. None call for the development of El Nino. The warming of the Pacific and an already exceptionally warm Atlantic will direct Northern Hemisphere weather patterns this summer. Climate Impact sees a risk of dryness in Europe, southern portions of Russia and the Central US from May into late summer.
Dry weather will grip Brazilian winter corn areas and much of Argentina over the next 10 days. The arid weather trend is raising winter corn concern. The US and the EU weather models are in better agreement with the GFS model backing down on rain totals for Central Brazil in the April 8-10th time frame. This is closer to the EU model's solution and consistent with the current arid weather pattern. The EU/Canadian models have remained ardently dry in recent days for Central Brazil and appear correct. A flash drought is developing across the winter corn areas of Brazil that must be closely monitored in the weeks just ahead. Sometime in the first 10 days of May, the dry season normally starts across Brazil, and this year's dry season will likely be ushered in by the ending of La Nina. The need for rain in the last 20 days of April is increasing.
June and August cattle scored new contract highs yesterday, as optimism from beef prices rising and slaughter margins continuing to expand is keeping a firm outlook for cash this week to be higher again. Boxed beef prices rose to solid gains to start the week. The choice cutout gained $1.87 to $239.53, while the select cutout jumped $4.73 to $232.50. Tuesday was the highest price on select beef since last June. Pre-pandemic, the last time select beef was this high was in 2015. Strong domestic demand and a record export pace are driving beef prices, which will keep cash cattle trade firm in the coming weeks.