New contract highs for December corn overnight.
Overnight grain futures continued the advance from Tuesday's recovery. The Monday post-crop report blowout was just another buying opportunity in the more bullish trends of corn and now wheat. Ongoing arid weather for Brazilian winter corn and the Northern US Plains/Canadian Prairies sparked the rally to continue overnight, amid historically tight old and new crop ending stocks for corn. As corn rises, it pushes wheat along with it. This is the last day of the index fund roll which should allow bull spreads and flat prices to rise into the delivery period amid strengthening cash basis bids. Central IL cash soyoil is offered 5.5 cents above May futures, while cash corn is trading 24-31 cents over and cash soybeans 32-38 cents over. End users needing supply see futures as a cheap alternative for ownership. Soybean futures followed the grain rally overnight on tightening domestic supplies and the rising Brazilian fob basis offers because of the record large export demand.
Today it's expected that the US Treasury will not label China as a currency manipulator today in the 1st annual assessment from Treasury Sec Janet Yellen. This will help avoid rising tensions between the US/China and help pave the way for additional Chinese buying of US ag commodities. The US dollar is softer while WTI crude oil futures rallied above $61.00 on the rekindled reflation trade. The White House assured Americans that their inoculation plan is “on track” regardless of the pause in J&J vaccinations.
The 3 primary weather models agree on the forecast with modest rainfall chances for Brazilian winter corn over the next 5-7 days before lite showers fall during the middle to last half of next week. The chance of showers is being pushed backwards in time which always reduces our confidence in the forecast. And there are clear seasonal indications that the wet season is retrograding north and west to NW Brazil (and NW South America). This increases the showers' importance mid next week and any follow-up rain that might fall across Parana and MGDS in late April. The time for Central Brazil rainfall is immediate with corn said to be rolling in the afternoon heat.
The morning ten-day weather model essentially has North Dakota and the Canadian Prairies void of any moisture through Saturday, April 24, with a cold Northwest upper airflow to prevail into the Midwest. Cold and normal temperatures look to prevail into late April for the central part of the country.
Cattle liquidation and technical selling prevailed yesterday for the forth day, with a steady to weaker open anticipated today. The renewed rally in corn prices also weighed heavy on feeder cattle. The cash market remains at a standstill with better interest likely to start surfacing late today or Thursday. A small number of cattle moved at $121.50 on Tuesday, with similar bids quoted elsewhere in the Plains. The midweek outlook holds steady/firm. Boxed beef values were mixed on Tuesday. The choice-value continues to erode and gave up $1.30 to $270.11. The select value gained $.38 and was at $266.54. The choice/select spread narrowed to $3.57 choice premium. After holding at historic levels in the 1st quarter, the spread has narrowed significantly in the past 2 weeks.