Grain markets recover overnight in Turn-around Tuesday.
Grain futures recovered overnight as we continue to flip trends from opening to opening. On Sunday night, the opening was the low, as the market bolted higher in that session. Monday morning, the day session start was the high. Flip that, and the opening of last night was mostly the lows across the board as grain forces recovered throughout the night. Central IL corn basis is firm at $.50-.55 over, with soy basis at $.60-.70 over for May-July arrival. There were 9 contracts of soymeal, 12 contracts of soyoil, 64 contracts of soybeans, 36 contracts of CBOT wheat and 311 contracts of KC wheat tendered against May futures. There remain no corn delivery intentions.
Old crop corn maintains its bullish leadership role as the market absorbs the sheer size of Brazilian safrinha yield loss. The EU, GFS and Canadian models agree that complete dryness will persist for another 10 days. Regional heat is offered to Parana, Mato Grosso do Sul and Sao Paulo. The EU model’s updated weekly climate outlook extends a pattern of below-normal rainfall, likely ongoing complete dryness, across Parana into May 24. Weather beyond this date will do little to salvage crop potential. This looks to be the driest safrinha growing season in decades, eclipsing the devastating drought of 2015/16. Seed genetic improvement is noted, but the USDA’s Brazilian corn production forecast is easily 10 million tons too high. This is rather important as export demand will be forced to the US August forward, which compounds any Midwest weather issues that may develop. The US needs corn acreage to have grown to 94 million acres.
The Central US forecast is consistent with prior runs, though the EU and GFS models remain at odds over rainfall amounts and locations across North Dakota and Saskatchewan. An active pattern of showers will stay intact across the Southern and Eastern Midwest and Delta into May 10. Cumulative rainfall of 2-5” will hinder seeding progress across Louisiana, Arkansas and pockets of Indiana and Ohio. Ongoing delays are not expected. The bigger concern is still additional soil moisture loss across the Western Plains, PNW and North American spring wheat region. Wetter patterns are not indicated in these regions into May 18. The need for precip after that becomes more immediate.
Cattle futures can't catch a break and pushed lower again yesterday. Cash markets were limited to Nebraska, where small numbers of cattle sold for $117.50-118 or $1.50 to $2 lower for the week. A similarly weaker trend is expected for the rest of this week’s trade. Last week, negotiated fed cattle sold for an average of $119, down $2 for the week, and the most significant 1-week decline since mid-December. Live cattle sold on a formula basis brought $124, and forward contracted cattle brought $123. The turn in the negotiated market likely marks a seasonal top, even as the beef market rally continues. Boxed beef prices were higher to start the week. The choice cutout jumped $2.80 to $299.30, and the select value gained $.74 to $283.79. A top in the beef market is expected ahead of the Memorial Day holiday.