Grain futures find further selling pressure in the night session.
Grain futures found further weakness overnight from the moderately bearish USDA crop report, mainly towards the corn data. Now there are concerns over the logistics of corn movement due to coming repairs to the de Soto bridge in Memphis, and it amplified that grain markets were overbought when they ended last week Friday and are now consolidating recent spectacular gains. December corn has major support to challenge in the 570-580 range, with November beans setting up for a decline to the 1380-1390 region if 1420 gives way.
Updates on the bridge show that barge navigation under the de Soto bridge will resume within days. Initially, there were fears about how long repairs and the return of river transportation would take. Fortunately, the bridge's impact on the US corn export program will be short-lived. The impact on interior basis will also be muted, record monthly physical corn exports will be ongoing into late summer. Spot interior basis changes have been more variable this week, but bids for early/mid-summer arrival remain perched at $.40-.70 over futures.
After yesterday's data, the USDA's adjustments do not change the bull market that still is prevalent in the grain markets. Ongoing beneficial weather will be needed this summer. June 30 acreage data is anticipated to find higher corn acreage, with soybean and spring wheat acreage suspect. And in the mix, the USDA did acknowledge production losses in Brazil. However, they may still be substantially 12 MMTs too high compared to what reports are indicating. This maintains a demand picture for the new crop from countries that cannot secure supplies from South America. This mandates a further reshuffling of global corn trade flows in the August-January period. On Wednesday, Brazil's interior corn price index settled at a new all-time high 102 reals per sack ($8.20 per bushel), while Black Sea corn fob offers have become rather difficult to find beyond July.
The EU and GFS models remain in good agreement. Both keep heavy rainfall into late May confined to the Southern Plains, Southern Midwest and pockets of the Delta region. Coming rainfall bodes well for HRW crop health improvement, but the lack of rainfall across the Northern Plains, PNW and Southern Canada will allow drought to intensify there. Closer attention is also being paid to budding dryness across the Upper Great Lakes region. A wet/cool pattern will be established across the Southern Plains and Southern Midwest into the middle of next week. Emergence stays sluggish in the near-term. Central US temps rise to more normal levels in the 6-10 day period, which accelerates crop growth but also works compound moisture loss in Northern regions. Max high temps late next week in the upper 70s and 80s will be spread. The hottest temps favor drought-stricken regions Montana and North Dakota.
Almost as if it's becoming a new trend, cattle futures were higher again yesterday (feeder cattle boosted by lower corn and feed values). Cash markets were lightly traded on Wednesday. Cattle in Texas moved steady to $1.50 higher at $119, while light sales in Kansas were quoted $1 higher at $120. Light trade in Nebraska was $2 higher from last week at $120. There is likely additional business left for this week, with similar trends expected. The boxed beef rally showed no signs of slowing at midweek. Choice beef gained $2.71 to $315.08 and select was up $.82 at $297.16.