Sharp grain recovery on barge traffic renewal.
Grain futures recovered overnight after a rough start due to margin call selling from yesterday’s sharp losses. Late yesterday the US Coast Guard, Army Corps of engineers, and barge companies concluded their emergency meeting on renewing barge traffic under The Hernando De Soto bridge. The meeting held high hopes that the Mississippi River will reopen in the next 24-48 hours after an initial engineering study concluded that the I-40 DeSoto bridge is stable without a load (traffic).
A follow-up meeting is planned for 2 PM CT today, with a second engineering study to be offered to help confirm the initial reopening recommendation. If the second study confirms that the bridge is stable, river traffic could return to normal as early as late this afternoon or on the weekend. Certain barges will initially be prioritized to pass, such as gasoline to replenish areas hit by the Colonial pipeline shutdown and a shipment for the US Defense Department. After that, other barges will be allowed to pass.
A several day river shutdown should not impact their export loadout operations as exporters can pull from stored supply. Most of the on-river grain barges are filled with corn to fulfill China’s massive export program. This is allowing corn futures to recover sharply. The current hard break in July corn was just another Kmart Blue Light Special for end-users to buy into. This could help lead to a July delivery squeeze for corn if there is a US weather problem, given the Brazil safrinha corn production failure.
Yesterday’s panic selling did not produce a break in Midwest cash basis bids. There were crushers willing to bid $.80-1.00 over to secure summer cash soybeans while summer corn bids held stout at $.35-.65 over. The cash market continued in its hunt for tightening old crop supply.
An early-season intense Ridge of high pressure is forecast to form over SW Russia, impacting wheat/sunflower production. The Ridge will breed 90-degree heat next week and add to rapidly drying soil moisture conditions.
The EU/GFS and Canadian models are in good agreement. All keep heavy rainfall into May 25th confined to the S. Plains, the SW Midwest, and pockets of the Delta. This coming rain bodes well for HRW crop health improvement, but the lack of rainfall across the Northern Plains, PNW and Southern Canada produces drought intensification. Closer attention is also being paid to budding dryness across the Upper Great Lakes region and Iowa. Rising temps will accelerate the soil moisture loss here.
The big difference in the forecast is the coming heat. Temps look to reach the lower 90’s in 8-12 days across the N Plains and the NW Midwest. This heat will exacerbate soil moisture loss amid a high-pressure Ridge aloft. None of the Central US will be in a cool temperature pattern beyond the weekend. The above to much above normal temperature pattern will last into June (and beyond).
Cattle futures suffered a sharply lower session yesterday after seeing a 6-day higher short-covering rally. The break was tied to the general commodity sell-off yesterday and renewed hedging interest. Cash cattle were lightly traded on Thursday with prices like earlier in the week. Cattle moved at $119/cwt in Kansas and $120 in Nebraska. The choice cutout extended weekly gains by another $1.70 (7.67 this week) and select was $1.25 lower in the cash beef market.
The weekly Drought Monitor released on Thursday showed 35% of the US cattle inventory was in drought areas. USDA meteorologist Brad Rippey noted that there had been just four other years that more than 40% of the country was in drought in early May.