Grain prices firm in the overnight session on concerns large areas of the corn belt miss rains.
After a lower start and soft evening session, grain futures firmed into the close of the morning session, on the disappointment that rains over the past few days have been less than broadcasted, and upcoming weather models show a drier forecast for Iowa/Illinois and the entire Plains. Northern and Central Plains corn/soybean crops have hit a moisture wall and are maturing rapidly due to the past three weeks of heat/dryness. As a result, there are expectations lower crop rating reports are anticipated next Monday, which the USDA will have to draw from on the upcoming production report on August 12. Also, hope for more Chinese business is anticipated after yesterday's flash purchase of 300,000 MMTs.
Nearly three dozen of the US's most influential business groups are prodding the Biden Administration to restart trade negotiations with China. The restart is long overdue as USTR is completing a review of US/China trade policy. Moreover, China has shown a willingness to engage in new trade discussions as a way more deeply engage with the Biden Administration politically. The ag markets await the response of the Biden Administration to the trade push from business leadership, but the hope is that for a reduction of US tariffs on Chinese goods and a 2-3 year extension of the Phase 1 Deal.
No solution is on the offing in Argentina at Bahia Blanca, the downriver terminal that tops off vessels before departing across the Atlantic. An estimated 28 vessels and over 11,000 trucks are now waiting for grain. The pressure on the Argentine Government is quickly building as costs rise.
Weather models agree a below normal rainfall and above normal temperature pattern will grip the Plains and W Midwest for another 10-12 days. And rainfall totals in recent days have not added up to the amounts advertised by either the GFS/European models as large swaths of the Central US are extremely dry. On Monday, this dryness will produce another 1-2% decline in GD/EX corn and soybean ratings. The best chance of rain is over the next 3 days before a lengthy period of dry weather returns. Scattered showers will pass thru the Lake States for another 3 days. The models have pulled the best rain chances north into E Minnesota, Wisconsin and N Illinois. Iowa/N Illinois has a good chance of rain on Sunday. However, the weekend rains will continue to be widely scattered in nature, with daily totals ranging from .1-.8″. This leaves 60-65% of the Central US as dry. In particular, the Plains will be arid, and crops here are reported to be maturing quickly amid the acute heat/dryness.
A lower cattle trade across the board yesterday with feeders weak into the close as well, on disappointing cash cattle trade which was mostly quiet again across the Plains with light Packer demand. The boxed beef market continues to streak higher. On Thursday, the choice cutout gained $3.24, and the select value was $2.62 higher. For the week, the choice cutout is up $14, led by a $41 rally in the rib value. Futures premium to the current cash market, which fails to find improving nearby inquiry with higher prices, is starting to become a burden on deferred live cattle trade. If packers will not pay up now, when will they?