Grain futures lower to start Wednesday.
Grain futures are mostly lower this morning, with most of the weakness in the winter wheat contracts. After a sharp two-day rally, row crops have rolled into a minor correction as lite to moderate rain fell across N Illinois, with the radar showing showers across Southern Iowa this morning. Very similar to summertime action when radar would light up at night. It is late August, and the weather still matters in the Eastern Midwest, where soil moisture is in fast retreat. Last week, the Pro Farmer tour participants stated that a meaningful finishing rain was needed to attain yields they prognosticated. Still, crop maturity is quickly being pushed by the excessive heat being felt this week into the weekend. Corn cutting is underway in the Gulf States, with yields below last year and their 5-year averages.
India will allow the importation of 1.2 MMTs of GMO soymeal to aid their livestock sectors after feed prices have nearly tripled in the past year. Once the 1.2 MMTs of soymeal are taken, it is expected that another tranche of 1.2-1.5 MMTs will be allowed. India looks to become a significant importer of soymeal, with this year’s soybean crop reduced on less monsoonal rainfall and excessive heat.
Tuesday’s equatorial ocean data confirms that La Nina has quickly developed across the Pacific, which could be problematic for 2022 Argentine and Southern Brazilian corn/soybean production. This is the 2nd consecutive year of La Nina which historically produces drought across N Argentina and Southern Brazil. The world demands large South American harvests if its to avoid acute shortfalls in exporter stocks. Initially, La Nina may delay needed rain to allow the soybean seeding campaign to start across Northern Brazil.
The landfall of the next tropical storm is being shifted eastward from Texas into Louisiana. There are three potential tropical storm systems in the Atlantic, and all could develop into tropical storms. The best bet is a system located north of South America, reaching the Gulf this weekend. All three storm systems must be monitored. A southward sliding jet stream and diminished blocking across W Canada and the PNW will produce a series of storm systems across the Canadian Prairies, North Dakota, Minnesota, and Wisconsin. The rains come too late to aid crops in Canada, but they could add to soybean seed size across the Lake States. Limited rainfall is offered for Illinois, Kansas, Indiana, and Ohio as soil moisture is in fast retreat. The 10-day rainfall graphic is from the EU model. Additional showers/storms will occur across MN/WI and IA yet this week with rains of .5-1.50”. Near to above normal temperatures will push US corn/soybean crop maturity with highs ranging from the mid 80’s to the lower 90’s for the next 5-7 days.
After an early round of contract highs through live cattle contracts and feeder cattle, profit-taking and hedging emerged midday, closing the cattle market well off session highs. Hedging interest is picking up as it is becoming known that the box beef market historically scores it seasonal high this week. Cash cattle markets remained quiet on Tuesday on limited packer demand. Next week is the last full slaughter week ahead of Labor Day, and the week following will be reduced holiday kill, which will keep packer demand in check. Slaughter margins remain at historic levels, and the fresh rally highs has feedlots looking to sell their show lists $1-3 higher this week. The boxed beef market showed the first indications that a seasonal top is forming on Tuesday. The choice cutout was down $.45 at $347.58 and the select value was $2.50 lower at $316.90. Tuesday’s down tick was the first day lower in over a month.