Grain futures remain concerned with load-out capacity of the Gulf.
Grain futures experienced a firm start overnight again with a high by 3 AM, just to see prices drift again into the night session close. The focus of the grain trade again stays on the Gulf export corridor and when electricity will be restored to start a process of fixing damaged facilities and restarting operations. No US grain or soy offers were available from the Gulf on Tuesday as damage assessments are ongoing.
Entergy, the largest electrical power provider in Louisiana, reports that it had 216 substations and more than 2,000 miles of transmission lines out of service. This has left hundreds of thousands of homes and businesses without power. Helpful is that Entergy's plants can generate power, the electricity just can't be moved as towers and lines need to be restored. However, electrical crews from nearby states are making their way south to help the power restoration effort. The damage assessment should be completed by today, with a plan of power restoration to be in place by Thursday. Businesses will be initially favored to receive power, including NOLA exporters. Still, it could take weeks for all LA power to be restored. Pent up export demand is evident and key support is just under the market, with short covering into the USDA holiday weekend a potential as the New Orleans Gulf Coast repairs commence.
China's President Xi commented overnight that China must have a reserve and emergency response system capable of meeting Chinese demands. Xi stated that China is a big country, and it must have strength in a national commodity reserve system. The news stokes expectations that China will restock its corn/soybean and rice reserves for future needs/emergencies. In addition, China has auctioned off massive tonnages of grain to cool their domestic market.
Algeria has booked 390-460,000 MTs of mostly European wheat, with the purchase said to have been made from France, Poland, and Germany. Russian wheat can be sourced, but for now, the wheat source is said to be Europe. France is the traditional supplier of wheat to Algeria, but it has endured a wet harvest season with milling wheat availability constrained.
The remains of Ida will push into New England today with heavy rainfall, wind and severe weather. After that, the storm will push back out to sea by late Thursday, and the Central US weather pattern becomes far less active. The GFS model offers diminished rainfall for the Central US into mid-September. A high-pressure Ridge will rebuild across the Western US and create a Ridge/Trough pattern for the US. The jet stream returns north to produce warm Central US weather conditions. A storm system will push across the N Plains early in the weekend, producing showers/storms for the Dakotas with totals of .25-1.25″. The Midwest will hold in a mostly dry weather flow. Tropical storm (Kate) will form in the South Central Atlantic, but this system takes a more northerly track and will not impact land. The Atlantic basin will stay active, and future tropical formation is likely. There is no evidence of any frost risk for Central US crops into September 14th, with the S Midwest corn/soybean harvest to get underway in a few weeks. The warm/ dry flow will push crop maturity.
Cattle futures were lower again yesterday, declining for the 5th day in a row, with this morning's outlook is still steady softer. Cash cattle markets were undeveloped through Tuesday on limited demand. Better interest is expected to start today, but the outlook at midweek is no better than steady as the beef market tops. Boxed beef values continue to erode but remain at historic levels for August. The choice cutout value was down $.67 on Tuesday at $342.11, and the select value slipped $.52 to $312.03. While cutout values were lower on Tuesday, the choice/select spread holds a record for late August. The spread on Tuesday was at a $30.08 choice premium versus $14 last year and an average of $11.