Turn-around Tuesday in the overnight trade on wheat cuts.
Grain futures moved higher overnight, capturing their Turnaround-Tuesday (adding to grains which closed near the better levels of the session on Monday though still lower) led by a cut in the French wheat crop. The French Farm Ministry cut their wheat crop estimate to 36.06 MMTs, down nearly 700,000 MTs on the wet harvest weather. The smaller crop amid less than desired quality will further limit French milling wheat supplies. On the other hand, modest upward adjustments were made to the French corn, barley and canola crops. Stats Canada data was also friendly with all wheat production number lowered to 21.7 15 MT’s from the August number of 22.948 MT, with canola at 12.782 MT’s down from the August number of 14.749 MT.
US corn GD/EX ratings fell 1% to 58%, while soybeans held steady at 57%. 4% of the US corn crop is harvested, while 38% of the US soybean crop is dropping leaves. And 12% of the US winter wheat crop is planted. Early corn yield data is disappointing, but it is too early to decipher a trend. Producers report that corn stalk quality is exceptionally poor.
Tropical Storm Nicholas has come ashore with gusts to 40 MPH and considerable rainfall. The storm is a slow mover that will lay areas of 4-10″ of rain and slow the restoration of electricity across portions of SE Louisiana. No additional structural damage is expected from Nicholas. There is no indication that the rainy season is prepared to start across N and C Brazil over the next two weeks. The hot/dry weather will prevent early soybean seeding, which will become a market worry in October. The Australian weather forecast offers limited rainfall for key wheat areas by the end of September. South Australian soils are getting parched, and several private estimates of Aussie wheat production are starting to decline.
The Central US will hold in a warm/dry trend with summer like high temperatures in the upper 70's to the mid-90's. The heat/dryness will push crop maturity. A Ridge of high pressure elongates and progresses east across the Central US, producing much above normal temperatures. A few showers of .2-.8″ will fall across Minnesota/Wisconsin on the weekend, but otherwise, rain totals will be limited. The Midwest harvest will become more active this weekend and next week as corn seed moisture falls to the upper teens to the lower 20%. The extended range forecast maintains a warm temperature pattern with limited rains for the Plains and W Midwest.
Cattle futures tumbled yesterday morning on the news of the fire at JBS's Grand Island cattle plant. The facility is expected to remain closed on Tuesday and is planned to be back operational on Wednesday. Despite the downtime at the JBS plant, the beef market was lower to start the week. The choice cutout value fell $1.29 to $325.93, and the select value was $1.21 lower at $292.16. Cash cattle markets were quiet on Monday, with packer interest expected to hold off until Wednesday. Will Forward beef sales trended lower in the weeks on either side of Labor Day but increased last week. However, total sales of 247 Mil Lbs still fell short of the five-year average. The largest increase in sales was for 22 days delivery. Yesterday's vulnerability due to the fire likely pushed a vacuum low in of significance that can hold for some time. Rallies on December cattle back into the lower 131-134 range are selling opportunities.