Markets stabilize overnight on Evergrande worries.
Grain futures found mixed results overnight but stability overall, unlike the Sunday evening session. Part of corn's mild weakness overnight is tied to its 1% rise in the US corn GD/EX rating, while world veg oil prices firmed and supported beans. The US corn/soybean ratings gain came from Illinois, a surprise amid all of the disease and disappointing early yield talk from producers. Illinois had 11% of its corn and just 1% of its soybean crop harvested, so relating condition gains to yield is a statistical stretch. And Illinois crop ratings have been volatile for unknown reasons for most of the summer. Irrelevant of ratings, yields are disappointing, and WASDA will likely lower its October estimate to at or below its August estimate of 174.
At the Ag Outlook Forum in Kansas City, USDA Chief economist Seth Meyer stated that renewable diesel is changing the US soybean market. Significant oil company investment in renewable diesel is “politically dynamic” regarding the US's Renewable Fuel Standard, stated Meyer. California is seeking 7 Bil gallons of renewable diesel which is nearly three times the biodiesel that is being produced today. The US simply does not have enough acres to produce all the soybeans that will be needed for crush/soyoil in the coming years.
Stock markets stabilized late Monday and recovered sharply late in the Monday session into the overnight Tuesday session, as the market is now rationalizing it overreacted to China's Evergrande Group and its missing of interest payments. Many do not see Evergrande impacting China's world banking system and that Central Bank is expected to add additional liquidity. China's stock market will reopen this evening in the US as their Autumn Festival holiday ends. The next interest rate payment for Evergrande is due Thursday. US Central Bank governors will start meeting today with their policy decisions due Wednesday.
The forecast models are back looking at a continuation of the current weather pattern, a Central US high-pressure Ridge that produces limited rainfall for the Western 2/3's of the US. The E Midwest has the best chance of rain, with temps holding at summer-like 70's to low 90's. Eastern Midwest has chances of rain's targeting MI/IN/OH with rain totals of .5-2.00″. The remainder of the Central US is dry.
South American weather features a few lite showers for North and Central Brazil early next week. Still, otherwise, the forecast is barren of rain for other areas of Brazil and Argentina into October. As a result, producers may have to wait until mid-October for widespread spring soy seeding.
Cattle futures traded sharply lower early Monday morning on the contagion fiasco of Evergrande but firmed into the close and avoided a broad-based liquidation. This speaks volumes that a sustainable low, for the time being, is in place for December cattle in the 125.50-126.50 range. Cash cattle markets were typically quiet to start the week, and buyer interest isn't expected to surface until Wednesday. Showlists across the 5-Area region are lower, and cattle feeders will be looking for a steady market. The beef market broke a long-running losing streak that started in late August. After falling $34 in 19 days, the choice value found demand and gained $1.19 on Monday and select gained $1.00. Live cattle futures look to have forged a near-term low with recovery rallies back to the one 31.00-one 33.00 range targeted for catch-up forward sales.