Oats limit up overnight.
Grain futures firmed overnight, as Chinese trading over Evergrande was not the disaster that was feared. Oats went up the $0.25 limit overnight, prompting the old saying “oats knows,” reminiscent of the 80s to early 2000 price moves. The Shanghai Composite and the Shenzhen opened 1% lower following China's 2-day holiday but settled mixed. Shanghai closed .4% higher, with Shenzhen losing .6%, which was seen as a victory following prior sharp losses in the US/EU share trade. The Chinese equity stability helped soothe world raw material values.
Overnight, Evergrande Group announced that it had made a coupon payment on its Hengda debt through private negotiations. Still, questions remain as to its dollar-denominated amount that is due tomorrow. Moreover, the Bank of China injected substantial liquidity into its banking system to ensure that commercial lenders have adequate capital on hand. Like many other nations, the flood of liquidity offers a longer-term risk of rising inflation. Crude oil prices rallied a dollar overnight, along with stock index futures recovering further from Monday's debacle. Today the Federal Reserve and zits today meeting at 1 PM CT, and many await their announcement and signals of when they may start tapering US bond purchases. This is the first on the list before interest rates would be raised sometime in later 2022.
Pakistan launched another tender for the purchase of 640,000 MTs of wheat for January/February. This is on top of the tender for 500,000 MTs for late 2021. Pakistan has been fighting rising domestic food costs and a wheat shortage. WASDE/FAS has Pakistan importing 2.5 MMTs of all origin wheat in 2021/22, with reality closer to 4-5 MMTs they will be importing in the crop year. Ukraine corn yields are disappointing in a world feed-grain market that is facing tightening supplies. Bean oil is finding renewed support as November Malaysian palm oil futures rose a sharp 133 ringgits to 4,436 RM/MT on declining production and strong export demand.
The Central US forecast offers a 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 in the next three days with some localized heavy totals of 2-4.00″. The rain and wind will cause some crop damage, but harvest should resume during the weekend. An above-normal temperature pattern holds across the Central US into October 10th. Rainfall chances for the Eastern Midwest target MI/IN/OH with totals of .5-2.50″ with locally heavier amounts over the next 72 hours. The remainder of the Central US is dry with high temps holding in the 70's to the lower 90's. The warmth/dryness will persist into October, allowing for a rapid harvest. The heat/dryness will impact US HRW wheat germination across the Plains.
A few lite showers are forecast for N and C Brazil early next week, but otherwise, the forecast is barren of meaningful rain into October. As a result, producers may have to wait until mid-October for widespread spring soy seeding as the pattern slowly shifts.
Cattle trading was mixed yesterday, with strength in the morning fading towards the close, but significant support is indicated under 126.50 for December cattle. Cash cattle markets remained untraded through Tuesday on limited demand. The outlook at midweek is steady, with better packer interest expected to surface later today. The boxed beef market collapsed on Tuesday, giving back all of Monday's gains. The choice valued fell $4.29, and select was off $2.74. The choice rib value fell $33.75/cwt, taking $3.85 off the total carcass value. However, both values are holding at record seasonal levels for late September. The choice/select spread topped two weeks ago and has somewhat relaxed. But at a $33.36/cwt choice premium, the spread remains at a historical level for September.