Grain futures produced a mixed trade overnight.
It was a mixed overnight grain session to start the week out, with both sides of unchanged traded the grain commodities. The volume of overnight trade was light compared to recent months, with the September USDA Stocks report due out this Thursday. Interesting is hedge pressure was not very evident on Friday and overnight in any substantial way, even though harvest activity was heavy. What is being noted is the reporting of disappointing yield trends in the Eastern Midwest area, where disease pressures have caused significant variability of yields within cornfields while regional dryness prevented late forming soybean pods from developing fully. October 12 is the next NASS crop production.
Energy futures were sharply higher overnight on the ongoing tightness of European and Chinese needs. Faster than expected economic recovery from the Delta Covid variant amid tight global supplies is creating this along with Europe's increasing dependence on renewables. Moreover, energy supplies for power generation will be extremely tight as the Northern Hemisphere temperatures cool. Ultimately higher crude oil/energy prices are very supportive for the bioenergy crops of corn/Soyoil.
For the 11th consecutive week in a row now, Russian wheat values have risen as farmers seek higher prices to compensate for the rising export tax. There is a fear that the Russian export tax will climb and surpass $70/MTs by the end of October, which is the equivalency of a $1.90 bushel. As a result, wheat tenders are now almost becoming a daily event, with Algeria back seeking wheat for November from EU/Russian sourcing.
This afternoon's ratings data is becoming less important, but a steady to 1% decline is anticipated, with Illinois's significant gains on ratings last week being reversed. Harvest is moving fast, and it's expected half of the corn will be harvested within two weeks, reducing hedge pressure. With open interest at four-year lows, considerable upside price movement can be made as funds return on documented smaller crops and improving demand.
The US/Canadian temperature pattern will remain extremely warm for the next two weeks. A Ridge of high pressure maintains its position across the Plains and pulses north and east into the end of the week. A fetch of Gulf moisture allows showers across Texas and the far Western Plains into the closing days of September. This is favorable for rain in the Plains, but the models have the heavier totals being farther east than prior runs. Plain's rainfall totals are estimated in a range of .4-1.50″ with locally heavier amounts. This looks to be the best Plains rain event in months. The Midwest will be dry with high temps ranging from the 70's to the upper 80's. The summer like warmth and the dry weather will maintain a fast harvest pace. This weekend, some rain leaks into the E Midwest, causing a slowdown in activity with totals of .25-1.25″. Dry weather follows in the week two forecast.
Cattle futures were higher last week over the prior week but lower on Friday, with a Cattle on Feed report that leaned bearish relative to trade estimates. NASS reported an August marketing rate at expectations of 100% of last year. The feedlot placement rate was 99% (98% expected), and the September 1 feedlot inventory was at 99% of a year ago (98% expected). While the marketing rate was unchanged from last year, feedlots were not able to gain on currentness. 20% of the inventory had been on feed for more than 150 days. This was steady with June, but the average of 18%.
The cash cattle trade was mostly steady for the week. Cattle sold for $124 across the Plains, steady for Kansas and Texas, and $1 lower in Nebraska and the Western Midwest. A steady outlook is offered this week. Choice boxed beef declined $11 while select slipped $5 lower. Both values are still at record levels for late September, supporting cash trade holding above $120 into October.