New historical highs overnight for Malaysian palm oil.
Grain futures firmed overnight as palm oil prices moved to new historic highs, cotton trades another limit up to new contract highs at 113.93 up the $5 limit, and canola is ready to challenge its prior summer highs. This has inflation talk circulating with fund managers acutely aware of the rising price of raw materials. The grain trade is cheap in comparison to moves that have been made in energies and softs. The replacement cost for grains via next year’s crop because of elevated fertilizer, chemical, and seed costs have many looking at harvested grain, which is nearing 50%, as something worth storing. End-users are acutely aware that their ability to acquire grain during harvest is reflected in a firmer basis than normal.
Bean oil was firmer overnight as palm oil last night made a new historic high on the October contract at 5,096 RM/MT. This is a record. Tight supplies of palm oil and rising energy prices have produced this explosive rise in recent weeks. As a result, the US soybean oil’s contribution to crush margins is 49%, the highest in 23 years.
Central Illinois cash corn basis bids are $0.35 over, just above last year’s robust levels. Cash basis improving across the Central US, as end-users fear that the cash pipeline will not be refilled as the harvest races ahead. Producers are storing away their corn/soybean crops into readily available storage, which was emptied last spring.
Egypt is in tendering for world wheat for November delivery and is expected to secure a combination of Eastern European and Black Sea wheat at prices that will be at 6-year highs. EU wheat export shipments are massive amid Russia’s floating export tax and record large world wheat trade in August/September. Jordan, Ethiopia, and Tunisia are also tendering for late November/December delivery.
Warm, dry weather continues into the weekend before scattered showers breakout across the Midwest and Northern Plains, producing .25-1.25” of rainfall. The drought-stricken Southern Plains should have a few light showers but totals will be less than .20”. There is no evidence of a storm system produce large, needed Plain’s rainfall for the West to aid seed germination. Central US temperatures will be well above normal, with highs ranging from the 70s to the upper 80s. This benefits the lack of need for drying crops down.
The cattle trade was higher again yesterday, with feeder cattle making triple-digit gains. Cash cattle markets remained quiet through Tuesday, with better interest expected starting today. Boxed beef values were sharply mixed on Tuesday, with choice a $1.47 lower and select up $2.62.The choice/bread fell to $19 .93 choice premium. A turn in the select value in the narrowing spread in the case of an overall low in beef values are starting to form.