Grain futures start new week firm.

Grain futures started lower Sunday night but quickly found end-user pricing that turned corn, beans, and wheat back higher, as crude oil raced to new 7-year highs over $81.00. European corn and wheat futures moved to new contract highs, with spot corn hitting $7 .38 and wheat $8.50. RBOB gasoline’s premium to ethanol is widening to $0.20 per gallon. Global strength to the agriculture and energy markets is noteworthy. No matter the outcome of Tuesday’s production report, upward price pressure will be evident in grains, with the US values now revealing bargains.

The world food price index is now nearing the highs of 2011-2012. Inflation in the US will be difficult to control, and its anticipated money will be shifting from the plateauing equity markets into raw materials from now into the new year. Even US dairy market prices have moved into a sustained rally, as cowherd’s contract and US dairy export demand remain strong.

The US corn harvest as of Sunday is anticipated to have reached near 55% complete, with soybeans 46-48% finished in this afternoon’s crop progress reports. Central Illinois corn basis continues to improve and is already notably positive for November-December delivery. As US harvest surpasses 50%, supply pressures will fade as farmers opt to store, with Tuesday’s crop production number end-users last hope for a price dip to secure the board, but not necessarily cash product.

The South American forecast is consistent with previous models, with an upper-level high-pressure losing its influence on the Brazilian climate. The normal seasonal rainfall patterns are moving into much of Central Brazil by October 18, with the pace of soy planting outpacing last year. It is Argentina continues to remain a problem. There is little-no rain and forecast across most of Argentina, except for isolated pockets of rain in Córdoba.

Cattle futures put on gains every day last week, closing at a six-week high. Boxed beef values continued to deflate last week but are still priced at record seasonal levels. The choice cutout fell $9 .09, but select was just $2 .10 lower. A seasonal beef rally typically gets underway now through next week. The cash cattle trade has held firm even though the boxed beef declined due to record packer profit margins. Cattle in the Texas Panhandle sold for $124 last week, which was steady, while sales in Nebraska and Kansas ranged from hundred $122-124, which was steady-$1.00 higher for the week. A more seasonal bullish outlook is starting to be offered as fed cattle supplies tighten after November. Short-term technical resistance for December cattle will be heavy in the $131-32 range.