US dollar below 94.00 brings risk on mentality

Grain futures are on the mend overnight, as end-user pricing became evident after funds steamrolled the market lower yesterday into significant technical support values for corn. Apparent yesterday is the selling was not cash-led. Wheat prices recovered as French milling wheat turned back higher overnight, presently up $4 MT, the equivalency of a $0.12 bounce, helping lead US values higher as the trend is still higher than the only negative input was Egypt blocking at current high prices. Lack of further follow-through selling today will likely have Egypt is tendering again soon. The US dollar weakened under 94.00 overnight, causing risk on mentality for all commodities and indexes across the board.

Soybeans hit values yesterday that many are wondering will be it for now, as veg oil pricing in the world remains firm, implying soybean meal is the driving factor to the downside to carrying beans lower. Extreme multi-decade support lies just below the market at the 300-310 valuation for the meal. Bean oil now makes up over 50% of the soybean value compared to 38% just several years ago.

Yesterday's CPI data revealed inflation, and overnight, China reported that its September inflation rate (their version of our CPI) was up .7% year on year and even with August. China's food prices year-on-year fell 5.2% on the steep drop in pork. The Chinese government achieved its goal of tapping down food inflation while the rest of the world struggles with the highest prices in a decade. The question is, can China maintain stable food values in 2022.

The NOPA is out on Friday with its September member crush data estimated at 156 Mil Bu, compared to 158.8 Mil Bu in August and 161.9 last year.

Lite/moderate and continuous rainfall will impact the Southern and Eastern Midwest into Saturday. Additional totals of .4-1.50″ of rain are projected. N Plains are largely dry for the next 10 days. The next chance of rain is with a system for that E Midwest late next week. That system produces anywhere from anywhere .25-1.25″ of rain. The Plains will miss rainfall for the western crop for just planted wheat.

Rains are favorable for N & C Brazil, whereas Southern Brazil and Argentina continue to remain dry, and La NiƱa strengthens in the equator Pacific waters. As a result, concerns are building for an ongoing drought in that area into the winter.

Both cattle and feeder cattle were lower on Wednesday, with a steady soft outlook anticipated. Cash markets started trading Wednesday with sales in the Texas Panhandle, and Kansas quoted steady for the week at $1 24. Sales in Nebraska were also at $124 but $2 higher for the week. Trades in the Western Midwest reported anywhere from $123-124. The boxed beef market continued lower yesterday with choice down $1.05 and select off $2.65.

As of yesterday, the cattle/corn spread had gained $70 a head over the last month, while at the same time, this cash feeder index is unchanged. The feeder index is at the lower limit of the relationship to the spread, so either feeder cattle are too cheap, or the market anticipates that cattle/corn spread to narrow back up in the coming weeks. Typically, feeder cattle should be worth $175 based off of live cattle and corn relationships.