Overnight strength from Crude oil fades.
Crude oil pushed to new contract highs overnight, with North Sea Brent crude touching $86, pulling the soon to expire November WTI crude oil contract to 83.87. This offered support overnight to grains and soybeans, but that faded by the morning hours after last week’s multi-day recovery bounce was sold into. French milling wheat also opened to new contract highs before rolling over on profit-taking and is currently down $2.25 at 273.75 MTs.
Export sales to China on soybeans and wheat are anticipated to be announced, with China back securing supplies for future needs. China’s soybean crush margins are back to record highs for imports from January onward. In addition, China is experiencing a sharp rise in its PPI inflation rate and will seek to secure commodities on breaks.
US row crop harvest is anticipated to get beyond 85% by the end of this week for soybeans, with corn at 75%. Receipts to merchants are already in decline, with well over half the crop harvested now. Near-term breaks on grain pricing will be end-user opportunities to buy. Lows were likely scored in the grain complex last Wednesday, October 13.
The South American weather forecast reflects near to above normal rainfall across all of Brazil over the next ten days with totals of 1-3” forecasted. The rain will speed spring seeding along with soil moisture restoration. The Argentine forecast, on the other hand, is arid with warming temps accelerating soil moisture loss. As a result, concerns are growing that the Argentine drought is becoming elevated amid La Niña.
Last week, the cash cattle trade was mostly steady to higher, with sales at $124 across the Plains. Sales were steady and Kansas and Texas and steady to $2 higher in Nebraska, keeping the outlook firm for this week. The beef market traded softer last week, but the negative momentum has slowed. The choice cutout value was down $3 .03 at $280 .24 and the select value drifted $2.12 to $206.62. December cattle is nearing major resistance near 132.00.