Grain futures firm ahead of a potential Turn-around Tuesday.
Grain futures were firmer overnight, as the US dollar weakened below of prior week's low for the first time since the end of August. Creating a sense of a US dollar top in the making has a risk-on attitude in play. Metals moved sharply higher overnight on the recovery, while crude oil went back to retest highs made in yesterday morning's session.
Wheat prices led as Russian values continued to firm. Russia's grain export structures are heavily weighted towards the spot market moving forward, and current FOB quotes and taxes are far from hitting a seasonal high. Currently, wheat, flour bread prices in Russia are still rising, but exports are slightly slowing on the margin.
Malaysian palm oil was closed today for a national holiday, but the Monday settlement was at a historical price. Rapeseed oil in Europe continues to move higher, with cash rapeseed quoted at $0.80 a pound. The goal of the market is to switch consumption to soy oil and sun oil.
Global feed grain prices are higher now in favor of the US market, with Brazilian corn not offered beyond November and Argentine cargoes offered some $0.30 a bushel above US origin for Jan-fab arrival. Slow harvest and Ukraine, along with Ukrainian sales to China, have pushed FOB basis there to a $1.70 over Chicago futures. US Gulf FOB basis is $1.00-1.40, and weekly export sales paces should become robust in the next 30 days. Chinese corn overnight rallied $0.08 to $10.15/Bu.
Observation shows that this week's CRB index is again making a new multi-year high and has done so every week for the last five weeks. As a result, commodities like energy and cotton have become extended, but grain pricing is seen as one of the last cheap raw material commodities to purchase.
The South American forecast is near ideal for Brazil but worries us are developing for Argentina because of extended dryness. Soaking rains will pause in Central Brazil into early next week returns with vigor later next week. Amounts of precip of 1-3″ will fall across most of Brazil except for the Rio Grande De Sol, far Southern Brazil, and all of Argentina. Dryness in the South is anticipated through November 3.
Cattle retreated yesterday while feeder cattle fell $2 as the corn market rallied for 1/3 session in a row from the October 13 low. Cash cattle markets were quiet to start the week, with trade not anticipated to Wednesday. However, early week outlook is firm to steady higher. Boxed beef values were weaker on Monday, but bearish momentum is slowing. The choice cutout value was down $0.15 at $280.09, and the select value was $0.81 lower at $259.81. Since the August high, the choice cutout value was down $68, and select is off $60. But even after what is considered a historical season correction, both cutout values are holding at record seasonal levers for mid-October. Massive packer margins absorbed the box beef setback.