Veg oils around the world make new contract highs.
Grain futures pushed higher overnight for the 6th day in a row of higher movement since the lows were made last Wednesday, October 13. Again, the leadership comes from the veg oil market, with Palm oil, EU rapeseed (up 10% in 2 weeks), Canadian canola, and Chinese soy oil making new contract highs overnight. This pulled US bean oil higher, lifting soybeans to the dismay of many bearish price players for beans. Soybean oil is the bull market that carried beans higher last winter and is reasserting its strength, with the crush being over 50% for oil.
The theme continues to run thick on concern over supply chain issues with fertilizer availability continued to spread across the end-user and investment communities. It’s almost impossible to quantify what this means for global grain yields in 2022, but the issue is that this is the exact wrong year for such risks to be a problem. In recent years, the lack of global yield growth has put the burden on next year’s crops to ease supply tightness on acres. As a result, fertilize demand is going to be massive, with the prospects of some acreage around the world going without fertilizer.
South American weather remains consistent with rains in Central and Northern Brazil, while southern Brazil and Argentina receive little or no rain for the next several weeks. In southern Brazil, Rio Grande do Sul and Parana account for 35% of Brazil’s summer corn production, and they have turned dry after September rainfalls. La Niña continues to become concerning.
Cattle futures were lower on Tuesday, while cash markets remained quiet on limited demand. Beef values did bounce higher with the choice cutout gaining $0.79 to $280. 88 and select value jumping dollar 1.72 to $261.53. The boxed beef market looks to be forging a seasonal low, which should offer a firm cash outlook for cattle this week.