USDA crop report out at 11:00 AM CT today.
Grain futures found short-covering overnight ahead of Tuesday's USDA crop production report, with soybeans still struggling with the concern that production data and reduction in exports will push the carry out near 400 Mil. The fact that the bean market has collapsed so hard sets up the prospect that the yield increase of ¼ bushel with minimal reduction in exports creates a bullish impact. End-user demand is not gone but has stepped back after a sharp rally into the opening of November. Inflation and high energy prices still are in the backdrop, with end-user pricing awaiting to step in after what they hope would be a bearish report.
Seasonal price strength returns in the grain complex from the last half of November into the opening part of December, with harvest being wrapped up and South American weather taking the market interest. According to Monday's NASS progress reports, soybeans are 87% harvested, with the corn crop at 84% as of Sunday. La Niña Pacific Ocean temperatures continue to decline, which keeps the prospects of a dry Southern Brazil and Argentine a concern into the winter.
Overnight Chinese corn prices climbed $0.07 to $10.79 US equivalent. They are tracking over $5.25 above US prices, with Brazil and Ukraine corn prices well over the US. This does not mean large exports are imminent, but it highlights that we are the cheapest corn in the world and that China may look to the US again as it did last winter as a source to cool their inflation. End-user buying is just waiting for the November crop report to come and go. No new production data will be available until the January report. The December crop report focuses on supply and demand balance sheets.
Lite snows are forecast for the northern Plains and NW Midwest with accumulations of 1-3″ to occur. The remainder of the Plains and the Midwest be largely dry with much cooler air dropping southward next week. Highs will decline into the 30s and 40s with lows in the 20s and 30s. The weather will feel like early winter wit's h any additional winter wheat seeding to be placed on hold amid freezing topsoils. 91% of the winter wheat crop is planted. Yesterday's crop 13.7 eighths or $0.14 paid, I show $0.39 ratings data show that the winter wheat emerged is rated at 45% GD/EX with 22% of the crop rated poor or very poor.
Cattle futures produced a firm trading session yesterday with a higher close. December cattle rose to a 10-week high while of February cattle contract closed unchanged. Although cash cattle markets are mostly quiet to start the week, few small sales were reported in the Western Midwest at $130, which was a dollar better than last week. The early outlook for this week remains firm. Last week's estimated cattle slaughter margins are at $538/head on the beef, up from $260 last year and a record for early November. With the byproduct value now grown to $168/head, this puts total estimated margins collectively at $700/head. Packers are doing well and will look to pay up for supplies that now tighten into winter.