Turn-around Tuesday gets underway in the night session.
Grain futures are mostly lower after a mixed opening night session. The video conference Monday evening between Pres. Biden and Xi did not go into any details of trade policy or supply chain issues. Instead, the conversation was on managing competition between the world’s two largest economies. The US dollar is unchanged following the signing of the US $1 trillion infrastructure package.
Grain futures have become overbought, with wheat prices reacting from yesterday’s highs and soybeans having challenged the October highs and into retreat. Grains are likely to experience more mixed trade during the next several sessions with a more corrective nature in pricing during the day. 8:00 o’clock export sales announcements will be watched and used as a “buy the rumor, sell the fact” mentality if it creates morning strength.
The IRI’s updated their Dec-Feb climate forecasts showing dryness in Argentina and Southern Brazil and featured high odds of continued dryness across the US southern plains and the bulk of Russia’s winter wheat belt. Just 23% of the winter wheat crop in Texas is rated as good/excellent, and good/excellent in Montana sits at 7%. Ongoing delays in US SRW seeding across the Eastern Midwest also raises germination issues as sustained freezing temps arrive.
Needed rainfall is forecasted in the far Southern Brazilian areas but otherwise, it’s consistent with prior output. Forecasts do lean favorable in the near term, with dryness in Argentina allowing soybean seeding to move along in a timely manner. The EU model 2-week forecasts in Argentina features just 20-35% of normal rainfall. 16-30 day guidance remains arid there and in southern Brazil. This is not concerning yet, but it’s the beginning of a potential La Niña event that needs to be monitored.
The cash cattle markets are anticipated to trade Tuesday or Wednesday, with cattle feeder’s looking to build on last week’s strength. The boxed beef market was soft on Monday, with the choice cutout down a $1.10 and select was off $2.25. However, technical momentum is positive for live cattle futures, with strength anticipated for December cattle to challenge 134.00.