A new string of contract highs to start Thursday morning.
Fresh new contract highs overnight for French milling wheat, US winter wheat and oats futures. Preliminary open interest shows the influx of new funds continues to morph. Corn open interest yesterday rose 12,695 contracts, soybeans up 13,190, while wheat was up 2,868. Soybean meal was down 428 contracts which would imply on a strong rally, when open interest declines, it would suggest that rally has become mature. Still, soybean meal maintained strength overnight better than bean oil.
Energy values continue to buckle in price as the US and China are anticipated to tap their strategic reserves to alleviate stock tightness in the absence of OPEC increasing production or US shale reluctant to increase in the near term. This created a drag on the biofuel usage thoughts yesterday, with the EPA still anticipated to announce updated mandates before the end of the month. Corn futures are stalled at down-trending resistance on the charts looking for a technical breakout. Chinese corn futures still hover in the $10.77 price area, with the Dalian January soybean meal contract at $501.85/MT.
Wheat export tenders have been a flurry this week, helping push wheat values higher, as even Iraq has been forced to tender twice a month for 500,000 MTs of wheat due to their extreme crop shortfall. Russia is expected again to raise their weekly floating export tax by one-$3/MT on Friday to account for the ongoing rise in its FOB wheat prices. Russia’s big sale of wheat are Algeria yesterday at 800,000 MTs has many wondering if Putin will soon become more restrictive on their grain export policy rather than waiting until February.
South American weather patterns continue to stay drier in the long-term 2-week weather models, which prompted yesterday’s price explosion and beans. A developing drier/warmer pattern for Southern Brazil and Argentine into mid-December is becoming the focus and concern. Near to above normal rains persist in Northern and Central Brazil, where they would prefer now sunny and drier conditions for the crops to bloom and get into the pod phase. 3-5” of rain are anticipated in Northern and Central Brazil for the next ten days.
Cattle futures closed higher on Wednesday, with a firm outlook anticipated for today. Cash markets were thinly traded with prices steady compared to a week ago at $132 live and $207 dressed. Packers are hoping for a steady-lower trade, but momentum is on the seller’s side and the outlook continues to remain higher with offers at 134.00. The monthly Cattle on Feed report is out Friday afternoon.
An observation of the November Livestock, Dairy, and Poultry Outlook released on Tuesday shows strong price differences between the USDA price forecasting of feeder cattle and the current CME feeder cattle futures prices. The USDA projects 1st quarter steer prices at Oklahoma City $153, with a 2nd quarter price of $151 and a 3rd quarter price of $156. A review of CME feeder cattle futures show significantly higher prices for all three quarters, with January feeders near $160, April-May are around $165 and August feeders at $173.