Grain futures continue weakness from yesterday's price reversals.
Grain futures are lower across the board, reversing the early evening strength. Covid infections are rising sharply in Europe, and Austria is announcing lock downs, with possibly Germany doing it next. These fears of European lock downs are putting heavy pressure on oil prices that we had been projecting could decline into November 19-22. This brought selling overnight into the biofuel pricing scenario, which is still awaiting its EPA mandate announcements. Corn and soybean oil led the evening setback in price.
Overall, US corn ethanol and soybean crush margins are holding at historically high-profit levels, with plants running near full capacity. The domestic draw on the corn/soybean supply has strengthened cash basis across the Midwest. As grain prices decline, farmers' selling will dry up, forcing further push if plants want to extend and lock in profitable margins. Since last Wednesday, aggressive new fund buying has potentially run its course for the near term with a corrective pricing nature that is gut checking the recent 7-day price run-up.
South American weather forecasts went slightly wetter than the previous two days, with the EU model offering some lite showers for Buenos Aries late in the 10-day forecast. Rain forecasts are primarily under 1.00″ of rain. Still, traders typically always read more into forecasts than the outcomes when you're in a dry period. Of course, N and C Brazil continue to have above-normal rains persisting in the 3-5.00″ amounts, as this area would prefer to ship this rain elsewhere. Argentine temperatures trend warmer in the opening of December with the high 80s and lower 90s.
Cattle futures continued to press higher yesterday, with cash trading at $1-2 better than last week in the $133-134 range. Cattle in the north moved at $2 09-211 on a dressed basis which is $3 better than last week. Boxed beef values were lower again yesterday, with choice dropping $2.31 and select off $0.90.
Trade organizations and senators now are becoming more vocal against Brazilian beef imports with the BSE outbreaks they are experiencing. On Thursday, Sen. Jon Tester of Montana introduced a bill that forces the Sec. of Agriculture to halt imports of Brazilian fresh beef due to questions about what processes Brazil uses to detect animal disease and other potential foodborne threats to consumers. The question is, will it get past lobbyists and, will the current administration allow it with the explosive inflation already on red meat? This has been part of the cattle futures strength in recent sessions.
USDA Cattle on Feed report is out after the close today at 2:00 p.m.