Grain futures start week under selling pressure.
Grain futures start the last full trading week of the year under pressure, with profit-taking noted with corn and soybeans ending last week near the best levels of the month. Drying weather is noted for S Brazil and Argentina, but lite scattered showers keeps buying interest at bay until the forecast becomes good more threatening.
World financial markets have stock markets back to record territory, even as US and world inflationary pressures build. US dollar is slightly higher, with energy futures turning lower after moving higher in the Sunday night session, trailing the stock market strength. Paris wheat futures are lower by a dollar 50 in MT, while Chinese corn futures are up $0.11 to $10.67 and soybean meal up $2.80/MT to $518.35 4/MT. Chinese corn prices continue to maintain strength on tightening supplies due to strong demand from their livestock feeders and starch industry. In addition, China is expected to issue TRT you import licenses for corn/wheat. The release will have Chinese importers securing US corn before their expected activation sometime in late 2021 or early 2022.
Next week the focus will be more on South American weather and the exceptionally strong cash markets in the US. Southern Brazil and Argentine weather forecasts offer a few light showers with heat restarting by this weekend. The market is slow to anticipate any losses from trendline, but a more bullish reaction will start to evolve next week if weather models do not improve. US farmers are still holding nearly 40% of this past year’s crop due to concerning South American La Niña weather pattern.
As anticipated, the South American weather pattern is becoming static with the weekend forecast. Weekend precipitation fell across La Pampa, far southern Córdoba and Buenos Aires with totals of .15-1.75”. The rains occurred on the southern edge of a high-pressure Ridge, with most of the northern two-thirds of Argentine and Southern Brazil Drive. High temps range from the 80s to lower 100s, with extreme heat located over Paraguay, Mato Grosso del Sol, and NE Argentina. The high-pressure Ridge holds across Argentina and S Brazil, producing a below-normal pattern for another two weeks with just a few lite showers. The 10-day rain totals range anywhere from .25-.85” of rain. This is about half of normal expectations with high temps in the lower 80’s to mid-90s.
Live cattle futures were lower on Friday, while cash cattle had wrapped up mainly on Thursday. It is the last full week of volume trading for cattle with packers dealing with holidays the following 2 weeks on Saturday. Last week cattle in Nebraska sold for $138-140 on a live basis which was steady to $2 lower, while dressed trades were steady at $220. Live trade in the southern plains was quoted mostly at $138-140, which was $1-3 lower than the prior week. The cash market outlook is steady to weaker in the next two weeks. The box beef market continues its decline with the choice cutout following $9.82 last week, led by deep losses in the chuck and rib values. Seasonally, the beef market tends to forge a low in the final weeks of December, with a firming price trend following into the first half of next year.