Soybeans lead overnight recovery.
Grain futures recovered overnight with soybeans leading the advance on the developing concerns that Southern Brazil and Argentine weather forecasts are arid with warming temperatures the next 2 weeks. Wheat futures stumbled on further liquidation while corn pricing is caught between the weakening wheat value but concerning Southern Brazil corn crop weather.
The stock market along with energies and metal markets recovered yesterday after the Federal Reserve’s announcement that they are moving forward with the tapering of the QE programs at a faster rate, along with 3 plant interest rate hikes in 2022. Fed chair Powell stated that it will be data-driven, and implied that interest rate hikes will be dependent upon the economy still maintaining a positive slope. This allowed stocks to reverse sharply yesterday and overnight, giving support to the overall commodity complex.
Yesterday’s NOPA crush number, though lower than the expected on total beans crush, was bullish because of the lower oil factor per bushel and the drop in soybean oil stocks. Along with the announcement of 2 new renewable diesel projects that will retrofit refineries which will become operational in 2024, biofuel diesel use will be growing in 2022 and beyond.
During yesterday’s sharp decline in world wheat prices for French Milling wheat and US values, Russian interior wheat prices were little changed. Yesterday it was announced that the Russian government quota on February 15 may be lowered from 9 MMTs down to 8 MMTs. Yesterday’s heavy winds and dryness in the Plains will likely keep crop conditions concerned but is not supporting wheat values yet. It’s spring weather that matters.
South American weather has Argentina and S Brazil holding in a dry pattern for the next 2 weeks. A high-pressure Ridge holds across Northern Argentina into Southern Brazil into December 26. This Ridge spawns above normal temperatures with daily highs reaching in the 90s and lower 100s. North of this high-pressure Ridge, Northern Parana, and central Mato Grosso do Sul have an active jet stream producing heavy rainfall. The South American weather pattern has stagnated with rains and Northern Brazil and drought conditions developing in southern Brazil/Argentina. Reduction in trend line yields are in the making.
Cattle futures were lower yesterday with the cash cattle market finding Texas Panhandle cattle selling $4 lower from last week at hundred $36 and $2 under Kansas trade that developed on Tuesday. Sales in Nebraska were limited to dressed trade at $218 which was $2 lower than the prior week. Cattle slaughter at midweek totaled 364,000 head, down 3000 from last week but still 8000 head more than a year ago. The boxed beef market was softer with the choice down $0.46 and select off $1.35.