Turn-around Tuesday gets rolling in the morning hours.
Row crop futures pushed sharply higher overnight for soybeans and higher for corn, while wheat struggled due to yesterday’s poor technical performance. Adverse South American weather continues to draw money in from index funds that want to own hard assets. Turn-around Tuesday kicked in by the morning hours, and wheat futures tumbled on further selling from yesterday’s weak performance and French milling wheat opening weak at 3:45 AM. French milling wheat is down $6/MT at $283.50, putting heavy pressure on Kansas City wheat which is down $0.13 to 8.34.
Open interest from yesterday was up with heavy volume continuing in the night. Corn traded 17,000 contracts overnight, with March soybeans trading 27,000 contracts. Open interest has corn up almost 18,000 contracts yesterday and soybeans up 1846. This reflects new money flowing into the grain trade. The stock market was higher overnight to a new record, with crude oil prices reaching nearly $77 a barrel. Gold was also up overnight another $10 an ounce to 1819. The reflation trade is widespread, with the last full trading week in place until Friday. US and world GDP rates are anticipated to be rebounding in the new year.
It’s being reported that China is planning approval of GMO corn traits produced by domestic companies to boost its food security amongst tightening world grain supplies. China will be seeking public comment on the government’s decision through January 17, but the GMO is expected to be approved. This will allow China to commercialize GMO seeds/crops, which currently are not allowed be planted by its farmers. However, China does allow the importation of GMO crops to produce animal feed that has not yet allowed their seating. It’s anticipated once approved, GMO corn planting may occur in 2023.
Though it is overlooked for now, dry weather is not only impacting winter wheat seedings in the US but also in Ukraine. One-third of their crop is suffering from poor germination and drought and can potentially lower Ukraine’s wheat production by 3-4.5 MMT’s. Therefore, spring weather critically needs to be optimum.
South American weather remains threatening and friendly to row crop pricing. High temperatures for southern Brazil and Argentina range from the mid-80s to the lower 100s. This heat and dryness is combined distress row crops endured below normal rainfall since early January. Limited rain is forecasted from S Brazil/Argentina for another five days widely scattered showers developing Sunday and early next week. Parana rain accumulations will be from .5-2.00” in the six-day. While RGDS and Argentina remain dry with less than half an inch of sporadic showers. 11-15 day. Returns drive for S Brazil and Argentina.
Cattle futures were mixed on Monday after of firm start from Friday’s COF report which failed to inspire further buying. Negotiated cattle markets were quiet to start the week, but it’s anticipated cash trade will be occurring by tomorrow. Even though cattle futures will trade Friday, New Year’s Eve day, Traders will likely have business wrapped up by no later than Thursday. Boxed beef values yesterday were higher on Monday with the choice cutout gaining $1.54 and select was up $2.23. The choice/select spread was at $27 premium choice in October, and this week it is now to $9.41. This is expected to continue into the opening of the first quarter of 2022 and making a low by February in boxed beef.