Renewed concerns for SA production.
Grain futures moved higher to sharply higher overnight, adding premium back to row crops from the continued threatening South American weather pattern. Last week’s rains were considered more of a sporadic event during a drought with continued dry weather to plague southern Brazil and Argentina and rising temperatures. A few showers crossed Parana and MGDS over the weekend while continual heat and dryness were maintained from Paraguay, RGDS, and Argentina; this will continue for the two weeks. It’s been nine consecutive days that northern and central Argentine crops have endured the 90s/lower 100s, which is starting to lower the yield potential of the October seated crops.
A new concern has two dams breaking in NE Brazil (Bahia) over the weekend due to widespread rains and flooding. Northeast Brazil has endured too much rain with limited sunshine, causing fungal diseases to flourish in soon mature soybeans.
Parana and MGDS early soybean/corn harvests are getting underway, with weeks of dryness causing sharp falls in actual yields. Parana yields are 30-90% below trend, with estimates that the state alone may have lost 6-9 MMT’s of soybean production. Brazilian production is anticipated to fall below last year’s harvest of 137 MMT’s. Down considerably from hoped-for 144 and MT production.
Iraq is to tender this week for 500,000 MTs of world wheat and could secure US HRW wheat today. Iraq is also considering a second tender of 500,000 MTs in the coming weeks amid growing domestic shortfalls.
The South American forecast has the continual expectations of 4.00-9.00” of rain for the northern two-thirds of Brazil through January 13, while southern Brazil and Argentina have limited rain in their forecast with elevated temperatures in the upper 90s lower 100s.
Live Cattle futures anticipate a firm start after a strong performance in the last half of December. December cattle expired at $138.90 versus $113 at the end of 2020. For the final week of the year, cash trade had Nebraska and Western Midwest selling for $140, which was up $4-5. Cattle in the South brought $138, which was $2-3 higher for the week. The outlook for this week is firm amid strong retail demand to restocked coolers following the holiday weekend.
Historically when cattle and feeder futures push higher into the first week of the year from December, a lasting high on futures typically gets in the place that sticks for 6-8 weeks.