Grains tumble overnight on Fed monetary policy notes.
Grain futures moved lower to sharply lower overnight, led by the decline in stock indexes and metals, which reacted negatively to the Federal Reserve’s minutes from their December meeting. The minutes revealed a more hawkish central bank preparing to reduce inflation via monetary means. The catch is, lowering monetary accommodations does not create foodstuffs, and South American grain production is in fast decline. Nevertheless, support should resurface in grain pricing into the weekend on a more dire Argentine and Brazilian forecast.
The Argentine and southern Brazil weather forecasts went completely dry into January 18, with the extreme heat of 95-110° predicted. This will be one of the hottest have endured in over a decade. Adding insult to this is that additional rains will continue to slow harvest across northern Brazil. Soybean harvest yields in Mato Grosso and Goias are seeing their yields fall 3-15% below trend lines due to excessive rains and little sunshine. It was this area that was hoped to offset losses in the South. In the next 10 days, northern Brazil is anticipated to endure again 4.00-10.00” of rainfall with temps in the 80s and low 90s.
As the week comes to a close Friday, grain prices will fight macro-economic trends via the more hawkish central bank and its monetary adjustments. Still, there is no denying that supply/demand balance sheets are being readjusted with extreme losses now starting to develop in South America on hoped-for large soybean and corn crops. Demand rationing still will be the theme into the spring of 2022.
On Wednesday, life and feeder cattle futures were lower, with a weaker outlook offered. Cash trade got underway on Wednesday and is expected to continue into today. Cattle in the southern plain sold steady on the week at $138 in the Texas Panhandle into Kansas. Negotiated life trade Nebraska was steady to $1 lower at $138, and dress sales were steady-$2 lower at $220. Box beef market was near steady with choice up $0.11 at $266.93, and select was $0.38 higher at $259.61.