Commodity values rebound from Tuesdays washout.
Grain futures are firmer this morning, recovering from yesterday’s wide-ranging equity and commodity liquidation. A slow return of risk-on exposure is working its way back from investment managers, as the EU government reports reveal what African doctors stated over the weekend. The omicron variant is mild in less lethal than the Delta. Infections are reporting mild headaches, tired feeling, and a modest fever.
Yesterday the Federal Reserve chairman Powell indicated that inflation is no longer transitory, implying inflation is becoming more stubborn. This will compel fund managers to be owners of a host of commodities heading into 2022. OPEC members are prepared to meet and discuss their future supply policy on Thursday. No change is expected.
The Biden administration EPA did not announce the 2020, 2021 or even the 2022 biofuel mandates that need to be done by November 30 according to the 2007 energy bill. The lack of an announcement has many postulating that the EPA’s waiting for the “Bankrupt Better Bill” to be passed, which has elevated funding for the biofuel demand, including renewable jet fuel, before making the mandate announcement. This could take all of December or even push this announcement well into early 2022.
A high-pressure Ridge is starting to become stationary in S Brazil/Argentina next week, with any rainfall to be extremely limited into mid-December. This potentially brings back new concerns for the production of soybeans and corn in this South American region. The world is counting on trendline or better yields out of South America. More rains are maintained into the 7-10 day forecast for Eastern Australia, again hampering the harvest and quality of this new crop.
Cattle futures were lower yesterday with the bulk of the commodity world and are called steady firm this morning on the US and world asset prices recovery. Cash cattle markets were quiet on Tuesday, with initial sales this week taking place at 137-138, which is $2-3 lower than last week’s high watermark. Boxed beef values were also lower, with the choice cutout value dropping $5.90 and select was down a $1.73. The 140-141 range of February cattle has become a hedgeable barrier, with April cattle also struggling over 143.