Wheat leads the overnight price strength.
Wheat futures are higher again this morning, as corn and soybeans follow. Tensions remain elevated over the Ukraine/Russian concerns, with Russia demanding assurances that Ukraine does not join NATO. In addition, the US put 8500 troops on alert for ready deployment to Eastern Europe in case of any escalation. Due to this ongoing turmoil, it’s now becoming difficult to find Russian or Ukrainian grain offers as importers/end-users switch to more assured suppliers. This is elevating European and US wheat prices.
Wage inflation is building amid a shortage of workers, making the feds inflation battle challenging to fight. The Fed meets today and announces any updates to its current monetary policy at 1:00 p.m. Wednesday. Financial markets recovered late yesterday on the perception that the Fed will move in a slow and steady progress of rate increase anymore.
Corn futures eclipsed the December highs and are maintaining that strength overnight, as South American corn production estimates continue to fall, improving the outlook for US corn exports. South American premiums for exports continue to rise for soybeans as farmers slow cash sales of harvested yields in the north that have been disappointing. An estimated 7-8% of Brazilian soybean harvest is not completed, allowing yield trends to be more acutely understood.
Rains are ending in southern Argentina, and the forecast model calls for a return to too dry and warm for southern Brazil/Argentina and the wet pattern back to northern Brazil where the harvest is trying to pick up full steam.
Cattle futures tumbled yesterday due to the Cattle on Feed report and weak outside markets. April live cattle held the significant 140.00 price support range on the close, and it’s imperative technical buying resurfaces here or a more extensive break from the first the year will be in play. This seasonal decline from the beginning of the year typically plays out into mid-February. Due to the futures break, the cash cattle trade will likely move at steady money this week, with feedlots picking up the advantage of a $1-2 basis improvement.
The January Cold Storage report showed the total end of December beef stocks at 504 mil pounds, which is 34 mil pounds less than a year ago, but 13 Mil pounds more the November. This marks the fifth consecutive month higher, however, seasonal highs and beef stocks are often marked in December with the declining trend into June.