Commodity and equity markets into retreat today.
It’s correction day across the commodity complex. With the first of the month behind us, we can see that corn made a high Monday and soybeans yesterday morning, and now a corrective phase and consolidating his in front of us. However, nothing changes the fact that record low old-crop supplies of corn and soybeans cannot be altered, only rationed, price fluctuations still occur but from extremes.
Export sales this morning showed corn at 1.1 MMT’s, within the center of the range of estimates, with soybean exports at 1.18 MMT’s, above expectations. As a result, corn only needs to see exports of 650,000 MMT’s a week now through September 1 to meet the USDA’s target.
Commodity futures across the gauntlet are all lower this morning, along with stock indexes and energies, as macro markets are going through or risk-off period due to Facebook’s earnings being a major miss yesterday by 20%. Comical how the world locks hands together and moves in unison at various moments. As we advance while the rationing process is played out for grains, this is one of the risks. Outside world economic features that become tumultuous will have these adverse reactions to markets that should not seem relevant from time to time.
Argentine's extended forecast shows dryness into February 19 with rising temperatures beyond the next five days. This is the extent of the 10-15 day model, and concerns rise beyond that if any regular rain event comes in on the forecast horizon. Without regular rain soon, February/in early March later plant corn losses could reach 18-20% relative to trend. So far, long-term models do not show any pattern change in the opening days of March.
Next week is the USDA’s February WASDA report on Tuesday the ninth, and it’s fully anticipated that South American yield losses will start to be incorporated. The question is to what extent will the USDA start reflecting these. CONAB is under a mandate from the government to get the crop size as close as possible, so expect another sizable round of production cuts. Brazil wants to attach farm aid to this crop report.
Live and feeder cattle futures pushed sharply higher yesterday, with April 22 and forward live cattle contracts all posting new contract highs. Cash cattle trade got underway late yesterday, with Nebraska $3-4 higher for the week at $140, and dress sales were up $4 at $222. IA/MN at sales quoted $3 higher at $140-141 live, and dressed trade was $4 higher at $222. Cattle slaughter through Wednesday totaled 362,000 head, 11,000 head more than last week, and 8000 head more than last year. The choice/select spread narrowed to a $3.58 choice premium. April live cattle are now technically targeting 150.00-151.00.