Grain futures start the week higher, soybeans make new contract highs.
Grain futures pushed higher Sunday night, with soybeans making new contract highs as the market deals with the potential for additional South American crop losses. A lengthy period of dryness now returns to Argentina, and the two-week forecasts keep any meaningful precept isolated to the central and northern Brazilian region, which is classic La Niña fashion that was in place during December. Regular Argentine rainfall is not indicated on short and long-term models for Argentina. Long-term concerns for soaking rains in Parana ahead of the Safrina corn seeding are nonexistent. 17% of Brazil's total corn production comes from this region.
The USDA updates South American production this Wednesday, with Brazil’s CONAB having its February crop report due out Thursday morning. Markets continue to readjust to the falling South American supplies and the associated dramatic change to world trade supplies. US demand will be on the increase into the spring as all import sectors compete for a supply that has been reduced substantially since the comfort levels that were placed on paper last November.
The EU and GFS weather models for South America through February 22 keep isolated rain showers in central Brazil and to the north. As a result, a noticeable blocking pattern is being established. Two-week precipitation accumulations in Argentina and southern Brazil, including the heavy safrina producing corn state of Parana, has scattered showers of .80-1.30’ with only 20-40% of normal rains. Temps after February 15 return to above normal levels in Argentina.
Cattle futures ended last week with strong gains, while the cash cattle trade also saw cash moving at $140. Last week, the estimated slaughter cattle margins turned down but are still at $395/head, which is still a record for early February amid the wide be/cattle spread. April live cattle are targeting 151.00-152.00 but are currently overbought.