Grains correct two days of sharp gains.
After a two-day sharp grain rally to start the week, a corrective mode stalls out the grains overnight, as you have to feed a bull every day. Thursday at 6:00 a.m., Brazil’s CONAB releases their keep production updates, and then Friday is the monthly USDA/WASDA crop production and supply-demand numbers.
Kazakhstan announced it will restrict exports of wheat to 1 MMT and wheat flour to 300,000 MTs through June 15. Exporters must sell 100,000 MTs of wheat and 30,000 MTs of flour into the domestic market at low prices. The Russian war with Ukraine rages on with no sign of ending. Putin indicated overnight the world will face a food crisis and that Russia must eye its own food exports to hostile countries because of NATO’s economic sanctions. He also stated that a shortage of fertilizer is inevitable as Russia supplies 13% of the world’s production. Demands for the payment and Rubles further complicate future material exports from Russia.
Today at 1:00 p.m. the US central bank releases the minutes of their March meeting and many are looking to gauge how hawkish the Federal Reserve is from what was said behind closed doors. The Federal Reserve’s balance sheet sits at $9 trillion, and many are wondering how they’re going to start cutting their balance sheet. World equity markets are now in retreat yesterday and today, as is being anticipated the Federal Reserve will be raising interest rates another by 2.5% through year-end. Yesterday the US 30-year mortgage rate traded above 5%.
Central US plains weather forecasts for the next two weeks remain arid with just a few spots of moisture while warming temperatures in the 6-10 day period as regular bouts of wind. Minnesota and portions of the upper Midwest will endure heavy snows through next week with accumulations upwards of 2 feet. The drought and snow are not giving an easy and optimistic start to the 2022 growing season.
Cattle futures continued their liquidation pressure on Tuesday, with the most pressure on feeder cattle due to the corn price rally. Cash cattle prices remained steady at 138 with tops at 140 which was steady-$2 higher from Monday. Most of the plains traded steady $138 in the South and $1 40 in Western Midwest. Box beef on Tuesday had the choice value making the largest one-day gains since January of $3.49. Select was also higher by $1.20. Box beef prices are as strong as last year at this time, but at least live cattle are $20/CWT higher than the same period last year. Life cattle are at precarious support near 133.00 that needs to hold, or cattle deteriorate into a downtrend that could have summer live cattle trading at 128.00-130.00, last summer’s and fall average spot trading prices.