Wheat prices lift on lack of grain corridor compromise.
Grain futures were higher overnight, led by the wheat market. Russia rejected the UN’s negotiations to allow grain export corridors through Odessa and Belarus to move Ukrainian grain to lessen the international food crisis. Also, less than ideal weather for the EU, Chinese, Brazilian, and Canada threatens the potential for the opportunity to reach trendline yields. This prompted a recovery from last week’s late slide. Last week’s late sharp drop in wheat was in hopes that the UN/WTO could get Russia to allow humanitarian exports. Still, Russia refused without any of the NATO sanctions imposed upon itself before agreeing to those terms. The dropping of any sanctions is unlikely as it’s NATO’s only response.
Soybean oil moved higher overnight, the reverse of the recent crush spread with meal softening. Indonesia again shifted their export policy and announced that permits would be required for crude and refined palm oil. The permits would be valid for six months and will be granted once a company shows they have met domestic palm oil sales requirements to pressure domestic prices. This is creating uncertainty in the Indonesian palm oil trade, as a new program will require weeks to be fully established.
Paris milling wheat is higher overnight by over €3/MT as the European drought worsens. Limited rainfall is forecasted for France/Germany and most of Europe and the next 10 days. This afternoon’s crop progress anticipates 68-70% of the corn planted with soybeans at 53-54% planted through Sunday. US winter wheat condition ratings anticipate a decline of 1% but are still stuck in their current range of the last four weeks.
There is a cool week ahead for the central US weather forecast, with temperatures more like mid-April than mid-May. Temperature highs will be in the 50s/60s with some lower 70s. The Upper 30s to middle 50s will be the evening lows. Seeding spring crops will not make much progress on growth or germination. The EU model has the 10-day rainfall forecast calling for frequent storm systems with the best rains across the S Plains, Delta, and the SE US this week. Then rains shift northward to the N Plains/upper Midwest, where some heavy rainfall returns of .5-2.00”, causing some seeding days to be pushed into June. The 11-15 day period has heat returning with a high-pressure Ridge building across the Plains and starts to extend heat eastward into the Delta.
Friday’s COF report had the feedlot marketing rate at 98% (98$ est), while the placement rate was 99% (96.5% est.) and feedlot inventory at 102% (101% est). This should prompt a softer start, but a substantial recovery of the stock market on Friday and overnight should help deferred live cattle find support. Even though weakness is anticipated this morning, the cattle market is heavily oversold with a lot of negative news already priced in. Last week the choice cutout value gained $3.22, and select was down $0.88. Both values are nearly $60/CWT cheaper than a year ago.