Soybeans post new contract highs overnight.

Grain futures pressed higher overnight with old crop and new crop soybeans making new contract highs for the year. (July beans are spot, and the spot high made in March is still at 1759.6 to clear.) Corn also followed beans higher in a sharp manner on the possible ridging in the western Midwest starting mid-June which creates concern that summer weather is starting too soon. Row crop values were considered exceptionally cheap after the break into June 1, with end-user pricing heavily prevalent.

Soymeal futures had rallied sharply yesterday from their lows and had follow-through buying overnight as crushers may be taking downtime in part for maintenance and lower margins along with the drop in soybean supplies. Soy oil has also been on the defensive versus soymeal on the spreads as a steep drop in Brazil soy oil premiums have occurred, along with Indonesia also lowering their palm oil export tax.

Wheat prices traded on both sides unchanged but moved firmer overnight as strength in beans and corn became more prominent. Managed funds are now net sellers of Chicago wheat and are short. Headlines of Ukraine food exports have been the dominant factor in the Russian/Turkey meeting today over mine sweeping and Turkey becoming the chaperone of the Black Sea region to get exports renewed out of Ukraine. The inevitable lack of this Ukraine export talk coming to fruition will create a sharp recovery rally in wheat pricing. The most frustrating part about this story which is becoming propaganda, is that Ukraine is not invited to the meeting with Turkey and Russia, who are working out the logistics, making it highly unlikely it will be accepted.

In the recent selloff in wheat, US SRW Gulf FOB wheat is now the cheapest in the world at $410/MT and is, in fact, $20/MT below Russian FOB offers. This Friday’s USDA supply-demand report will have the USDA juggling wheat balance sheets again, showing the shortfall of “available” supplies to wheat buyers, highlighting the discount of US wheat finally to the world.
This week’s forecast for the central US is favorable with cool temps and additional rain. However, the primary forecast models are progressively drier with het building across the S Plains and into the W Midwest in the two-week timeframe. This is creating a concern for central US heat and dryness amid a La Nina pattern for summer.

Cattle futures mounted a strong recovery yesterday as a two-day correction to start the week was met with money flow on strong outside markets that produced encouraging consumer interest. With cattle weights down 25 pounds over the past several weeks, this is helping reduce production a bit while slaughter numbers stay consistently heavy. Yesterday’s cash market trade remained quiet, with asking prices at $137-138 with no bids defined. Cash trade is likely targeted at steady money for now and will develop today or Thursday. Choice demand was supportive, closing higher by $1.84, but select was softer by $1.53. The load count was moderate at 137 loads. The choice/spread has begun to widen now, trading at 21.86. Lower carcass weights have lowered the quality levels, and retailers are paying up for the choice beef product to meet demand. Feeder cattle are now consolidating recent gains with strength in the feed market becoming relevant in a burden on feeders unless deferred live cattle maintain further strength.