Stronger CPI keeps pressure on the FED
The grain trade overnight was lower as yesterday’s strength in corn and beans went into correction after outside markets tumbled hard rolling into today’s CPI report. The Consumer Price Index this morning came in the highest in 40 years jumping 8.6% year-over year. This set outside markets with a risk-off money flow, as the Federal Reserve will be on course for continual interest rate hikes, with a whisper thought that they may be forced to escalate their plans. This had the US dollar again higher overnight to 103.75, with gold down $25 this morning at 1,828.
Today’s June WASDA crop report is out at 11:00 a.m. The market will be intent on watching the USDA making cuts to the Indian production and adjustments of stocks to the balance sheets more specifically towards old crop corn and soybeans. Exports have been stronger in April and May then the balance sheets had projected. Cash markets remain strong as end-users are hoping for a negative price reaction to today’s data in order to procure lower reaction prices.
The UN/Turkey/Ukraine and Russian export corridors have remained in a bottleneck. Ukraine’s wheat harvest starts in just a few weeks and storage facilities are still over half full from last year’s crop. Ongoing exports out of Ukraine via rail and truck are limited to near the 1.5 MMT range. Difficulties will become apparent in the coming weeks when Romania, Poland and Bulgaria looking to harvest their crops, tying up their rail. Large amounts of Ukrainian grain are going to end up on the ground, subject to extreme losses.
The Central US weather forecast shows another few days of seasonal temperatures before models build and amplify a high-pressure Ridge. This Ridge shows stability into late June with Central US high temperatures routinely in the 90s. This rate is forecasted as one of the strongest Central US Ridges in years. Late planted tender US crops can endure near 10 days of extreme heat and dryness, but become worrisome as a summer weather pattern starts to establish. 10-day weather models just show lite chances of rain for the central Midwest through June 20.
Cattle futures corrected yesterday after the prior days of strong gains. Cash trade developed at $136 which was higher by $1.00 the prior week for most of the southern business. Northern cash sales were several dollars higher at $142-143. Northern dressed trade was at $225-226. The cattle market is looking now at a basis flip, as shorts get squeezed out and the Packers put more pressure to pay up for cattle, lifting the futures market over the cash market as weights continue to come in lighter. Yesterday the choice trade closed $0.64 lower while select was $0.20 higher. The load count was soft at 108 loads. Cash trade is mostly done this week with offers resting at 138-139.