FED meeting starts today.
It's a mixed morning for grains, with wheat and corn softer while soybeans mount a mild recovery. Outside markets are stable as the Federal Reserve starts its two-day meeting today with the interest rate hike announcement tomorrow at 1:00 p.m. The trade is now anticipating a potential .75% interest rate hike. If the Federal Reserve stays at the indicated .50% rate hike, it stated back in May for the rest of the year, then look for a sharp upward price recovery in commodities and stocks, as the market will take it as an indication that the Fed is concerned about stalling out the economy ahead of the midterm elections, rather than slowing inflation.
Yesterday’s data from the NASS reported that 97% of the corn, 88% of the soybeans, and 94% of spring wheat are planted. Compared to the March planting intentions report, some 700,000 acres of ND/SD/MN of corn are unseeded, 666,000 acres of spring wheat, and 3.1 million acres of soybeans. The soybean acreage number will garner attention as the most significant risk of not being seeded and is tied to the recent overall strength that November beans have held relative to corn and wheat over the last two months.
Crop ratings had corn at 72%, down one percent from last week, with the first rating on soybeans at 70% and 54% for spring wheat in the GD/EX category. What’s interesting is that in the winter wheat category, 42% of the crop is rated poor to very poor, a new seasonal high. 10% of the winter wheat crop is now harvested, with cutting getting underway in Kansas, which is reflected at 2%. The upcoming heat and dryness will start to lower crop rating data as we head into July. This weekend is a three-day weekend with Monday markets closed for the Juneteenth holiday. Look for grain prices to elevate into the weekend with the upcoming warmer/drier weather.
Central US weather forecast shows the EU ensemble maintaining a hot/dry forecast for the next two weeks. The GFS offers tropical storm activity, which is typical this time of year, always trying to show a chance of a wetter, cooler forecast. The euro model shows week three continuing heat and dryness into the first week of July. The upcoming extreme heat will quickly advance a delayed crop, but some soil moisture reserves will be drawn down. 100-degree temperatures which occurred across KS, NE, and MI yesterday are extremely rare for mid-June.
Cattle were sharply lower yesterday with the outside markets that spilled over weakness to every commodity. Prices did find buying support rebounding off session lows, and today, outside market activity should help create a steady to better opening. Retail demand is the focus once we get past procurement for the Father’s Day weekend holiday. Box beef products did start the week with a soft tone with choice down $0.78 and select lower by $1.44. The load count was lite at 93 loads. Carcass weights did drop another 5 pounds last week, maintaining the trend in weekly production with last week at 540 million pounds. This is still larger production compared to last week, and last year, as slaughter numbers remain strong despite the lighter weights.