Grains Rebound after three days of liquidation.
Grain futures are in recovery mode on Friday after three days of heavy liquidation on the “fear” of recession which is not based on “fact” that the grain trade will slow in the coming quarters. The blinders are off today, and the market is focusing on the prospect that an amplified strong high-pressure Ridge will return to the Central US following the July 4 holiday weekend. End-users are looking at the best price offers since the Russian invasion of Ukraine, and improving demand is anticipated, with coverage being boosted for the fourth quarter. Through the demise, the cash basis has remained strong for Central US corn, soybeans, and HRW wheat.
Next week Thursday, June 30, NASS will release their June Stocks/Seeding report, and historically the data provides surprises to the market. This occurs ahead of the always volatile July 4 weather holiday. This year there is one extra trading day after the June 30 data before the three-day weekend.
The Central US forecast will experience another warm/dry day across most of the Central US with a few lite showers developing overnight and Kansas, S Iowa in central Minnesota. Rain totals will be from traces to near .50”. From here forward, a below-normal rainfall and variable temperature pattern will be offered over the next 10 days. A high-pressure Ridge will be compressed south and west into early next week, allowing for seasonal upper 70s to low 90s across the Midwest with several chances of convective showers across the NW Midwest and plains. The E Midwest and Delta will be shortchanged on rains which will deepen soil moisture losses. The extended range forecasts on the EU are different than the GFS. The GFS builds a strong high-pressure Ridge over SE US while the euro model places the Ridge over the S Plains/Inter-mountain West.
The cattle market, similar to grains, experienced selling every day this week. This afternoon is the June COF report with on feed estimated 102%, placements at 100%, and marketed at 103%. The market will be watching the placement numbers to gauge the cattle crop going into the end of the year and early 2023.
Yesterday’s Cold Storage Report showed total red meat supplies in freezers were down slightly from the previous month but up 20% from last year. Total pounds of beef in freezers were down 2% in the previous month but up 25% from last year. Both beef and pork stocks came in above trade estimates. The increase in storage for both beef and pork is significant. Box beef has been dropping over the past two weeks, and more beef and storage as the negativity. The report shows people are using less meat, both beef, and pork, compared to a year ago. Frozen boneless beef in May was at record storage for 2022.