Mixed start for the post-Holiday start.
Grain markets anticipate a mixed start, with wheat anticipated 10-20 cents higher on the strength of French milling wheat and active world exports over the past three days, while corn and soybeans are expected 3-5 cents lower. Ongoing widely scattered showers and lack of significant heat throughout the Midwest after the next two days, which had been forecasted, have been part of the spiraling collapse in grain prices over the last two weeks, with index funds liquidating on impending recession fears.
On Monday, Egypt purchased another 440,000 MTs of wheat from Russia, Romania, and France. The shipment periods are from early September into late October, and this is on top of last week’s large purchases from the GASC, bringing the total to 1.25 MMTs through October in just a few days to extend forward coverage. World importers are well aware that the recent collapse in wheat and grain prices are not sustainable, with sourcing ability narrower than last year.
World wheat, corn, and soybean stocks/use ratios are either at or near record low; recent price breaks on the liquidation of index funds have seen them shed 60% of their market length, which they held at the peak in the second quarter. Tight stocks will bring in end-user buying into row crops, like the recent wheat sales; as for now, nobody wants to be the first one to buy by catching the falling knife. Wheat prices may have scored their harvest lows last Friday with corn and soybeans in search of that bid.
Widely scattered showers and storms fell across the Plains and Midwest over the long holiday weekend. The best rain fell across the Northern Plains in the upper Midwest on Sunday/Monday with mostly .25-1.50”. Nebraska/E Kansas had rainfall on Friday/Saturday with totals of .5-1.5”. The E Midwest did not receive much moisture, with crops just said to be turning acute for dry portions of IN/OH.
The EU and GFS models do not align, as the GFS is always much wetter/cooler than the EU model beyond the next five days. Excessive heat will prevail across the Central US for a few days, with the Midwest highs ranging in the upper 80s to upper 90s under a high-pressure Ridge. The Ridge retrogrades west of the Intermountain West on the weekend with showers/storms pushing across its eastern flank, producing Midwest 10-day rain totals of point 50-2.00”. Indiana/Ohio look to get the best totals of this, whereas a drier trend holds across the Central Plains, MO and AR.
Cattle futures are offering a firm start for the futures trade this week after the strong performance on Friday. Cash cattle markets were mixed with southern plains at $137-138, while trade Nebraska arranged from $145-151. This heightens the discount that August carries to cash. Beef values last week were lower ahead of the US holiday, with choice down $1.16 while select lost $4.55. Estimated slaughter margins for cattle in the South are at $294/head, still well below year-ago but outside of the pre-pandemic range. Margins on the northern cattle are at $100/head due to the wide price difference. Funds have shed one-third of their net long positions over the prior week and are now at a three-week low of 24,300 contracts. Hedgers covered more than 20,000 contracts of sales during last week. August live cattle look to be locked in a range of 130.00-$140.00.