Grain prices pushed higher overnight

Grains are higher to sharply higher this morning as soybeans and wheat pushed double-digit gains. Chart action on soybeans holding the 20-day MA for several weeks after closing above it has triggered further short covering and buying interest since China returned from their Autumn Harvest. French milling wheat is €3.00 MT higher this morning, with an equivalency of 9 cents, bolstering short covering and new buying in the wheat trade after open interest fell off last week.

It is becoming a timing issue for Russian farmers, with limited rainfall offered over the next 10-14 days across central and southern crop areas. Seasonally, Russian farmers will want their winter wheat crop planted by November 1 for proper route establishment heading into winter. Russian October FOB wheat is still offered at $216/MT while world values again try to increase.

Friday’s soybean option open interest total was down 107,819 contracts, while Chicago wheat was off 50,645 contracts. The liquidation amounted to 12% of the total open interest in corn, 14% in soybeans, and 24% in wheat. Short put contracts became short contracts that are now being pinch liquidated.

Better rain had been hoped for in northern Brazil late this week, but the rainfall never pulled forward in the forecast and was diminished on the weekend and today. The GFS model stays hot/dry across N Brazil with limited spring seeding to occur as farmers still wait for seed germinating rainfall. The prospect for N Brazilian rain is limited into October 7 which now has Brazilian farmers on edge and the board of trade. High temperatures hold in the 90s to lower 100s. Traders are now watching and paying attention to the northern Brazil weather forecast, with just one percent of the soybean crop planted through Sunday. Typically, planting would’ve started September 7.

Friday’s Cattle on Feed report was considered neutral compared to pre-report estimates. Cattle and feeder cattle futures closed higher last week, and a steady to firm start is offered this morning. The active cash cattle trade had held off until the end of the week but was higher in all regions. Live trade in the north was up $2 at $184, and dressed trade was steady $1 higher at $290-292. Meanwhile, live sales in the South were up $3 and $183.

Cattle slaughter for last week was off 10,000 head and was 17,000 head less than a year ago. The average carcass weight was 26 pounds heavier than a year ago, and production was still 0.4% higher than a year ago. The choice beef cutout was down nearly $5, and select lost close to $6 for the week. Box beef typically drifts in price into the first half of October. Friday’s COT report showed that for the week ending September 17, funds were late buyers for the second week of just 632 contracts against commercial selling of 1,282.

The cash cattle trade found an early seasonal low with the October/December cattle spread, which is now near parity with the cash market.