Turn-around Tuesday for the grains.
Grain futures were lower overnight, with soybeans leaving the decline. The Pro Farmer Crop Tour is the low water benchmark for corn yields, and prices have acknowledged that, along with the prospects of a record bean crop. The focus is now shifting to demand, which the USDA may have overstated given the current strength of the US dollar into new 20-year highs. Recessionary worries again are creating the selling, as the focus leaves the supply concern that has created the recent price rise, to one of that demand may be faltering.
With the Chinese economy not the same as in prior years, concerns are growing that their demand will not reflect growth, coupled with the US record crop and the prospects of a record Brazilian soybean crop being planted in September is taking the bloom off the bean market.
Crop ratings will have less influence in the future as they start to reflect a maturing of the crop. Yesterday’s GD/EX ratings for corn came in as expected, down 1% at 54%, the lowest for a comparable week in a decade. 86% of the corn crop is in the dough stage, with 46% in dent while 8% has reached black layer. Soybeans are rated at 57%, which is steady with last week but one percent better than last year. Recent rains have been helpful to the soybean yield outlook. Only 4% of the US soybean crop shedding leaves compared to the five-year average of 7%.
Russian wheat and Ukrainian fob corn are offered well below US Gulf offers, with US wheat values now some $54/MT and corn $22-24 4/MT more expensive. Recent US grain strength is at risk of correction, including corn, which now has cheaper South American offers.
A chance of rain is still maintained over the corn and soybean crops of the E Midwest before a decidedly drier weather pattern develops with little rains for the Plains and the Midwest into September 10. E Midwest rainfall ranges from .5-.85” with locally heavier amounts. After that, the forecast remains dry with seasonal to slightly above normal temperatures. The Atlantic has turned busy with tropical storms, but for now, notice terms produce a hurricane that would impact 2022 Gulf crops.
The Live and feeder cattle trade was mainly lower yesterday, with the higher corn prices putting the extra downward foot on feeder cattle. The cash cattle trade was quiet, typical for Monday, with the early outlook on cash trade still anticipated steady. Packers are buying for a short week, and feedlots may be content to carry inventory forward. Box beef values did pick up on Monday, with choice gaining $0.28 while select jumped $3.99. The choice/select spread narrowed to a $20.29 choice premium. It is seasonal for cattle and beef prices to trend lower into early September, which has been a drag on the futures trade. Strong support should develop in the October live cattle trade at $140-142, while December cattle on the charts we show maintain good support at $146-148.