Grains price decline overnight as a ship leaves Odessa.
Grain futures opened higher overnight, but not as strong as early indications, as rumors were circulating that despite a ship not leaving Odessa Friday or Saturday, it was rumored that it would leave Odessa Monday morning. This took the bloom off the start in the grain pricing along with forecasts that showed more moisture for the Ohio Valley with a slight moderation in temperatures for the West. This brought about liquidation and profit-taking. In the night session, you can literally see at 2:30 AM (9:30 a.m. Odessa time) as the ship left port with a load of corn, grain prices softened throughout the night into the early morning hours.
What’s interesting is that over the weekend Russia attacked Nibulon’s owner/founder who was the largest private Ukraine grain exporter with a missile attack on Saturday killing him, which did leave some to wonder if the ship would even leave Monday morning. Out of defiance it did, and now will be closely watched as to its ability to make it to its destination which is Africa. Another concern is that ships leaving the corridor may be easy in the weeks to come, but the infrastructure to reload the port areas will be difficult. Also, Russia still complained of the world has not dropped enough sanctions on its own grain exports amid financing/insurance difficulties.
The ongoing drought in Europe has the EU cutting its corn crop by 8% overnight to 65.8 MMTs. Many suggest further cuts of 7-9 MMTs will be realized was real yield data is accounted for due to their dire drought. The EU also cut its soft wheat crop estimate to 123.9 MMTs compared to 130.1 MMTs last year. Their wheat export estimate was cut by 2 MMTs. The EU weather forecast remains with limited rainfall for most of the continent with France/Germany/Italy extremely arid. Heat looks to return during the middle of the week with pattern showing no real sign of change as the drought their worsens and the mid-August.
The US weather forecast has a drying trend for the NW Midwest in mid-August but less heat than forecasted that was seen late last week. The forecast model agrees between the GFS and Canadian models but still limited rainfall for the Plains and NW Midwest over the next 10 days. The EU model has a front producing some showers of .25-1.00” of rain on August 8 for IA. The forecast model has plenty of 90s to lower 100s, but any extreme heat above 102° will be limited. The Ridge retrogrades West in the extended range 11-15 day forecast with some rain into the Lake states/E Midwest. The Plains and NW Midwest are in question in terms of how much rain looks to fall with the risk of a flash drought continuing for IA/NE/SD.
Cattle futures had a mixed week of trade last week, but today a steady outlook is offered with feeder cattle finding strength on the reversal in grain pricing overnight. Last week’s cash trade was mostly $1.00 in the south of $135 while cattle in the north were $4 lower on the week at $224-225. Overall box beef pricing found choice gaining $2.12 while the select value was down $.25. Live cattle remain trapped on the spot contract between $1.32-1.38. December cattle have technical support at 146.00-146.50.