Corn and wheat are trading lower on the week this morning.
Grain prices are lower this morning, with strength in the US dollar heading back to 110.00 with next week’s higher interest rates being implemented and the onset of harvest pressure. Corn and wheat are lower than last Friday’s close, while soybeans are still higher. Still, the poor performance since the crop report is on demand concerns and the cheaper grain price offers available from overseas competitors.
By using interest rates as the primary tool by the Central Bank, they have stated their goal is to get inflation back to 2% in 2023. This is keeping the US dollar firm and trending upwards, as it’s highly anticipated that the Fed funds rate will rise to 4.5-5.5% in 2023 to accomplish this feat. Next week the US feds funds will be at 3% on September 22 and on its way to 4% by the end of 2022, with a rate hike in November and December anticipated at .50% each.
Fridays bring about harvest hedge pressure with sales anticipated into the weekend with the onset of harvest. This will gain into late September as the cash pipeline becomes refilled. Weekend trend buying strength may get subdued today, especially with the stock market again starting Friday morning down 300 points on the Dow and the deflationary concerns rising. Gold is well below 1700 and trading near 1670, with crude oil well off early week highs and trading in the mid-80s.
Harvest looks to have favorable weather getting underway in the Central US, with above normal temperatures, and below normal rainfall. There are no frost or freeze events for the Midwest through September 28. Two weeks into the hurricane season, the Gulf is no storm activity anticipated, while elevated Atlantic activity has any hurricanes targeting the Eastern US coast around September 24.
Cattle futures closed solidly higher yesterday despite the outside negative influences of the stock market. The feeder cattle market traded back and forth before ending lower. The negotiated fed cattle trade remains slow on light demand through Thursday. Sales in the southern plains were $1 higher at $142, while trade in Nebraska was steady at $143.
Yesterday’s beef export sales data showed a four-week average of 37 Mil pounds, the lowest average since February. The four-week average sales rate of 17 Mil pounds was the lowest of the year, and in fact, there had not been a single week where sales were below 20 Mil pounds. Despite the low number, the report data still shows cumin of beef exports at 102% of last year, while outstanding sales are down 10%. Total commitments are down 1%.