Putin insights further price gains overnight.
Wheat prices accelerated overnight, with Chicago wheat going through $9.00, and Kansas City hitting a high of 982 before drifting. Corn values challenged last week’s high but did not best it and found itself this morning with soybeans lower at the end of the night session.
Comments at 1 AM US Central time, which was 9 AM in Moscow, from Putin said that Russia is calling up 300,000 reserves in response to the referendums of Russian statehood to be probable in days ahead and Eastern Ukraine. If these territories vote to move to Russia, Putin said that he would use all available means to protect these territories as a sovereign part of Russia. This means if the West does not honor the will of the people of Eastern Ukraine if they choose to join Russia, and Ukraine continues to fire upon them, it will now be an act of war. This would permanently end the Safe Grain Corridor.
This could be an end game for Putin by annexing the referendum of the eastern regions, and then Putin can claim a prize for all their efforts to the Russian people and end the war. That is, if the West will allow it. There is much uncertainty coming from this new development. Still, if the war escalates, the willingness of vessel owners to enter the Black Sea region will be diminished without the safe Grain corridor being canceled.
The US dollar overnight has risen to 110.63, (Federal Reserve interest rate hike announcement at 1:00 p.m. today) creating concerns for exports of ag products, namely soybeans, to China. China is likely opting for as much South American origin of soybeans as possible over the next 12 months and will only buy what they need from the US to get them to mid-January when the first available beans out of Brazil can be shipped.
Argentine producers have been active in adding to corn sales along with the flood of soybeans due to their current currency boost that ends September 30. US Gulf corn bids are anywhere from $0.70-$1.10/bushel above South American origin for November arrival.
Live cattle closed higher but well off day session highs while feeder cattle will lower on the strong lift in feed prices. Cash trade was quiet again on Tuesday, but the outlook remains firm. The live cattle correlation with the current cash market would be similar to 2021. A year ago, the cash cattle trade rallied from late September into the fourth quarter, with the equivalency of such a rally suggesting December cattle could make it to $160. Last year though, did not have the prospects of increasing the chance of recession and job layoffs. Still, the optimism that comes from the declining numbers from here into 2023 cannot be ignored, and consumers have had a taste of hiked price beef courtesy of Packers last year taking a large cut of what was experienced by expensive box beef.
This Friday is the September COF report, with estimates for On Feed at 100% of a year ago, Placements 98.1%, and Marketings at 105.9%.