The second day of renewed US dollar strength and poor exports.
Grain futures are lower across the board this morning due to the second day of the returning strength of the US dollar and the confirmation of poor exports in this morning’s data. Wheat and soybeans have double-digit losses, with corn also back under 680 with harvest intensity and hedge pressure off the combine is too much for friendly production expectations.
The continued low levels of the Mississippi River continue to pose challenges as dredging is needed to allow barges to pass in such operations that are not occurring fast enough to prevent large backlogs and barge rates from soaring. Traffic has halted near Lake Providence in LA. The cost of moving beans to the Gulf has jumped as barge and rail rates are rising sharply. This puts further pressure on the interior River basis and harms US grain export demand. Unfortunately, additional dry weather is forecast for the next two weeks, suggesting a further fall in River flows. Soybeans are the most impacted by this due to the large US Gulf export program, which should be underway now into January.
It’s anticipated that the harvesting of soybeans could surpass 50% next week, with many soybeans now being put into storage amid the falling cash basis bids. Corn harvest is anticipated to accelerate next week as farmers put more attention to the drying crop. It will be very difficult for the USDA to produce a large price lift in next week’s crop production report, as slipping demand is becoming apparent and offsetting lost production in the balance sheets.
Yesterday’s cattle futures trade came back to life again with little cash activity taking place. Dressed sales in Nebraska were light but quoted $1 higher at $230. In the southern plains, feedyards were passing on steady bids of $143 while offering cattle at $145. The choice cutout yesterday was down $0.98, while select fell $2.69. The best thing I can say about the live cattle trade is has been working sideways during what is predominantly still a negative price window that typically finds a fall low. The smaller cattle herd will produce a fourth-quarter rally, the only point missing is the extent of how much.