Harvest pressure and slow exports soften grains overnight.
Grain prices drifted lower overnight on the advancing of the US harvest, along with the dim export demand outlook. Exorbitant Gulf FOB offers continue to keep exports trimmed. A large rise in bean oil prices overnight on follow-through buying from yesterday’s reduced oil stocks in the crush report supported beans, keeping losses small overnight.
Russia is offering mixed signals as the continuance of Ukraine’s grain export corridor and is striking key infrastructure like water/electricity before the winter sets in across Ukraine. Lack of electricity would impede Ukrainian farmers who are trying to move their corn/wheat/sunseed harvest to the market. Russia says it will continue the corridor if the sanctions against their grain exports and fertilizers are removed and adhered to in the original July agreement.
Yesterday’s progress reports showed the soybean harvest was two-thirds completed, with corn now at 50%. The trade debate over crop sizes has mostly become mute with the October NASS data last week, and now it’s about whether exports can improve from their dismal crop year start or will they contract even more through the winter with the advancement of a large South American crop. Rain prospects for Argentina have started to improve in the 10-day models.
Gulf FOB premiums are exceptionally high on the low MS River levels, with November US soybeans offered at $2.60 over, November corn at $2.70 over in November, and HRW wheat at $2.35 over. The big premiums are hitting US ag trade post-harvest. World importers will source their needs elsewhere, with South American corn $2.00 Bu cheaper while Black Sea wheat is $3.00 Bu cheaper. US soybeans are the only grain that is lacking export competition for the moment, but Brazilian beans are already $0.70 cheaper in January/February. The window for US soybean exports will be quickly closing in the next few weeks.
India has indicated that it has more than enough wheat/rice stocks and may start to sell reserve supplies to push domestic values lower. There is no indication currently that India’s prepared to return as a wheat exporter in the near future.
Live cattle and feeder cattle opened higher yesterday and produced strong gains in the futures markets, closing at their best levels since late September for live cattle with feeder cattle near previous highs. The negotiated fed cattle trade is quiet start of the week, but feedyards are looking for gains of $1-3 this week. Box beef values showed select gaining yesterday at $2.67 while the choice was higher by $1.16. Total domestic beef sales last week rose to a five-week high and were the fourth highest of the year at 256.2 Mil pounds.