Grain prices recover from oversold conditions.
Wheat prices gained a dime overnight as Argentina Rosario GRAIN Exchange trimmed the wheat crop by another 1 MMTs to 15 MMTs. The USDA has Argentina projected at 17.5. This will likely reduce their exports to 9.0-9.5 MMTs which should be the lowest since 2014. Meanwhile, further rainfall impacts the heart of wheat production in New Whales and Queensland overnight in Australia, with another 2-4” of rain projected into the weekend. This will dramatically increase feed wheat which will compete with corn into the Southeast Asia export market. Saudi Arabia is reportedly looking for 535,000 MTs of optional origin wheat for spring arrival.
Overnight the US dollar has retreated half of yesterday’s gains, throwing small support towards the grain and energy markets. Rains for central Argentina have been reduced a bit, with the soaking rains early next week now reduced to just under an inch. This also added to the support and beans overnight, with soybean meal rebounding from heavy losses taking the lead from the strength soybean oil has produced over the last three sessions.
Export data out this morning was at the low end for corn and wheat, with soybeans as expected due to last week’s robust Chinese buying, which has disappeared this week. Grains will have short covering opportunities on various stories and US dollar dips, but the overall trend remains lower into November, with rallies being selling opportunities.
Harvest will get held up a bit next week as some heavy rainfall moves across the Central Plains and much of the Midwest in the 6-10 day period. Isolated showers are forecasted of 3-4” for IA and IL. Lesser rainfall of 1.0-1.5” will occur across NE and the Dakotas, MN. The deepening drought continues to remain a problem in the HRW belt.
Yesterday live cattle and feeder cattle enjoyed a third strong day of rallying as cash markets were likely traded. Packers are resisting higher prices, but feed yards know they have the leverage among tight supplies. Box beef prices continued with substantial gains confirming seasonal lows that have occurred two weeks ago. Some light sales were quoted in the southern plains at $147, which was $2 higher than last week, and some trade in IA/MN was at $150, which also was $2 higher than last week.