Harvest pressure and strength in the US dollar weaken the grain trade overnight.
Grain futures are lower to sharply lower across the board this morning, as yesterday’s short covering run in soybean meal along with the four-day rush to the upside in soybean oil came to an end with less than spectacular technical closes Thursday. Outside economic worries again dominate today with the US dollar bolting almost a full percent higher overnight to near 114.00, which has the prospect of being the highest weekly close since the spring of 2002. Yesterday’s poor exports for corn and wheat along with the disappointment of only one day of reasonable bean export announcements heightens the prospect of the USDA will be raising carry outs in upcoming supply/demand tables.
US crop values are expensive in the export markets, with spot Golf corn offers anywhere from $2.00-2.70/Bu above South America and Ukrainian origins. Brazil soybeans are offered at $0.85/Bu discount to US origin late January forward. Domestic crush and ethanol production margins are highly profitable. Domestic supply issues which are tight are struggling with export rationing that is occurring due to the strength in the dollar and are elevated valuations with the Mississippi logistics adding to difficulties to move crops during the heart of harvest.
Yesterday’s South American weather forecast showed a reduction from what was to of been significant rains for Argentina early next week, but overnight weather models have trended weather again for my Mato Grosso do Sul and Mato Grosso in central Brazil into November 1. Monday/Tuesday holds out hope for rainfall of 1.0-1.5” potential impacting the heart of Argentina’s corn and soybean belt which helps crops that are going into the ground after an extended period of dryness. Argentina is 17% planted on its corn versus 33% average.
Live cattle extended its gains yesterday while feeder cattle were slightly mixed against Thursday’s corn strength, but feeders look to find strength this morning against the lower grain trade but will struggle with stock market losses that they become extreme with option expiration today for stock options. The cash trade was sharply higher over last week with southern plains up $3 for the week at $148. Live sales in Nebraska where $2-4 higher at $150-152. This afternoon is the October Cattle on Feed Report with the average trade estimates for marketing for the month of September at 104% of last year, placements of 96% and a October 1 feedlot inventory at 99%. If the on-feed inventory data were to meet estimates, this would mark the first month this year that the feedlot inventory is below last year.