Turnaround -Tuesday is elusive.
Grain futures tried a minor Turnaround-Tuesday on the evening start, but that quickly gave way to further liquidation selling as risk-off became the theme for metals, energies, and equities overnight. Large-scale speculative investment interest remains absent as the Chinese yuan drifts to a 15-year low to the dollar.
Yesterday’s progress reports show that the soybean harvest has reached 80% while corn is at 61%. By this weekend, it’s anticipated that the soybean crop will be roughly 90% harvested, with corn reaching just over 75%. The fast harvest has been filling up an empty US pipeline along with a profitable crush for beans and grind for ethanol.
Brazilian corn cash and futures values have shed premium this week despite China having approved the import of Brazilian corn from three ports. For now, there is doubt that the Chinese demand for Brazilian-origin corn will occur until the arrival of the 2023 safrinha harvest gets underway. This means the Brazilian corn surplus will linger in the background, barring weather threats.
Domestic corn and soybean processing margins are very profitable, providing strong support until the release of the December stocks report in mid-January. This winter’s price outlook is weak importer demand and growth in a record Brazilian crop output. Choppy markets can continue nearby, but rallies need to be sold for the majority of the 2022 production by the new year.
The South American forecast maintains an outright wet pattern across lesser-producing areas of northern Brazil and a nice mix of rain and sun elsewhere. More rain will be needed in portions of Mato Grosso to replenish soil moisture fully, but the wet season there continues to evolve normally. Soaking 1-3” showers impact La Pampa and Buenos Aires in Argentina over the next 48 hours. Argentina has just started to plant its crops, which continues into early December.
Another robust day yesterday in the cattle and feeder futures market, with December and February live cattle soaring to new contract highs. The negotiated fed cattle market, as always, starts out at a standstill, with active trade anticipated by midweek. Fed supplies this week are smaller, and feedlots are looking to add to recent price strength. Box beef values also jump sharply, with choice gaining $4.21 and select up $1.25. Yesterday’s cold storage report showed be stocks increased for the second consecutive month, up 2% from August and up 19% from a year ago. Beef stocks have been record large since February but have had little impact on beef prices. Live cattle are approaching upside technical wave targets, which may prompt hedging action to stall the move.