A lower grain trade greets the start of the week.
Grain futures opened lower overnight and traded sharply lower as crude oil tumbled to fresh 2022 lows on growing Covid lockdowns in China, with soybeans also finding selling pressure from Argentina announcing (rumored late last week) their improved conversion of pesos for US dollars through December 31. This is anticipated to spur the additional sales of 3-5 MMTs of beans through the end of the year, which will compete with US exports in January/February.
Reports are surfacing that exporters to Iran are struggling to get letters of credit opened on corn and wheat deliveries amid their political and financial difficulties. Vessels at the port are backing up, and emerging costs are soaring as they have waited for two weeks. These cargoes could be diverted and sold elsewhere.
South American weather models continue above average rainfall for areas for most of Brazil, while below normal rainfall occurs in the southern tip of Brazil in the RGDS area and Argentina. Rain is anticipated for Argentina at the last half of this week in the range of .25-1.25”. Argentina is the concerning area of production, but planting is still under 50% for soybeans. Heat risks are anticipated in portions of Santa Fe, Argentina, around December 7, which will be above 100°. This is part of the concern that keeps support in soybeans.
Live cattle closed steady last week after strong gains early in the week, while feeder cattle closed softer. Lack of holiday volume could not hold midweek strength when liquidation arrived. The cash cattle trade was sharply higher by $4-5 in the south, with cattle at $154-155. Cattle Nebraska and IA/MN traded $2-three higher at $156-158. Box beef values were mixed with choice slipping $3.04 lower, and select gained $1.54. Packer margins are now the lowest since February 2018 at $52-56/head. Cattle futures enter a very positive price seasonal once they get past Pearl Harbor Day, December 7.