Turn-around Tuesday challenges the downtrend.
Grain prices went into recovery mode overnight, in a consistent Turn-around Tuesday fashion. Soybeans took the lead to the upside as soybean oil stabilized and soybean meal continued its advance on the spread unwinding. Further adding to the soybean price lift is that the EU, GFS, and Canadian weather models have moved precipitation from the principal crop areas of Argentina north into December 20. Max temperatures this week will be in the low 100s, which is prolonging seeding delays.
Brazil continues to have near-normal rainfall into the final week of December, with moisture deficits mainly in the southern portions of Brazil in the RGDS region as the La Niña pattern lingers. Interestingly the dryness of Argentina and far Southern Brazil should be more of an issue for corn production rather than soybeans. Yet, the trade uses soybeans as the proxy to trade weather concerns in SA.
US Gulf SRW wheat is now offered $5-9/MT below comparable French origin on a FOB basis. This is the first time since July that this has occurred, and wheat now in southeast Europe is competitive with Russian origin to the recent declines. Wheat values should be approaching a level of support, but rallies will await signs of improved demand and this Friday’s Supply/Demand report.
Live cattle were primarily steady yesterday, with feeder cattle higher on the weaker corn prices. Negotiated fed cattle trading continues to start the week with limited demand, with the outlook steady with fed supplies tight but beef values drifting. Box beef had choice cutout declining $6.62 and select was down $3.45. This gives a sign that potential holiday demand is already filled. Cash has now converged on futures, and the CME is hesitant to add significant premiums into 2023. It’ll be the cash market that will lead the board.