Grains are mixed as a result of South American weather forecast change.
Monday’s rainfall for in south America was isolated to northern Brazil followed by zero rainfall anywhere else. Forecasts are showing drier and temps to remain in the 90s for Argentina making January rains that much more needed. Today’s forecast is showing 25-65% of normal rainfall for Argentina. Southern Brazil is no longer in the narrative of desperately needing rain, but a good soaking will be needed to get the drought taken care of.
Soybean and corn are very driven by the changes forecasts we are witnessing in SA with intraday swings as new models are released. It will take a continued SA dryness and/or bullish USDA data to give us another sizable rally in the short term to take advantage of other than the daily volatility we are seeing. Otherwise, we will be stuck in the neutral to bearish trend until potential dry North American weather comes into play in spring 2023.
China covid concerns continue to linger causing intraday swings in crude oil. Malaysian palm oil and French milling wheat, China corn and meal are all trading lower overnight. Tensions between Ukraine and Russia again and shipping waiting times in the Black Sea market are still growing.
Feeder cattle market was showing weakness yesterday even with corn being lower while live cattle had price improvement and firm technical outlooks. Yesterday’s fed cattle was mostly quiet with no surprises but active trading should pick up this week before the short week coming up next week.
The USDA forecasts 1st quarter cattle $5-7 under the CME at $177 while 2nd quarter feeder prices are mutually agreed upon between the two at $190. 2nd quarter pricing has a large disparity with USDA pricing feeders at $214 and CME pricing feeders in the $202 area, which is a bullish outlook either way.