Risk-off across equities, metals, energies, and agriculture
World stock, energy, metals, and commodity markets are all lower this morning on a sharply higher US dollar that has traded back to near 113.00. The Federal Reserve yesterday afternoon stayed with an aggressive stance on rate increases and did not give a hint that it would pause without data that substantially shows inflation is breaking. Malaysian palm oil declined 70 ringgits overnight, with crude oil also down $1.50 this morning, putting pressure on the soybean complex, which was the stronger market midweek.
Wheat is sharply lower back to where it ended last week, as the grain corridor action is moving again along with hopes that the export corridor will now be renewed officially on November 18. Insurance companies now provide confidence to vessel operators with their rapid return of writing policies. October exports of corn from Ukraine had reached a season-high of one .8-2.0 MMTs. Russian wheat exports in October were 4.5 MMTs, also a season-high which underscores the corridor’s success if it stays operational.
Yesterday StoneX released its crop estimates for next Wednesday’s production report, pegged the corn yield at 174.5 Bu/acre with the production estimate at 14,109 Mil Bu versus the USDA’s 13,895 last month. They also projected soybean production at 4,413 Mil Bu, 100 million bushels above the USDA’s 4,313 Mil. Modest production changes will impact the anticipation that consumption numbers will be either unchanged or lowered.
Weather models are at odds for South America by mid-November, as rainfall totals and coverage for Argentina are split on the EU and GFS models into November 13. The EU has trended drier and futures only moderate/scattered rain across the heart of Argentina’s ag belt. The GFS maintains widespread rains of 1-2” across key areas of Córdoba and Buenos Aires November 11-13. Meanwhile, the Brazilian outlook maintains the return of normal rainfall beyond November 12-13.
The performance of live cattle futures this week has been less than stellar, while feeder cattle have rallied on the weakening grain trade from its sharply higher start early in the week. Yesterday some negotiated cattle trading got underway with limited volume. The early sales were quoted at $149 in Texas, which was $1 lower than last week. Dressed sales in Nebraska were quoted at $243, which was $3 higher, and the live trade in IA/MN was reported at $154, $1-2 higher from last week. The outlook remains firm for the rest of the week.