Turn-around Tuesday hits overnight.
Grain futures sagged overnight as Turnaround-Tuesday kicked in after the night session got underway. Monday’s strength in beans was met with Argentine premiums declining, with soybeans out of Brazil now bid $0.50-.55 under March, which is $0.70-.75 cheaper than US Gulf soybeans offered at $1.15 over. Brazil’s 48% March soybean meal is bid at $15.00 over versus US Gulf’s 46% soymeal at $60 over. Demand will be shifting to South America, and China will become less present in any bids for US beans to likely non-existent even though they are returning from their holiday. Residual purchases from last week may show up in this week’s sales yet.
Egypt’s GASC is bidding for world wheat, with the purchase to be financed by the World Bank for late February/March. Egypt continues to struggle with its sagging currency as the Egyptian pound is making it difficult for buyers with their purchases and financing. A purchase announcement will come tomorrow, with the wheat likely being sourced from the lowest-cost seller, and that will be Russia.
The US dollar firmed overnight, putting pressure overnight on energies, metals, and grains. The Federal Reserve will start its January meeting with conversations on the future policy to combat inflation. The central bank is expected to raise its current lending rates by .25%, with a remote chance it could be .50%. Additional hikes are anticipated for March and April.
The Argentine forecast stays dry for another 24-36 hours before showers and storms return on Wednesday/Thursday. Rainfall totals are estimated at .25-1.25”, with a few locally heavier amounts favoring the southern and western portions of Argentina. Next week will be a lengthy period of dry weather with a chance of rain evident in the 11-15 day period with the new frontal pass. Near normal temperatures are anticipated in this window but the probability of rain returning by February 12 is considered likely.
Yesterday experienced an explosive day for live cattle contracts, with April through the rest of the 2023 year all making a new contract high. The April 2024 contract closed above $170 compared to the highest closing price of $171.97 in October 2014. End of the month short covering from sellers ahead of today’s Annual inventory report was noted. Cash cattle markets are quiet, with feeders looking to have showlists at least $2-3 higher than last week, which was $155-156. The five-Area average nearby cattle basis has been negative for the previous three weeks, but the seasonal trend starts to improve in February. Inventory dated today expects the cow herd to be down 3% from last year and the calf crop down 2.6%.