The Fed stayed soft on inflation
Grain prices firmed overnight with soybeans quickly recovering the bulk of yesterday’s losses as index funds quickly moved in support their soybean meal position and buy commodities in general with the new low for the year on the US dollar. Friday’s jobs report is anticipating another 180,000+ job growth and if the numbers come in well north of 250,000 that could cause the Federal Reserve to change its dovish stance on future rate hicks in yesterday’s post interest rate meeting.
Wheat futures continued to pinch the short position held by the next funds which would be closely monitored Friday afternoon as of their status through this past Tuesday. While wheat has risen to a considerable premium to Russian wheat which is now historical high, Russia’s 12.5% wheat has stayed at $3 05/MTs, which makes US 12.5% protein carry a $2.50/bu more expensive to world importers.
In comparison soybeans continued to stay cheap in South America with even Argentine soybean meal having reached a drought peak of $60/MT over Chicago in late December, has now fallen precipitously to $30/MT currently. Brazilian beans are $0.80/Bu below US Gulf. It’s also anticipated that Brazil will continue to shop 2.5 MMT’s a corn out in February would suggest they understated last year’s corn crop by likely 5-6 MMT’s.
Live and feeder cattle trade gave up early week gains made into the cattle Inventory report, as the early week surge liquidated. Cash trade has offers in the south 158-160.Cattle slaughter this week has totaled 375,000 head, down 3,000 from last week, but 13,000 head more than a year ago. The kill rate remains large and has weighed on the choice cutout in the early part of 2023. Values have returned to the late October highs. Live cattle will find support on April at 158-159.