Grains start softer to end of the week.
It’s a mixed morning for grain futures, with soybeans softer on the Chinese tensions after the downing of a Chinese weather (spy) balloon, which does not help that the political relationship between the two is straining over the Taiwan issue. China has been known in the past for canceling prior purchases just to reload a better price. However, they have the advantage of moving to South America now for the next 7-9 months at better pricing. Meanwhile, wheat continues to find short covering interest from fund managers who want to continue to reduce the size of their short position.
India’s foreign minister indicated that India did not increase its 2023 wheat seedings despite record-high prices last autumn. Indian farmers seeded 84.8 Mil acres of wheat, which was up barely ½ a percent from last year, while the rapeseed seedings rose 7.4% to 9.8 Mil acres. The additional rapeseed acres will lower India’s import of vegetable oils, while a smaller wheat seeding suggests that the 2023 Indian wheat harvest will range from 108-112 MMTs. It’s more than domestic consumption requires but not enough to build their stocks substantially.
Wednesday is the February WASDE crop report, early estimates have the corn carryout higher by 20 Mil Bu at 1,262 Mil Bu, soybeans near steady at 211 Mil Bu, while wheat is 10 Mil Bu higher at 578 Mil.
It was dry this weekend across Argentina with high temps in the upper 70s to middle 80s, which is seasonal. The Argentine forecast offers dry weather for another 5-6 days before showers return on the weekend. The rain starts on Sunday and lingers in the next week Tuesday, with rainfall totals ranging from .25-1.50” with locally heavier amounts. The rain comes at a timely point to keep crop conditions rising. The extended 11-15 day period offers a return to arid weather with again a chance of rain every 10 days continues to be Argentina’s weather model, which is maintaining soil moisture needs that are needed at this time. Brazil’s forecast calls for near to below-normal rain for the next two weeks and no extreme heat, which will help advance harvest, as record yields are slowing the progress.
It was a strong week for cattle and feeder cattle last week, and a steady outlook is offered for early trade this morning. It was the best weekly close in five weeks for feeder cattle, while live cattle futures all scored new contract highs. Last week, the negotiated fed cattle trade ended higher, with the dressed trade in Nebraska and IA/MM reporting $250, which was $2-3 higher than the prior week. Sales of $160 were also reported in IA/MN, which were five dollars higher. Cattle slaughter last week totaled 641,000 head, which was down 18,000 head from the previous week and 6000 head more than a year ago. Box beef values were mixed with choice cutout down $3.02 at $264.74, and select gained $1.07 to $251.61. The choice value is $17 lower than a year ago, while the select is almost $25 cheaper.