Grains trade higher after the holiday weekend.
Grain futures opened higher Monday evening on the dry weather forecast for Argentina and some light frost on Saturday. The frost event was not widespread, as most temperatures were just down to 2°C while the dip below zero was in low-lying areas. Nevertheless, the lack of rain in the upcoming 10-day forecast reignites a concern that Argentina will remain sub 40 MMTs of soybeans. Meanwhile, Brazil and Paraguay have an abundance of soybeans that is finding its way to the ports, with prices collapsing more than a dollar below US values.
Brazil is on its “Fat Tuesday” holiday for Lent, with Ash Wednesday picking back up hedge pressure to Chicago. Even though Brazil’s crop is down 4-7 MMTs, Paraguay and Brazil are combined, seeing an increase of nearly 30 MMTs over last year. Brazil and Paraguay soybeans will flow into Argentina’s processing as Brazil maintains being the largest exporter of soybeans to the world.
The Chinese tensions with the US continue to grow as Sec. Blinken commented to them about not providing resources for Russia’s military needs. China’s concern is that Russia’s defeat in the Ukrainian war would have long-term consequences for Southeast Asia. China sees itself as a partner with Russia from an economic and geopolitical perspective. China has recently expanded its economic ties to Moscow by purchasing farm goods and energy. The recent spy balloon situation has likely produced irritation from China that corn and soybean sales have been almost nonexistent over the past 10 days.
This Thursday morning will see the release from the USDA’s Farm Forum and will show their new crop balance sheets and current ending stock expectations. The release will occur at 6:00 a.m. and will have a dramatic effect on Thursday’s trade in the morning.
Rains ended in Buenos Aires over the weekend, and temperatures will dry in Argentina for the next 10 days. High temperatures will range from the 80s to mid-90s during this period. There could be a few lite showers later this week, but rainfall totals are less than .50” of less than 1/3 coverage for crop area. Rain is indicated in Argentina’s 10-14 day period, with better rain chances occurring across RGDS in Southern Brazil.
New contract highs were experienced Friday on the deliverable February cattle, while April cattle tagged new contract highs in the morning before retreating. Live sales in the South are quoted at $162, which was $2 higher. Live sales in Nebraska and the IA/MN regions were also $1-2 higher at $160-162, with the dressed trade $3 higher at $257. This is the highest price is now since January 2015. The box beef trade supported the better cash trade, with choice gaining $11 last week and select pushed $12 higher. The choice cutout value ended the week more than $11 higher and is a record price for mid-February.