US dollar works above 105.00 on a hot PCE inflation number.
Grain prices are all lower this morning on the day that marks the one-year anniversary of the Russian/Ukrainian war. Recent media headlines that implied a larger insurgency by Russia have not materialized, and grain prices have declined, with wheat now priced below where it was a year ago when the war started. Russia is on track to export a record 44-46 MMT of wheat and bridge the supply gap left by Ukraine.
The US dollar has surged over 105.00 this morning, negatively affecting the commodity spectrum, including heavy losses in the stock indexes this morning. In addition, PCE inflation data came out this morning, creating another piece of evidence that the Federal Reserve is still behind the curve and will need to be more aggressive with its future interest rate hikes by up to .5% for the next couple of meetings. This is having a reeling effect on the equities and bonds as the Federal Reserve will likely push harder and anticipate a recession in the third quarter.
The soybean market continues to debate the size of the 2023 Argentine crop. Yesterday the Buenos Aires Grain Exchange cut their estimate of the Argentine crop to 33.5 MMTs, prompting support for soybeans late Thursday. This is down 14.5 MMTs from their initial crop estimate of 48 MMTs last fall. The market is trying to determine if it’s already priced in such a low crop, and can the sliding world corn and wheat prices weigh heavily on the soybean market with Brazil/Paraguay crop that is 30-32 MMTs larger?
Dry weather will continue now in major crop areas of Argentina for the next week before shower chances return. Next weekend widely scattered showers are possible with the potential of .2-1.00”. The 11-15 day forecast also offers a few lite showers but nothing that change the overall character of the current drought. N and C Brazil forecast calls for near to below normal rainfall for the next seven days with near to above normal rain in the 11-15 day forecast for RGDS. Brazilian harvest moves along with good rain for the winter corn crop into early March.
Another strong day for the cattle trade yesterday, with a steady outlook anticipated this morning. February live cattle traded at another contract high for the sixth day in a row as a higher cash trade is priced into the market. All listed live cattle contracts made new contract highs yesterday, with the April 24 contract trading as high as $172.70. Box beef values were again a combined $2 higher on Thursday, with light cash trade in the north at $164. Offers in the South remain at $165.