Grains slip further after weak Thursday technical close
Grain futures are mixed at the close of the night session after a mostly lower trade that found buying interest on the US dollar break after the release of the US jobs number. A poor technical trade performance on Thursday after BAGE Argentina released new low crop numbers for the soybean crop of 29 MMTs and a corn crop of 37 MMT’s. With lack of buying interest, index fund liquidation accelerated yesterday and continued into the night session. Open interest increased in all grain commodities yesterday.
The grain trade as of yesterday is ignoring the progress of the Black Sea Grain Export, accepting it as done. However, Russia yesterday afternoon indicated they are not content with the present situation as Western nations are importing Ukrainian grain, not the impoverished African or SE Asian populations where it was designated to flow. They also complain that the economic sanctions hinder Russian grain exports. Next week, a meeting is set in Geneva on the pact where Russia and the UN will meet. This could create new uncertainties over the extension, with the massive index fund short of over 100,000 contracts in Chicago.
Malaysian Palm oil stocks are reported to have fallen to a six-month low as output there has declined on excessive wet weather/flooding. February Malaysian Palm oil output fell to 1.25 MMT’s, with stocks falling to 2.11 MMT’s. Further falls in supply and stocks are forecasted now through June, with stocks to decline to 1.5 MMT’s in May.
Hot, dry weather is maintained in the Argentine forecast, with any potential rain not arriving until mid-next week, and what is expected is light across La Pampa and southern Buenos Aries. There will be limited rain across the heart of the Argentine grain belt, where crop losses now could grow to 40-50% for corn and soybeans. After March 20, it will be too late for the rain to make a meaningful difference after the pollination of corn.
Live and feeder cattle were lower yesterday amongst the broad commodity fund selling that was experienced. Live cattle have now drifted lower as cattle numbers tighten. A small number of cattle yesterday moved in Texas at $165, which was steady with last week, but markets and the rest of the five Plains states were quiet. Beef cow slaughter rates have now scored a seasonal high after the start of the year and have been trending lower. Cumulative cow kill is down 7% from a year ago compared to the January 1 inventory, which was down 4%. Slaughter rates have fallen since late January as liquidation slows, and the lower beef cow slaughter has reduced beef supplies by 5-7 million pounds per week compared to last year. Key support for April live cattle and corrections is $161-163.