French milling wheat tumbles to new 19 month lows.

Grain futures moved lower overnight after an initial firm start, with French milling wheat leading the decline in the early morning hours, declining $7.00/MT (20 cent Bu equivalent), putting heavy pressure on wheat, extracting their 10-day gains from the March 10 low. Weakness in wheat spilled into corn, with soybeans breaking to new calendar year lows near the significant 1460 plateau as the first big rains in two months fell across central Argentina with totals of .5-2.00”. The rain is falling late in the crop cycle, similar to the end of August in the US.

Today the Federal Reserve is expected to increase the Fed funds rate by .25% at 1:00 p.m. CT. Many expect the Federal Reserve in their communique to affect a long pause in the lending rates due to the recent bank troubles of declining asset values on their debt securities with the sharp rise in US rates. (Interesting how the Federal Reserve in the 1980s did not care about farm values/real estate when they collapsed, but when it comes to banks who piled their deposits into bonds paying a low rate that declined in value as rates climbed dramatically affecting their liquidity, there they have a concern. We obviously know which side they butter their toast on.)

Managed funds are now anticipated to be short 54,000 contracts of corn, the first managed money short in corn since September 2020. They’re also net short 96,000 contracts of wheat while long 128,000 contracts of soybeans and 134,000 contracts of soymeal. There is a risk of additional liquidation in the soybeans and meal.

After a weak start Tuesday, cattle futures reversed higher and close with modest gains with a steady outlook for today. Last week’s consumer price data showed the average retail beef pricing in February was down less than 1% from a year ago at $7.59/pound. The Consumer Price Index inflation rate for the month was up 6%. When calculated, the real inflation-adjusted beef price was down 6.1% from last year. The nominal price was 2% under the record high scored in April 2022, while the real beef price has fallen 6% during the same time. Beef has gotten cheaper for the consumer when compared to last spring.