Russia again makes comments against Grain Corridor.
Wheat and corn prices firmed overnight as Russia again continued to make comments about the Black Sea Grain Corridor and how it will hold to the May 17 deadline of the current extension if the EU/US does not make changes to the SWIFT banking access and insurance on freight and the ability to make unfettered exports of fertilizer. This would put the risk of Ukraine’s current 2.7-3.5 MMTs of grain/month out of its three Black Sea ports. French milling wheat this morning is at €252.25/ton and was unmoved.
Argentina clarified the working elements of the new peso/dollar conversion for soybean sales yesterday, as only modest amounts of soybeans were seen moving since Saturday. The current peso bump gives them a 40% increase, but it is still well short of inflation, which is running at 98% annually. Many Argentine farmers are just selling for immediate cash needs and choose to store the soybeans like gold.
The CPI data out this morning was neutral to friendly to expectations, causing the US dollar to head back to near the 101.00 range and sending gold, silver, and crude oil higher with substantial gains. The US dollar closing under 101.00 could set off a precipitous decline as it will imply the Federal Reserve will be pausing rate hikes, and inflation can reignite. A weak dollar supports commodities.
A strong cash basis is supporting spot prices despite timely planting getting well underway. Some central Illinois per soybean prices are paying $0.70 over spot, with Cedar Rapids paying $0.65 over for spot cash corn. Fieldwork is the concentration now, not marketing and transporting grain.
The weather forecast for the Central US will help the acceleration of spring planting. Summer like warmth continues through Friday with cooling and a few widely scattered Midwest showers of .25-.75” of coverage that is estimated to be no better than 50% over the weekend. Another lengthy dry trend follows with a few lite showers late next week.
Unfortunately for the Plains, the drought will deepen with high temps in the 80s/lower 90s, with the 11-15 day again bringing hints of some rain, while confidence on that could remain low with the northward movement of the jet stream. The Plains drought looks to deepen as it goes into May. Southwest Kansas has not seen more than .10” of rain since October.
The dynamic bull trend of cattle and feeder cattle continued with a new round of contract highs again yesterday. Negotiated fed cattle is still awaiting action, while choice cutout gained $2.19 and select jumped $3.64. The choice/select spread narrowed to $13.06.
The April WASDE report raised beef production for the first and second quarters of the year, with the largest increase occurring in the third quarter due to better-than-expected placement rates in the first quarter. The first quarter price was adjusted according to recent reporting. The second quarter forecast increased by $6 to $169, the third quarter increased by $3 to $162, and the fourth quarter increased by $3 to $167.