Grains correct a part of yesterday's big rally.
Grain futures are lower across the board this morning as it is becoming apparent the the Kremlin staged the drone attack to stir up local support for the war, as reflected in yesterday’s newsletter’s video link of the event for you to see. Further bank problems are front and center again, with PacWest Bank in California looking for money to shore up its liquidity shortfalls, with its stock down 45% pre-market. This created an implosion in crude oil prices at last night’s opening, where crude oil tumbled $4.50 in five minutes before recovering back to steady money just above 68.50.
There is a concern that the US credit crunch will start to develop with banks cutting lending, and raising liquidity is a growing worry for investors and commodity expansion. The US economic outlook is starting to reveal cracks in the economic outlook after a year-long rise in interest rates with odds of a growing recession in the third quarter or later. Demand is being questioned, and a host of raw materials are anticipating reductions in demand.
The UN is promising to work hard for the extension of the Black Sea Grain Export Corridor with the Russians, with talks set to resume in Moscow on Friday, meanwhile, Ukrainian Pres. Zelensky is pessimistic about its outcome. Headline risks are now growing into May 18 on the court or agreement being extended. Russia continues to demand that the SWIFT world payment system be returned to its key Ag lending bank, with Turkey and the UN offering other payment workarounds.
Planting will accelerate this week in the Midwest and Delta amid warming temperatures into mid-May. Showers return late Thursday/Friday across the Eastern Plains, with the rain pushing north and east on the weekend. Rain totals are forecasted in the .25-1.50” category with locally heavier amounts. The zonal flow of the jet stream offers additional Midwest/Delta rains on a near daily basis. The western US plains stay in a below-normal rainfall trend. Weather risk is growing on the Canadian Prairies, where above normal temps and below normal rainfall have occurred for the past six weeks. The drought appears to be developing on the Canadian prairies.
Live and feeder cattle closed sharply lower yesterday as the market again throws the fear of reduced demand potential as they yell the word recession. June cattle found support yesterday near the 50-day moving average and closed the chart That was left in early April. Negotiated fed cattle on Wednesday had sales in Nebraska at $176, which was $2 lower from last week, with dressed sales at $281 that were steady with Tuesday but still $3 lower for the week. The choice beef cutout has gained close to $30 in the last five weeks and has been held at a record seasonal price for the last several months.
The recent beef rally has been led by the loin primal, which has gained more than $50/CWT. This added more than $11 to the carcass value, accounting for just over 1/3 of the rally. Compared to a year ago, the loin primal is trading $75 higher, which is added $16 to the carcass. Seasonally, the primal tends to top in early June but often rallies another 10-15% in the month of May.