Turnaround-Tuesday in play after yesterday's strength.
Grain prices softened overnight, with soybeans heading back to the monthly lows, as the short covering buying interest on Monday, with some market participants thinking the WASDE crop reports reflected optimistic weather and things can go bad, still needs to find threatening weather to have further buying interest. Open interest declining in yesterday’s trade suggests it was mostly short covering, not new buying. There is a lack of fresh bullish news, lending to liquidation and selling.
Even though there are comments that Black Sea negotiations are going on unofficially, the Corridor is effectively shuttered. Ukraine is moving inventories overland and through a large river source, while Russia continues to export its wheat supplies cheaply. Yesterday’s planting and wheat condition reports were considered in the range of expectations and are ahead of multi-year averages for the Midwest. North Dakota is struggling to catch up but has open weather mostly for the next two weeks.
GFS and EU weather models are pretty much in fair agreement for this week and into the weekend but diverge after that. The GFS projects another system to linger in the US southern plains in the 6-10 day period, with rainfall of 1-4” projected for North TX and Oklahoma. The EU model keeps rainfall next week isolated to West TX and NM. A low-pressure trough exists in Eastern Canada in the next 1-2 days, and thereafter the mean position of the jet stream shifts northward, taking rain chances with it. A general blocking pattern is staying in place across Southern and Western Canada, with no rain forecasted in Saskatchewan into May 25. Warmth also favors Canada and the PNW. Rain will be needed east of the Mississippi River by early June, but Canada needs a pattern shift.
Cattle futures were mostly higher on Monday after a rough start, with a steady outlook anticipated for today. Negotiated fed cattle markets are anticipated to trade by midweek with steady money anticipated. The recent rains in the Plains have improved the national pasture conditions, with the national poor/very poor declining from 37% last week to 33% this week. That’s down from 49% last year but still historically high for mid-May. Live cattle futures are gauging the amount of discount that will occur from the spring high into the summer low. Demand is watched for signs of cracks similar to what hogs have experienced since the first of the year.