Row crop prices start the week on the rebound.
Grain futures this morning have corn and soybeans on the rebound as the EPA has dropped eRINS from the Biden administration proposal, which is due to be announced by June 14. The eRINS, which are credits for electric vehicles, would’ve produced a surplus of RINS, diminishing the value in cutting margins for additional biofuel producers in coming years. The ending of the eRIN proposal will raise the production of biodiesel and renewable diesel.
Wheat continued lower overnight as another 30,000 MTs of wheat are expected for shipment to the US from Poland to Ardent Mills in Tampa, Florida. There were two previous cargos shipped in April and January. Chicago wheat traded under 6.00 for the first time since April 2021 before recovering a bit on the overnight corn strength.
Russia is targeting annual grain production of 130 MMTs and exports of 50-55 MMTs, including 40-45 MMTs of wheat. The wheat export number would be similar to last year. The weather in Russia’s New Lands/Urals has turned dry without any soaking June rainfall, Russian wheat production may not meet the targets and will be closely watched for pattern change.
The current Central US weather forecast offers limited rain over the next two weeks, allowing spring seeding to advance with quick germination to occur in crops rooting down. Long-term weather models do anticipate rain arriving throughout the Midwest in the 2-3 week window. Central US high-pressure ridging will be watched to see if it’s locking in place by mid-June.
Live and feeder cattle closed sharply higher last week, with fall 2023 and forward feeder cattle contracts making new contract highs. The May cattle on feed report was mostly neutral, with On Feed fractionally higher than guessed. Opening calls are steady-mixed.
Negotiated fed cattle last week were slow to get underway, but most sales in the South were steady at $170, while late-week sales in the North were $1-2 higher at $178. Dressed sales also bumped higher by $1-2 and traded at $281-282. This week’s early week cash outlook again starts steady. Meanwhile, the beef market seems to be confirming its seasonal top, while slaughter margins remain positive at $189/head. The market will be focused on balancing slower domestic demand versus tight supplies throughout the summer.
Average carcass weights for 2023 have been 821 pounds, down from 833 pounds last year. Cumulative beef production is down 4.7% from a year ago and looks to fall further behind into the last half of this year. Key support for the August cattle contract will be near $160.