Grains continue their price collapse overnight
Grain futures are again sharply lower this morning as yesterday’s poor technical closes and lack of any concerning data audit of the crop progress and condition reports led to follow-through selling in the overnight. Prospects for rains to arrive in the dry Midwest area by June 12-15 continue to spur long liquidation as margin call selling becomes a feature today. Index funds have now rolled from a long position in soybeans to a net short as the market falls in a vacuum-like event. Thursday is a new trading month, and statistically, the washout has a tendency to come to a pinnacle by then.
Russia has a race to the bottom for wheat values, now down to $230/MTs for their 12.5% protein wheat for their offers from June through October, and this is ahead of the tax they plan to implement for the new export year that starts on June 1. This, along with slowing world grain demand, has the grain trade shedding any premium thoughts on value, focusing on upcoming improved weather in two weeks, and the fact that our corn and bean sales are almost nonexistent.
Mexico’s Ag Minister said they are not worried about the US taking Mexico to a USMCA trade dispute panel over GMO corn as they claim the latest presidential decree in February has turned the issue into a trade issue and making technical consultations wanted by the US moot.
At Brazil’s largest private terminal at the Santos port, volumes of grains, sugar, and fertilizer are expected to grow by +6.8%, driven by increased Chinese demand for Brazilian commodities. Brazilian safrinha corn in Mato Grosso is rated 88% G/E, 20% above last year.
The forecast models show limited rain for the Midwest/Delta for the next 10-12 days. A few thunderstorms are possible across Nebraska and W IA in the next 48 hours with rain total estimates of .1-.85” on poor coverage. Highs will be in the mid-80s to low 90s. Showers will persist across the S and C Plains with daily rains of .25-1.00”. The extended 11-15 day forecast calls for Midwest showers with accumulations near 1.00”. Confidence increases more once the models pull inside the 10-day forecast.
Cattle and feeder cattle futures put in an explosive upside day yesterday, with feeder cattle rushing new contract highs with the break in the grain trade. Negotiated fed cattle markets are quiet but are anticipated to be no worse than steady this week following yesterday’s rally. Box beef values found choice gaining $1.03 and select up $2.85. Pasture conditions across the country continue to improve, with the national GD/EX ratings jumping 8% and is now at 45% GD/EX. this is the highest weekly rating since June 2020. Of all commodities traded, only live cattle/feeder cattle are at their best pricing levels of the year.