Grains react to shifting weather models.
Grain futures are sharply higher this morning as the weather forecasts longer-term again continue to vacillate. In the Tuesday/Wednesday commentaries, we alluded to this that long-term weather models are typically prone to many revisions until they become more laser focused once they’re deeper inside the 6-10 day window. Weather premium is being quickly added back into the trade, more specifically in the corn, with December within pennies of the Sunday night high.
Reuters cited sources that indicated the UN is urging Russia, Ukraine, and Turkey to prepare to start the transition of Russian ammonia through Ukraine pipelines to bolster the Black Sea grain corridor agreement. Meanwhile, Russia’s Grain Security director indicated that the Black Sea Grain Deal was supposed to allow safe transfer vessels, but Russia is finding its coast under attack through the corridor. This is casting additional doubt on its ability to be maintained.
According to Chinese weather forecasters, Henan province will need to prepare for further rains in the coming days. This will likely impact harvesting as the area has already been hit hard by rains and flooding earlier in May. Saudi Arabia has returned to the world wheat market and is now tendering for 480,000 MTs of wheat for September/October with the tender results due on Monday.
Weather models shifted a bit overnight, with limited rainfall for the Midwest/Delta for the next 10-12 days, which has been forecasted. The extended range forecast has the GFS bringing bouts of moisture into the Midwest in the 11-15 day model whereas the EU is less confident. In the meantime, daily rains will persist across the S and C Plains with totals of .5-2.5” of rain.
Live and feeder cattle prices pushed sharply higher again on Wednesday creating new contract highs throughout the complex, with April 2024 live cattle reaching a high of 182.87, a new all-time record. May 2024 feeder cattle were near $245. Negotiated fed cattle trade for Wednesday was quoted steady at $2 80-285 on a dressed bases in Nebraska, while markets were at a standstill and other regions. The cash outlook for the trade dress this week remains firm. Box beef values gained $0.88 on the choice while select was down $0.62. Spot live cattle have resistance at the continuation gap near $173 after the April contract expired.