Grains continue their liquidation, with rain likely in the dry Midwest.
Another morning of sharply lower grain prices as the weather models inside the five-day forecast show abundant chances of rains of over 1.00” in the driest areas of the Midwest for the weekend. Storm clusters overnight moved across northern and eastern IA. With recent rains and anticipated weekend rains, crop ratings on Monday are looking for a marked improvement. This has markets in complete liquidation ahead of the end of the quarter/end of the month on Friday, with the large Stocks and Seeding report out at 11:00 a.m. It’s also first notice day for July futures contracts on Friday.
Yesterday’s open interest saw an implosion on the data, as corn open interest declined 35,230 contracts, soybeans were off by 14,188 contracts, and wheat was down 13,855. In the soy products, soybean meal is down 12,687 and 3223 per soybean oil. This kind of action implies last week Wednesday was the peak with the outcome of July weather the focus. Forecasts verifying over the weekend, this will not be 2012, it will be 2023, with the blocking Ridge in Ontario, Canada having moved out, this allows for more normal rains in July to move to the Midwest.
Stats Canada released its acreage report this morning, and their All-Wheat figure was at 26.922 Mil acres, with canola at 22.082 Mil acres. Both numbers were slightly above estimates but in the range of guesses. Durum was 6.034 Mil acres, with oats at 2.537 Mil acres, and the average guess on oats was 2.9 Mil acres. Flax was put at 609,000 acres, with barley at 7.321 Mil acres.
Today’s forecast for the Midwest is little changed from Tuesday with Ridge riding storms to produce Midwest rains over the next 10 days. The best rain chances now focus South and East of I-80, a region that missed last weekend’s moisture. Total 10-day accumulations range in the .5-2.00” rains. The NW Midwest will be drier with just a few showers, while the southern and eastern Midwest be the wettest in terms of rainfall outlay. The best rain chances occur from Friday into Monday with a secondary system the last half of next week and then 1/3 system is in line in the 11-15 day period it appears now near-normal rain is forecasted for the Central US into July 12.
Live cattle and feeder cattle closed higher yesterday, and a higher start is anticipated again for feeder cattle with the week feed grain trade. Yesterday’s initial cash trade was small numbers in Kansas which was $2 lower at $178 and sales in the Plains were quoted $1-2 lower at $178-179. Feedlot asking prices after yesterday’s rally are quoted at $182. Even though futures were higher yesterday the cash beef market fell sharply with Choice losing $3.81 and Select being off $1.24. Even though there was a decline, both values are holding at record levels for late June. Estimated slaughter margins stand at $295/head on beef, with the byproduct value adding another $120/head of revenue. The large discount August cattle have been caring to the cash market has been the source of strength, while feeder cattle are receiving the support of the recent 80-cent decline in corn prices since last Wednesday.