Grains lower overnight as military actions remain quiet in Ukraine on grain infrastructure.
Grain prices softened overnight while soybeans traded on either side of unchanged. There were no Russian strikes on Ukrainian grain handling facilities overnight, which are on pause, but it is noted that there were reports of blasts from sea mines surrounding Odessa overnight. The Head of Ukraine’s Danube Commission said river ports need additional protection against air attacks to restore trust. If this is achieved, it then remains to be seen what volumes the river ports can handle.
According to Wheat Tour scouts, early spring wheat yields in ND are above the 5-year average but below last year’s results. Final estimates from the Tour will be released on Thursday.
Russian wheat FOB is reportedly still the cheapest exportable wheat in the world today at $240. Russian offers rise in September to $245/MT and then $250/MT for October and another $5 higher for November. This compares to German/Baltic and French wheat offers that are above $290/MT. Russian harvested protein levels are in decline with more of the crop testing 11-11.5% compared to lofty levels of 2022, according to exporters. World wheat prices have bottomed out, which will start to entice importers and millers to take forward coverage on moderate corrections.
Today the US central bank is anticipated to raise its lending rates by .25% and then should indicate a lasting pause. The rate increase comes at 1:00 p.m., with Chairman Powell speaking at 1:30. The Federal Reserve’s communique comments will be closely watched for news of future rate hikes that will affect the US dollar.
The heat is on for Central US crops as forecast models keep extending warmth into the first half of August as the high-pressure Ridge is reluctant to retrograde west. This provides an extended period of above-normal warmth with lows holding above 70° in the evening. It’s a lasting warmth that will add stress to corn as the plant won’t be able to respirate. There will be Ridge riding thunderstorms around the northern portions of the Ridge, but South-Central US high-pressure ridging hangs on with heat/dryness to envelope a large share of the southern two-thirds of the Midwest/Central Plains and the Delta. In the next two weeks, high temps will be 3-8° above normal during the hottest period of summer. This places highs in the upper 80s to lower 100s, with most extreme heat occurring during the next 3-4 days. Forecast models are struggling with rain location/amounts with the Ridge riding systems.
Cattle futures settled lower Tuesday while feeder cattle would just below unchanged even as the corn market corrected. A weaker outlook is anticipated this morning on follow-through selling. The Plains cash markets were quiet, with a few numbers reported in IA/MN at $188-190, which was steady to $2 higher. Feed yards will be looking to move show lists for no less than steady money, and a further decline at the CME would allow hedged feed yards to pick up a couple of dollars on basis.
Yesterday’s July Cold Storage report showed end-of-the-month June beef stocks at 412 Mil pounds, down 3% from May and 20% less than a year ago. This marked the sixth consecutive month-over-month decline in the fifth consecutive year-over-year decline. It was also the largest year-over-year decline since July 2014. Seasonally beef stocks tend to bottom out in June and increase into the end of the year. The July WASDE pegged the year-end stocks at 645 Mil pounds on a carcass weight equivalent to or near 486 Mil pounds on a product weight basis. Live cattle October have chart-based support near 178.00.