Crop ratings had values lower overnight.
Grain futures are softer this morning, lower with yesterday’s improved crop ratings. Crop Progress showed corn conditions improving 2% to 59% G/E. Notable changes included IL +6%, MO +9%, SD +9%, IN & OH +3%. Soybean conditions improved by 5% to 59% G/E. Notable changes included IL +12%, IA +5%, SD +7%, ND +6%, IN & OH +3%. Soybeans did push higher in the night on the upcoming dry/hot temperature forecast and retreated in the morning hours as outside markets when risk-on as China reported cutting their lending rates.
US corn values are now even with Brazil through November, and Argentina has no offers of any size despite producer sales through the first part of August after the government's favorable peso/ dollar conversion. The Russian ruble is weak again despite the Russian Central Banks emergency hike in interest rates Monday to 12% versus 8.5% previously, which will possibly harm their ag financing in the long run but keeps near-term exporter margins intact. China’s central bank overnight cut its short-term lending rates to select financial institutions from 2.65% to 2.5%. This suggests China’s government acknowledges their sputtering economy despite ending Covid lockdown protocols.
The NOPA member crush is out today for their July usage and is estimated at 171 Mil Bu versus 170 Mil last year and would be the second highest on record. Crush margins are supporting a near-record late-season crush, with the board and physical margins recovering rapidly in the first week of July. Board crush this a.m. is at $2.90/Bu. Cash margins in the Central Midwest are pegged at $3.50+/Bu, with cash soy oil still 2 ½-7 cents/pound above spot CBOT.
The major forecasting models remain in agreement with their outlooks into the final days of August and are consistent with prior runs. After this weekend, a rapidly expanding high-pressure aloft fuels a pattern of dryness and abnormal heat. Temperatures peaked next Monday-Wednesday with no moisture in the forecast into August 28-29. Dictated harvest has now begun an unwanted rainfall of 1-3” is forecasted for parts of Alberta and Manitoba in Canada.
Live and feeder cattle prices closed lower yesterday, with October cattle right on top of the shelf support that needs to hold. Cash cattle markets were quiet, with trade expected late week. Box beef values were sharply higher despite the poor performance on the board, with Choice up $2.89 and Select gaining $3.22. The choice/select beef spread is at historical summer highs this summer. Along with reduced production, the percentage of calibrating choice declined from historic seasonal levels in the first five months of the year and was back near the five-year average in June. The latest grading percentages data showed the choice grade out to a new low for the year at 71.5%. Seasonally, the choice grading percentages tend to decline into late October and then increase into the end of the year. October live cattle are at a line in the sand that, if closed below, will trigger index funds to liquidate.