More Ukraine attacks overnight
Grain futures firmed overnight after becoming oversold, as Russian drones targeted Danube River grain silos last night at the port of Reni, damaging storage and warehouses, according to senior Ukraine officials. However, grain shipping sources say operations have continued despite the attacks, keeping prices in check. A Hong Kong flagged ship enroute to Istanbul left Odesa Black Sea port, testing the “humanitarian” corridor and Russia’s threat to attack ships. Russia’s ambassador told state-run media that they are working with “friendly” partners on alternatives to the Black Sea corridor to deliver grain to needy nations.
On August 1st and starting the final month of the crop year, US soybean stocks are down -18% from last year and the lowest in 8 years. Domestic crush rates are expected to expand in 23/24 due to additional processing capacity coming online. This makes the upcoming heat and dryness a major concern if it develops as forecasted, reducing yields to potentially below 50 BPA tightening up our carryout.
The three forecasting models, GFS/EU/Canadian operational models have all extended the pattern of Central US heat into the very end of next week and have hiked temperature forecasts across the Central Plains Sunday-Tuesday. High readings will reach 102-105 in TX, OK, KS, and NE. Highs reach 95-98 in IA, MO, IL, and IN Wednesday-Friday. An increase in tropical activity lowers the confidence in this forecast details beyond 7-8 days, where the EU model then futures tropical moisture working its way into the. It’s not anticipated though the large-scale pattern shift will take place. What is known is dryness will be established in the Midwest into late month, while excessive heat defines next week.
Live and feeder cattle again closed lower on Tuesday, with a steady outlook offered for today. Live cattle are risking technical breakdowns if moving averages that the October contract is sitting on top of fail. Very small numbers were traded yesterday in the negotiated market, as IA/MN had some steady trades on the week at $188. Even though the board is softening, the beef trade remains steady. Hedged feed yards will likely sell steady bids if they can pick up a few extra dollars on basis.
Early-week slaughter is starting out softer than last week with slaughter now for the first half the month 6% less than a year ago and 2% below the five-year average. Reduce production has supported a rally in beef prices this week. On Tuesday, choice gained $1.76 and is up a total of $4.65 for the week. Choice gained $2.58 and is now $5.80 higher for the week. Live cattle values need to hold yesterday’s lows by a few nickels or risk a technical breakdown.