Concerning weather for the last half of August supports beans.
Grain futures had corn and wheat lower overnight, while soybeans had mounted a strong rally that faded by the morning hours. Concerns continue to grow over the upcoming hot/dry weather in the Central US for the next two weeks and what the impact will have on row crop yields. Soybeans have halted the bloom phase for groups 2-3’s but are very sensitive to the upcoming weather in the pod development phase. Meanwhile, overnight the Hong Kong-flagged ship that left a Ukraine port yesterday has made it to Romanian waters and is scheduled to arrive in Istanbul today (without Russian interference), casting the bearish tone over wheat.
The macro-environment for commodities as of late is bearish on the outside markets, and as a result of the Fed minutes yesterday, traders have raised the probability of another 2023 Fed rate hike in September. Interest rates have risen to multi-decade highs.
It’s back in the news again that, according to Reuters, India is considering importing up to 9 MMT of Russian-origin wheat at discounted prices as they attempt to cool off rising domestic prices. Bloomberg reported that the US is preparing to elevate its complaint against Mexico’s ban on GMO corn imports. Yesterday was the deadline to have resolved the dispute. The EU said that it is investigating whether Indonesia has been going around biodiesel import duties passing biodiesel through China and Britain before heading to the EU.
Today’s primary weather models remain in agreement with an extended period of hot/dry weather that lasts into early September. The GFS model has limited Central US rainfall into September 2, while the EU model has a few showers across the Lake states during the closing days of August. Currently, the GFS has had a favorable track record lately. The high-pressure Ridge loses amplitude during the opening days of September with showers across the Lake states, but the Plains/Delta area continues on with the heat with readings in the mid-90s to lower 100s which will rapidly deplete soil moisture.
Live and feeder cattle continued lower again yesterday for the fourth day despite strength in the box beef market. Outside market influence from the stock market didn’t help, and this may possibly offer morning strength with outside markets recovering from yesterday’s hit from the Federal Reserve minutes. Yesterday some initial cash trade got underway, with TX and KS selling at $1 lower for the week at $1 79. Live sales in Nebraska were steady at $188 and dressed sales at $295. Box beef values again were strong, with the choice gaining $1.73 while select was up $1.74.
This Friday is the monthly Cattle on Feed report at 2 PM CT. Estimates s include On Feed 98.4% of last year, Placements 94.5%, and Marketings 94.8%. If realized, this puts the placement rate the lowest since 2017, and feedlot inventory will be below last year for the 11th straight month.