Soybeans lead overnight strength
Grain futures opened sharply higher last night, with soybeans the strongest, as the crop is most at risk with the upcoming record heat, which will affect pod filling. Wheat softened overnight as it became the sell leg against soybeans, while corn retreated its gains after jumping $0.30 from last Wednesday’s new calendar year low.
The Pro Farmer tour kicks off today in the eastern and western legs of the tour, gathering yield information. The tour will end Thursday, with estimates for the yields being released on Friday. Interest is how extreme heat this week and low moisture will impact soybean and corn yields. It will have an acute impact on the soybean crop because it is currently involved in its pod-filling stage. Pro Farmer tweets from the field will have an impact on intraday volatility.
This afternoon’s crop condition reports estimate that corn and soybean G/E categories hold steady or drift as much as 2 percent. The next two weeks anticipate large drops in the ratings with the heat experienced this week and several weeks of dryness forecasted through September 5.
The rumor mill of India looking to import 7-9 MMTs of Russian wheat should start to surface possibly this week. The Indian monsoonal rains have been a disappointment at this time for needed rain to aid the groundnut/soybean crops, which is now passing. The Indian monsoon seasonally starts withdrawing mid to late September, but it is currently occurring with two-week forecasts showing a lack of moisture.
The Central US weather models are all in agreement that a period of hot/dry weather will occur in the Central US into September. The GFS model offers limited Central Midwest rain into September 6, while the EU model has a few showers across the Central Plains and Missouri next week. Excessive heat will be recorded this week near record highs, with readings from the mid-90s to lower 100s. Crop areas in the W Midwest and the C Plains will endure 100-110° high with low soil moisture. This will produce premature death of corn and soybean plants, pushing crop maturity and reducing yield. This week's hottest temps occur from Tuesday through Friday, with moderation over the weekend. The crop endured a hot dry June and now is getting multiple weeks of the return of hot/dryness.
Cattle ended lower last week ahead of the August COF report, which reported, On Feed 97.7% of last year (98.4% expected), Placements 91.7% (94.5% expected), and Marketings 94.7% (94.8% expected). Placements and On feed are friendly for this morning’s opening, and with feed grains having weakened overnight from their higher start, feeder cattle should receive a strong opening.
Last week’s cattle slaughter was up slightly at 616,000 head, which was the most in four weeks, but it is still 7% below a year ago. Cumulative slaughter for the year is down 4%, while slaughter in the last five weeks has been 6% less than a year ago and the lowest since 2016. Box beef values were sharply higher for the week on light production in the building of Labor Day holiday demand, while Packers restricted kills to backup cattle and allowed futures to drift. The seasonal high in the box beef market should be reached this week as Labor Day demand is satisfied. Live cattle are below moving averages, essentially a dollar above the market, and need to overcome them to break their negative technical cycle of liquidation from the funds.