Grains are mixed as trade gets back underway after a three-day weekend.
Grains produced a mixed to firm opening Monday night on renewed Strikes on ports of Odessa and the Danube River ports, along with a lack of success with talks to revive the Black Sea Corridor. Soybeans also opened firm after the hot weekend, expecting ratings to decline today by 2-3% from the G/E category.
Softness materialized as algorithms returned to their selling strength, while reports from Turkey’s Erdogan said after talks with Putin on Monday that it may be possible to revive the Black Sea grain corridor and that they are working with the UN to address Russia’s expectations at this month’s general assembly meeting which occurs later this month of September 20.
The US dollar pushed higher this morning to a new six-month high and is trading at 104.77, up 57 cents, which put a risk off-tone to the outside markets, with crude oil giving up overnight strength after hitting a 9-month high on tightening supplies.
Overnight, Australia’s ABARE lowered their wheat production forecast to 25.4 MMT, off – 800,000 MT from the prior estimate. This is about -6% off the 10-year average. Australia’s ABARE pegged canola production forecast off -38% from last year and barley production off -26%. Strategie Grains lowered their 2023 EU production forecast of soybeans, sunflowers, and rapeseed by modest amounts.
Last week, the Monday afternoon crop conditions report halted the underway grain rally when the decline was less than expected. It’s plausible that after a three-day weekend and the first of the month effect, a decline in ratings today from the G/E category by as much as 3% or more will get the algos-rhythm traders to reverse the trend. Several prominent crop analysts will make the guesses for next Tuesday, September 12, crop production report on Wednesday and Thursday afternoon of this week. Enumerators for the USDA are out this week gathering data.
Temperatures relax later this week with possible light showers at the end of the week, but the crop is already turned and is quickly heading for maturity. Other than producing some green beans that will complicate harvest, the crop is heading for a quick finish, which is not productive for yield weights.
All primary weather models maintain below-normal rainfall for the Central US, with another hot day before returning to seasonal temperatures this week. Below normal temperatures arrive in the 6-10 day forecast with no evidence of the return of normal rainfall into mid-September. There will be occasional scattered showers, but any meaningful rainfall will be confined to North Dakota/northern Minnesota/Wisconsin and Michigan. The weather markets have now created a four-week window from mid-August to mid-September that will go down as one of the driest and warmest ends of the US growing season on record for the Midwest.
Live cattle closed slightly lower last week, while feeder cattle ended firm after setting new contract highs in the week. Seasonals are now bearish for the next 4-6 weeks, which will make it difficult for sustainable bull runs. Last week’s cattle slaughter rose to a seven-week high at 620,000 head but was still 13,000 head below last year. Slaughter in the last seven weeks has been 6% less than a year ago and the lowest since 2016. Choice cutout value last week was down $3.41 on the choice and select drifted $2.38. A lower beef trend would be expected in the coming weeks, with the choice cutout value expected to fall back into the $295-300 range.