Soybeans lead the overnight recovery from soybean meal strength.
This morning’s grain trade is mixed with row crops higher while wheat stumbles. Row crops are firming ahead of Tuesday’s WASDE crop report, while wheat continues to struggle with massive monthly Russian exports, which are now in the 5-6 MMT category. IKAR analysts indicated Russian 12.5% protein wheat for Oct delivery at the end of last week was $240/MT fob compared to $245/MT last week and well below the Ag ministry’s official floor of $270/MT.
Midwest corn harvest is starting to get active, with soybean cutting anticipated also to get busy in 10-12 days. The time for rain to benefit yield is ending. This afternoon’s crop ratings are anticipating further declines, with some suspecting a 2-3% lowering in both the corn and soybean G/E ratings. This puts the crop well below last year’s vegetative green index. This index does not consider the poor finishing weather that could reduce seed size and weight.
The UN’s human rights chief told a council session in Geneva that Russia is responsible for higher food prices due to their withdrawal from the Black Sea grain corridor pact and continued attacks on Ukrainian grain facilities. Russia intends to give 1 MMT of wheat to Turkey, which will mill the flower for poor South African nations. Ukraine’s exports for wheat, corn, and some for crops will move across towards Europe and down the Danube River, which will be costly and is expected to slow Ukrainian monthly exports by 30-40% versus the Black Sea shipment capabilities.
Australia, Argentina, and Northern Brazil weather forecasts call for limited rain for the next two weeks. Wheat crops in Australia and Argentina are being impacted currently, while early soybean seeding across Northern Brazil is slow to nonexistent due to excessive heat and dry soils. El Niño years often produce delayed soybean seedings across Northern Brazil as monsoonal rains are delayed. This extends the US export window beyond mid-January.
US forecast models offer below-normal rainfall and seasonal temperatures for the next two weeks. The cool temperatures compared to normal are over the next 3-4 days, with 60s and 70s most across the Midwest. A warming trend occurs thereafter. Showers are noted across the Lake states this morning, with a decidedly drier forecast offered after Tuesday. Any meaningful rain this week will be confined to the southern plains and any US due to Hurricane Lee. The end of the 2023 growing season for the Midwest will be dry, with soil moisture staying on the decline. The only benefit is a fast start to the 2023 corn and soybean harvest amid dry soils.
Last week was a significant up week for cattle and feeder cattle futures, with a firm outlook offered for this morning. October live cattle did not reach contract highs but did mark a new weekly high close. Feeder cattle contracts all set new contract highs and even on a nearby basis. Feeder cattle prices were regionally mixed during the holiday-shortened week but mostly firm. The Feeder Index is now at a new record high of $249.33. The summer break in the cash market has been limited, and prices have held a narrow range from the early June high. On average, if we look to the future, the cash market gains $16-18 from a third-quarter low. This puts prices at $198-200 at the end of the year/beginning of 2024.