Grains are set to test Turnaround-Tuesday.
Grain trade was mostly higher overnight until subsiding during the early morning hours, as crop ratings showed the soybean crop down 2% to 50% G/E with 12% of the crop harvested. Corn ratings increased by 2% to 53% G/E with 15% harvest complete. Numerous analyst models continue to suggest a corn yield near 171 BPA while soybeans are at 49 BPA, which puts the carryout in a threatening position for soybeans.
Russia attacked Ukraine’s Izmail port on the Danube River terminal overnight, damaging grain storage facilities again, and trucks are awaiting to unload grain. The Russians continue to target Ukraine’s grain infrastructure while Ukraine, at worse, can target the Black Sea fleet and Crimea. The Kerch Bridge seems to be well protected by the Russians. Today, another vessel has into Ukraine using their new corridor to the west load out grain. Ukrainian grain exports are down 50% in the month of September, and this trend will likely persist into October.
Yesterday’s heavy selling in soybean oil futures has index fund managers almost completely reducing their long position. The Soy oil cash market held at 3.5-5 cents over on Illinois rail, with just 67 receipts registered for delivery on Friday. The possibility of chart-related selling from funds can continue yet, but the break is a correction of a longer-term bull market as renewable diesel demand ramps up and North American soy oil/canola supplies tighten into 2024.
This Friday’s USDA/NASS September Stocks and Small Grains Report has been known to hold surprises as March and June's reports indicated larger US corn feeding than last year’s, and the soybean crop may have been overstated. Friday’s report is USDA’s final judgment on this. The balance sheet for soybeans is tightening on record large crush and developing poor yields.
Little or no rain is forecasted for the Argentine crops for the next few weeks, putting their HRW wheat at risk due to its reproductive stage development. Their first corn and soybean crop seeding is also being delayed. Meanwhile, Matto Grasso do Sul in Brazil has the potential for some rain at the opening of October, but it’s not a change to a wet forecast.
Live cattle traded mixed on Monday, while feeder cattle moved slightly lower but were near session highs at the end of the day. The early week’s cash outlook is for steady bids, with active trade likely to hold until the last half of the week. Box beef values were mixed with choice down $1.85 while select was down two cents. Packers were unable to move beef at higher prices even as they restricted recent week slaughter numbers.
Yesterday’s September Cold Storage report showed that US beef stocks rose 3% from July, over 18% less than a year ago. This marked the seventh consecutive month of year-over-your declines and the sixth month of double-digit declines. A seasonal low in beef stocks was scored two months later than normal, and stocks typically increase into the end of the year. There was a slight build in pork stocks during August, but total stocks are trailing last year’s level by -13% and the 5-year average by -11% for the same period.