Corn and soybeans follow oil lower while wheat rises.
A mixed morning in the grain trade as soybeans and corn drifted lower on the collapse in crude oil overnight while wheat rallied on more Russian attacks. Ukraine defense officials reported more Russian drone attacks overnight in Odesa, Mykolaiv, and Kirovohrad areas. UK intelligence suggested that Russia may target civilian shipping by secretly laying mines on approaches to Ukrainian ports and then falsely blaming Ukrainian attacks.
If Ukraine’s newly started Marine export corridor is closed by Russian port attacks or sea mines, it will significantly adversely impact its grain trade. With Southern Hemisphere weather risks rising as the US harvest pushes ahead, grain pricing is seen as lows being forged, but slow and difficult they are as managed money needs a push to get their Algo machines to change directions.
OPEC has held their production steady into the end of the year, but the fear is at the rising US interest rates producing new headwinds for the US economy. The stock market is struggling with the 30-year mortgage rate reaching a 23-year high at 7.55% mystic inflation. The break in oil prices has not directly affected corn and soybeans, as it never supported corn and beans during its swift rally in August and September. The break is having a minor effect, but not as substantial as it typically would since grains did not enjoy the same rally.
Argentina Ag Business Group estimates that the country's domestic market will only have 3 MMT of soybean stocks to last from October through May. The group also estimates idle crush capacity of 65% currently and could rise further, and a record 10 MMT of imports will be needed by the end of the year. The Rosario Commodity Exchange also went on to state that a 15 MMT wheat crop estimate is at risk if soaking rains do not immediately fall. The grain exchange warned that the crop is falling into a deepening drought with limited rain forecast for another two weeks. Argentine farmers have halted the first corn crop seeding, awaiting germinating rain. Amid acute economic inflation in the prospect of another year of drought, financial targets are being acute for Argentine farmers.
Yesterday, live cattle turned higher on the close while feeder cattle were mixed. In an early morning low, December cattle found demand that lifted the market above unchanged in the close. November feeder cattle found support on the break just below the 100-day MA. Negotiated fed cattle trade for the week remains slow, with sales quoted steady to $1 lower from the previous week at $182. Cattle slaughtered midweek totaled 375,000 head, down 6000 from last week and 11,000 head less than a year ago. Despite lighter production in the first half of the week, box beef values gave back early week gains on Wednesday. The choice cutout fell $3.31 and select gave up $0.72.
Live cattle will likely work out a rough correction time in the current environment until the cash trade shows improved strength. Deferred contracts still carry a premium, but that premium has been reduced. With economic factors now coming into find concerns for demand, the bull supply side of the trade is now throwing a focus back to demand. This could take until November to sort out, with the next bullish seasonal time window for cattle kicking in December 7 (Pearl Harbor Day) into the new year.