Grain prices drift on a lack of Monday follow-through buying.
Grain prices are lower this morning after disappointing action on Monday’s trade, with corn and soybean not able to catch headwinds from the quick rise in energy prices through the new geopolitical events with Israel/Hamas. Lack of US export demand is being touted ahead of Thursday’s October WASDE crop report, bringing in fresh chart-based selling.
Midwest harvest continues with cash basis levels firming. W Midwest soybean basis bids are rising $.05-.25/Bu just late yesterday. Farmers are storing most of their uncommitted corn and soybean harvest, causing crushers to reach for supply amid strong margins. Today, a trading bottom in price should be created, with short covering the influence into Thursday.
The IMF is warned of sticky world inflation and argues that the Central Bank should keep up the fight and maintain high lending rates. China is said to be preparing a new economic stimulus package to age its fledgling economy. Details are being worked on, but China appears willing to endure a larger budget deficit to reach the economic growth target set out earlier this year.
The northern two-thirds of Brazil continue to hold in a below to much below normal rainfall pattern, with daily rainfall from Parana into the Río Grande do Sul the feature. High temps are meeting the lack of rain across N Brazil in the 90s/lower 100s. Argentina will be dry the next 10 days with showers in the 11-15 day period. Argentine wheat and corn are in immediate need of rainfall. South American production on this dryness will start to take on a bigger focus at the beginning of November.
Live cattle and feeder cattle all pushed lower again on Monday as the trade worked an inside day on Friday strength. This made it more of a technical play rather than a new direction finder. Negotiated fed cattle markets are starting out their typical quiet beginnings, with trade anticipated by Thursday. Box beef values were higher to start the week, with choice up $1.41, trading back above $300.
Slaughter margins have fallen $16/head to just $40. This is the lowest since last December, and compared to previous years in early October, it’s the lowest since 2014. Seasonally, the box beef market confirms a low this week , which should support a better cash trade later into the corridor. December cattle has a 100-day moving average near $183 as the market is becoming very oversold.