WASDE October crop production data out at 11:00 a.m. today.
This morning’s grain trade is coming in firm to higher, led by the short covering in soybeans ahead of today’s WASDE report after taking out early week lows and closing near 1250. The trade seems to be set for a non-exciting report, with corn and soybean yield estimates coming in slightly below September and no expected changes in seeding or harvest area by FSA data, which was already utilized in the September report. Today’s bigger concern seems to be around what the USDA may do to exports and the prospects of lowering them due to our pace being down 30% from year ago levels.
The Rosario Commodity Exchange in Argentina reduced their wheat crop by 700,000 MTs to 14.3 MMTs due to the ongoing drought. The exchange raised their soybean production forecast for this year to 50 MMTs, implying their farmers will hold off on seeding in the hopes of rainfall later into October or November. In September, WASDE estimated the Argentine wheat crop at 16.5 MMTs.
Egypt is back again in the wheat market, seeking world wheat for December in an overnight tender. The tender payment option is 180 and 270 days, buyers’ option. GASC appears to be using its public tender to secure private wheat purchases from Russia and keep Eastern European prices in decline. Russian Pres. Putin just signed a decree that obligates Russian ag exporters to convert all foreign currency into rubles, quickly putting pressure on the US dollar. This morning's CPI came in hotter than anticipated, firming the US dollar back up again, and is presently this morning up $0.22 at $105.79.
Northern Brazil's dryness is slowly receiving attention as the flow of key rivers drop to their lowest levels in recorded history, which is raising transportation costs and grounding barges. The weather forecast keeps the northern two-thirds of Brazil in a below to much below normal rainfall pattern through October 22 while additional rains fall across the saturated Southern Brazil region. This should start to become a more heightened concern after today’s WASDE data, especially when models are starting to appear into November with no change in the forecast.
Both live and feeder cattle futures closed higher Wednesday, with a firm outlook offered for early trade this morning. Some active cash trade developed in the South, with sales in Texas and Kansas, quoted at $183, which was $1 higher from last week. This follows Tuesday's limited trade, where Nebraska and IA/MN markets were quiet. Cattle slaughter through midweek totaled 379,000 head, up 4000 head from last week but is still 4000 head fewer than a year ago. This slight uptick in production has kept beef prices lower on Wednesday. Meanwhile, the choice cutout value was lower by $0.78 but still above $300, and select was down $0.85.
December live cattle has built a support base at 184.50-185.00 and had witnessed an outside day higher close yesterday (lower low followed by a higher high over the preceding day with a close above the preceding day), which could imply major support is in place near term with a perspective rally possible in the coming week.