Overnight weakness was minimal.
Grain futures experienced a bit of a Turnaround-Tuesday overnight, but prices have recovered into the morning hours. The prospects of rainfall in the dry areas of N Brazil are bringing in a slightly wetter forecast inside the 6-10 day forecast. The forecast then shows a high-pressure Ridge returning for Northern Brazil in the 12-15 day period with returning heat and dryness. Potential rain in the near term is .5-2.50.
This morning's release of the CPI was considered friendly for outside markets, with the dollar declining half a percent and is now trading back under 105.00. This boosted the stock market sharply and added strength to metals and energies. All categories of the CPI were slightly less than expected on inflation. some prognosticatorsare stating there will be no more interest rate hikes the rest of this year and some are even discussing the prospects of yield relief sometime next year.
Yesterday’s release of the Commitment of Traders report showed funds had added to their short position in corn and is part of yesterday’s recovery pinch. The report showed that funds sold 24,156 contracts of corn (net – 168,588), bought 45,445 contracts of beans (net 68,598), and bought 9,313 contracts of wheat (net -92,262).
The harvest for corn and soybeans is nearly complete, as yesterday’s Crop Progress showed corn harvest is 88% complete and soybeans 95% complete. Winter wheat is 93% planted and 47% G/E (down -3%).
Pres. Biden meets with Chinese Pres. Xi later today and into Thursday, it’s anticipated that some complementary purchases by the Chinese will be made in many facets. Also, the U.S. House will try to pass its Continuing Resolution that includes a one-year extension of the 2018 US Farm Bill. The houseboat is expected to be close.
Extreme heat is now occurring in the northern 2/3s of Brazil, with high temps currently in the mid-90s to lower 100s. 40% of the readings are setting daily records at 104-110°. Meanwhile, across Southern Brazil additional .25-2.00” of rainfall is occurring. Heat continues to fan across Northern Brazil until early next week, when the potential of .5-2.50 inches of rain can occur. The high-pressure Ridge returns across N Brazil in the 11-15 day period. Weather model forecasters anticipate this is not a pattern change but an interlude where rain occurs during a drought but never lasts. The rainfall that does come will be helpful, but the soil profile does not hold the moisture long.
Live and feeder cattle futures did boost higher on Monday, with a steady outlook anticipated this morning. The CME cash feeder Index was down $forward to start the week at $231.40. This has occurred despite some bright spot prices that we were hearing reported last week. The delayed Commitment of Traders report surprisingly shows that funds were net buyers as of Tuesday of 537 contracts last Tuesday. Hedgers were also net buyers of a modest hundred 67 contracts. The Tuesday-two Tuesday price drop nearby futures was $5, and both hedgers and speculators were net buyers for the week. In feeder cattle, funds sold 770 contracts and now hold the first net short position since February of a small 35 contracts. The Cattle on Feed report is this Friday, with On Feed estimated at 102.4%, Placements at 107.9%, and Marketings at 98.3%. With one extra day reportable, that adds 4.5%.