Grains are lower again to end the week.
Grain futures are lower this morning on the anticipation of next week’s rain in N Brazil. The extended range forecast still shows a return of dryness last ridging, but for now, the market is bracing for what accumulations might come to. Soy oil prices are firming as the spreads are working out a bottom for the oil market. Thursday’s open interest data shows a decline in corn and soybeans, which implies profit-taking, not new selling, but there was a modest rise in Chicago wheat. Corn OI fell 7,430 contracts, soybeans were off 1,140 contracts, and Chicago gained 1,212 contracts.
According to Interfax, a senior Ukraine official estimates that 150 ships have used the “alternative” Black Sea corridor shipping lanes since August, moving 3.2 MMT of grain. Following Putin’s promise last July to ship free grain to poor African nations, the first cargoes of 200K MT of grain are said to be headed to six countries. The addition of Ukraine using 50 Bil of US dollars (they have none; it can only be a bookkeeping scheme from the money we have sent) with Lloyd’s of London providing new insurance has been the latest negative impact to wheat.
Argentina elections on Sunday will impact the grains due to parties' different views on how to address the country’s rampant inflation. The drought situation in Argentina has been catastrophic to the economy as they are not receiving dollars from the Ag sector and processors (exports of all crops are down -39%). This will make for a challenging environment for the new President.
Next week, for soybeans, it’s all about the potential rain in Brazil. Records are still being set in Brazil, with temperatures remaining in the 90s to lower 100s into Sunday. Meanwhile, flooding is widespread in Río Grande do Sul, Santa Caterina, and S Parana. The scattered showers start to arrive late Sunday in N Brazil as a high-pressure Ridge relaxes. Showers persist into Thursday before the Ridge returns, and another extended period of dry weather looks to engulf Northern Brazil. Currently, the GFS, which has been the most accurate for the last eight weeks, shows rain of .5-2.50”, which would reflect only 40% or less of normal precipitation for this area for the month of November, and this occurs in the next 3-6 day period. The euro model, which has always looked for rain into the future, has the potential of 1-4.50” across N Brazil, which is why the market is taking on such a negative stance as it is focusing on this model, which has been wrong for eight weeks. Additional heavy rains of 4-9.00” are anticipated to fall across S Brazil complicating their situation. Argentina, meanwhile, remains dry into November 28.
Live and feeder cattle futures plummeted to steep losses yesterday on rumors that Tyson Foods had a computer hack. Tyson never commented on it while the market recalled the JBS hack, which shut down production temporarily. A recovery should be anticipated today as Tyson Foods seems to be operational throughout yesterday. The break helped promote a lower cash trade as all regions moved cattle at $178, which was $2-3 lower for the week. Dressed sales in the north occurred $5 lower at $282.
The average trade estimate in today’s COF report calls for a large jump in placements from a year ago, but it’s worth remembering that placements a year ago were record-low. Also, one more day in the computation accounts for 4.5%. Estimates are On Feed 102.4%, Placed 107.9%, Marketed 98.3%.