Today's grain close has the potential for a weekly reversal on price charts.
Overnight, the grain trade followed global markets firmer as a risk-on mentality was put in place. After making new winter lows this week, corn, soybeans, and wheat appear to be set to make chart-based lows, with the potential to close unchanged with last Friday’s close. March Corn last Friday closed at 447, March soybeans at 1224.2, and March Chicago wheat at 596. Note corn and soybeans are trading at these values this morning.
AgroConsult analysts cut their estimate of 23/24 Brazilian soybean production to 153.8 MMT from 161.6 MMT previously. They added that El Nino has made it hard to assess field conditions, and they will later revisit Mato Grosso to evaluate later planted and replanted acres. Attentive a short covering is present as there are wide-ranging Brazilian crop estimates, but what is becoming certain is that the yields are near 150 and possibly lower while Argentina is now entering a weather phase that could take the bloom off the yield that’s been touted.
The Buenos Aires Grain Exchange crop report showed Argentine corn 92.7% planted and 46% G/E (vs. 36% G/E last week) and soybeans 97.1% planted and 55% G/E (vs. 51% G/E last week). Argentina’s government posted a +$1.02B trade surplus in December 2023. This was the first surplus since February 2023. The overall trade deficit for 2023 was -$6.93B.
Moscow said today that there is no chance to restart the UN’s Black Sea grain export deal and warned that alternative routes carry “huge” risks. Geopolitical risks remain high on multiple fronts, with rebels from Yemen leveling attacks in the Red Sea, Iran has attacked rebels in multiple Middle Eastern countries, and Pakistan has responded. China has made threats regarding Taiwan.
The South American forecast into early February remains consistent with a blocking high-pressure Ridge aloft W Argentina, keeping a pattern of complete dryness and warming temps in place throughout the next two weeks. Welcome grain returns to Brazil by Tuesday, with heavy cumulative totals forecasted in the 6-15 day window. The Brazilian pattern is broadly favorable, but the Argentine forecast needs a pattern shift no later than early February. Longer-term guidance is optimistic that regular showers will resume in Argentina beyond the next three weeks, but the pattern shift needs to be pulled into nearby forecasts.
A sharply higher trade took place for live cattle and feeder cattle yesterday, with a firm outlook offered for early trade. It was the highest close for February cattle since the November Cattle on Feed report, while March feeder cattle were above the pre-reporting trading levels. The negotiated fed cattle market still remained untraded through Thursday with bids in any at $273-275 on a dressed basis, which is steady with last week. Cattle feeders passed on steady bids amid the recent rally in beef prices in the cost of winter stress. Offers in the South remain quoted at $174-175, which is $2-3 higher than last week. It’s expected that active trade will develop today. Box beef values were mixed on Thursday, with Choice down $2.16 while still $7 higher for the week, and Select was up $0.74 but still showing a gain of nearly $12. Cattle on Feed Report today at 2:00 pm CT, with the average analyst’s estimates being On Feed 102.1% of last year, Placements 95.4%, and Marketings 99.3%.