Soybeans lead overnight follow-through strength from Monday.
The overnight grain trade had seen further buying interest in the grain trade, especially soybeans, as South American weather and crop size started to become in focus. Also, China is looking at new economic stimulus plans that could come to #278 billion to spark a rebound in Chinese sure prices. The Chinese government is looking for fresh economic stemless measures to boost their domestic consumption as our economy still staggers post-Covid for GDP rates.
Analysts with Cogo consultancy lowered their estimate of Brazil’s 23/24 2nd crop safrinha corn to 118.5 MMT from 129.6 MMT previously due to expectations of 5% less planted acres and intense El Nino conditions. Farmers are less willing to risk planting corn due to low prices.
Argentine inflation is soaring about 200% in January with Pres. Milei now seeking to tax individuals that make more than $1,585/month to raise revenue. The new tax would also include farmers, which is raising worry that new elevated Argentine ag export taxes will stay in place through 2024. The current blue peso exchange rate has pushed to new highs and is now priced at 1210 versus 1 USD.
ECB Policy Decision is on Thursday with a dovish ECB announcement that would drive the Euro down and boost the Dollar. The Euro constitutes 58% of the Dollar index. US GDP data on Thursday, then US PCE inflation data on Friday (2.6% expected year-over-year).
Bloomberg reported yesterday that the NASDAQ versus the Commodity ratio is hovering back at the 1999 high on the current AI enthusiasm. The ratio reflects that US equity markets may be too expensive or that raw material values are too cheap. Hedge fund managers are taking note, but a weaker US dollar is needed to spark a macroeconomic shift in their investment.
The SA weather forecasts have the weather pattern stagnant, with soaking rain across Brazil and hot/dry weather for Argentina. The GFS is especially hot beyond this weekend, with highs in the mid-90s to lower 100s across Argentina. The extended 11-15 day forecast maintains a trend of below normal Argentine rainfall with near to above normal temperatures and additional wet weather across N Brazil.
Live and feeder cattle futures closed mixed yesterday after an early lower run. January feeders expire on Thursday, and the cash feeder Index started the week higher by $1.25 at $228.51. Slaughter print operations are back to normal this week with warmer temperatures and negotiated fed cattle markets looking to trade near steady later this week. Box beef values did start out with choice jumping $3.17 higher at $299, which was a seven-week high. Select also gained $3.532 and an 18-week high of $286. These are record-high prices for the last half of January. As production comes back online, box beef values will be expected to slip this week. A Cold Storage report will be released on Wednesday, and it is expected to show beef stocks to be well below a year ago. Seasonally, stocks peak in December and tighten into the summer.