Markets are lower again this morning with corn and soybeans both down 7.
We have seen subdued trade as the traders bounce on every weather update. The GFS model continues to hold the Ridge over the Central Midwest into the first week of August while the EU model has the Ridge sliding south and west allowing for more normal conditions into the first week of August.
USDA releases updated Cattle on Feed data this afternoon. The country’s cattle inventory, which started the year out on a high note on steady consumer demand amid the pandemic, is likely going to begin to shrink as pastures in the West and Upper Midwest are rendered unfit for cattle due to drought conditions and sky-high grain prices put the squeeze on cattle producers’ profit margins.
China has been absent in the market for US new crop beans. China remains the short in the World as South American stocks already look to be close to sold out. China has almost zero coverage in new crop beans in the US and you can bet that a very large import program could start at any time. The futures prices are 4-5 dollars more than a year ago, and these purchases are not getting forward booked because of the price risk and uncertainty of the US crop. They may end up making spot purchases from harvest through January instead of the all the pre-booked grain they set for delivery last year. This will eventually set up a very bullish dynamic for new crop beans, which are forecast to have a 155 million bushel carryout for next year.
Have a Safe Day!