Grain Futures Stuck in Neutral Ahead of USDA Reports
Grain futures have struggled to rally as harvest approaches and prices remain capped by selling pressure. Corn, wheat, and soybean futures have essentially traded sideways this week, waiting for more information from next Wednesday's USDA Crop Production and WASDE reports.
The US corn conditions declined more than expected, with only 61% of the crop rated Good-to-Excellent after expectations for unchanged ratings from last week's 63%. US soybean conditions held steady at 63% G/E. The spring wheat harvest is underway, with conditions increasing to 55% G/E, ahead of last week's 53%. However, US winter wheat harvest continues to advance but was delayed by weather.
The stalled rally in grains followed the surge in equity markets and higher fed cattle cash trade drove the cattle markets higher this week. However, on Thursday, weaker boxed beef prices and grain markets beginning to rebound saw liquidation across the cattle complex. The Cargill Fort Morgan beef processing plant is back at the negotiating table with the Teamsters labor union.
Continued China buying of US soybeans as well as strong corn exports have failed to drive these markets higher. Brady Sidwell, a commodity futures broker, notes that US dollar weakness has provided support for commodities traded in US dollars, while the index continues to weaken. The weaker US job numbers released on Friday contributed to the weaker trade with a softer jobs market lending to a potential Fed rate pause or ease in coming meetings.