It’s Tuesday in Chicago, a day when commodity markets sometimes reverse themselves from Monday’s action. Such are the concerns of many soybean traders this morning as overnight action appears to be reversing Monday’s sharp gains in an attempt to fill chart gaps left on daily charts Monday.\r\n Overnight soybean price declines haven’t been enough yet to trigger notions that the rally is over for the season, but traders have been nervous about the bubble bursting for weeks. Chinese buyers could pull out of the market at any time, thrusting previous purchases back into the domestic market pressuring cash and futures markets.\r\n So far, cancellations have been the exception rather than the rule, although most recent soybean purchases by China have been Brazilian. US soybean export loadings continue, but facing Chinese crush margins still have some traders worrying that the market will dry up suddenly.\r\n Still, technical factors remain supportive, and heavy rains in parts of Brazil are slowing the harvest pace. While many say the harvest is almost up to the point that it can support demand, harvest delays always worry traders since weather-induced delays can also mean crop damage and lost production.\r\n Wheat markets are getting a boost from another “polar vortex†settling in across the lower 48. Warmer temperatures recently have melted much of the snow cover in the central and southern Plains, and some of the wheat has broken dormancy. \r\n Without snow cover and with the plants trying to grow, they are vulnerable to extreme cold temperatures. Thus, “winter kill†is a term mentioned by market analysts in their comments to clients.\r\n The arctic temperatures often are bringing along fresh snow, but not everywhere. The central and southern Plains especially have been lacking in adequate snow cover.\r\n And the Texas Department of Agriculture Monday reported a further decline in the health of the state’s wheat, pulling its combined good-to-excellent rating down to 17% from 18% a week ago. Farmers and market analysts say the decline is the result of dry soils.\r\n The National Weather Services’ drought monitor <a href=\”http://droughtmonitor.unl.edu/data/pngs/20140218/20140218_usdm_home.png\”>Your text to link…</a> clearly shows the bulk of the US’ Hard Red Winter wheat belt suffers from drought ratings ranging from abnormally dry to exceptional drought, the worst kind.\r\n And the extreme cold and snow in Canada continues to hamper grain movement, most notably wheat, into the US. Once the weather warms seasonally, this is expected to get better, but until then, wheat markets remain supported. The Canadian Ag Minister has met with grain companies and railways to find a solution, but it’s hard for government programs to fight nature.\r\n Ukraine could become an even more aggressive grain exporter if Russian threats to restrict imports from the embattled country are carried out. Monday, Moscow warned that concerns about veterinary standards and food quality could limit imports under new leadership.\r\n The dry US wheat conditions could lead to larger-than-normal February placements of cattle into feedlots as farmers remove them from fragile wheat lands a few weeks early. Crops that have broken dormancy are at risk of cattle biting off essential plant parts that produce the wheat, and depending on the variety, farmers will want to get the cattle off by mid-March.\r\n No cash cattle sales were reported Monday, and trading interest was very low after a late-week blast of action last week. Cash cattle traded last week at $144 to $145 per cwt in the southern Plains and up to $148 in the Northern Plains, all up from $142 the previous week.\r\n Market analysts are calling for steady cattle prices this week since beef markets appear to be holding their own as retailers begin the slow, tentative switch to more grilling items that will appear in showcases beginning in March in the south.\r\n The USDA reported higher beef cutout values Monday, possibly the result of good weekend business. Choice boxed-beef was reported at $215.82 per cwt, up $2.07, while select product was up $1.79 at $212.67. The choice/select spread widened to $3.15, and there were $106 fabricated loads sold into the spot market.\r\n The CME Feeder Cattle Index for the seven days ended Friday is $170.57 per cwt, down $0.20. The March Feeder Cattle futures contract settled Monday at $170.20, down $0.50.\r\n
Cattle feeding is pretty straightforward - doing it profitably isn't.