South American weather affects North American prices
With the North American crop now mostly in the bin, grain traders are turning their attention to South America.
Brazil is the second-largest producer and exporter of soybeans and the condition of that crop affects world oilseed prices, including canola.
An indication of how quickly weather problems in Brazil can affect Chicago futures prices came last week when news that the coffee bean crop was hurting because of dryness spilled over into the soybean pit.
Coffee futures prices rose 40 percent in a few days on fears of crop damage.
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Soybean traders got caught up in the worry and bid up the November contract by about eight cent, or 1.6 percent.
But by Monday, rain had fallen in Brazil and soybean prices were back to where they started.
The large stockpile of American soybeans is a heavy weight that the market can’t sustainably lift to a high price, as least for now.
But traders will continue to keep an eye on Brazil.
While concerns last week focused on dry conditions in the northern part of the country, southern regions are wet, which raises concerns rain could delay summer corn planting and winter wheat harvesting.
Farther south, in Argentina, a major competitor in the world wheat market, there is a more significant weather problem.
It has been dry for two or three weeks. Wheat in the key-growing region in the south has not been damaged yet, but northern crops are beginning to suffer. Rain is needed soon.
We’ll try to keep you updated on South American weather.
Cattle strong
The other big market news last week was the strength of the demand-driven fed cattle market.
In the United States, the cash market early this week was paying more than $72 (U.S.) per hundredweight, the strongest price since 1997.
Thank goodness consumers are loading up on meat because the supply is also the largest it has been for some time.
In fact, demand for all meats is way up. The booming U.S. economy has raised employment and wages and people are putting some of their new wealth into steaks, pork chops and chicken breasts.
Food service buying for millennium New Year celebration parties is the icing on the cake.
Another positive is that since the beginning of September, the value of cattle byproducts such as hides has risen $10 per animal to about $114. Last year at this time, the value was $72-$73.
