Wheat markets dropped sharply during the last three weeks as the news of the Russian drought became factored into prices. A very good spring wheat harvest in the Northern Plains along with active farmer selling of both old and new crop wheat kept the cash markets much more subdued than the futures markets during the drought rally.
Russia did announce an export freeze of all grains, and cancelled several contracts with many countries, forcing those countries to other suppliers like the United States, which saw a huge increase in exports sales to countries that had to scramble to refill those contracts. Recent rains in northern Russian regions are helping to restore moisture conditions as the farmers prepare for winter wheat planting.
Corn prices have managed to hold quite well despite harvest well under way across the south and starting in the lower Midwest. Demand for new crop corn has been robust as exporters need the higher quality corn to blend with last year’s low quality to satisfy export specifications. The soy complex has come under some pressure as the crop looks to be a bit bigger than previously expected.
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Boxed beef prices continued to push higher despite the movement being very light, suggesting that some retailers were short-bought. Cash fed cattle reached the $1.00/pound mark last week as supplies remain very tight and export demand remains much stronger than last year.
Energy prices ran into some headwinds as the Dow tumbled and the dollar rebounded strongly. The weaker economic outlook has cast a shadow on equities and lowered the expectations for energy demand while offering significant support for the safe-haven dollar and pressuring foreign currencies as sovereign debt issues once again come to the forefront, particularly in Europe.
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