Risk-off affects markets overnight, with the US dollar being higher.

This morning’s grain trade is softer, led by the wheat market, as risk-off has hit the marketplace. The US dollar pushed above 104.00 overnight, forcing a correction in the metals, energies, and indexes. It’s estimated that index funds purchase 27,000 contracts of corn and 15,000 soybeans in Monday/Tuesday’s price lift. Australian FOB wheat prices for November/December delivery are quoted at $253-256/MT, off $4/MT from last week and starting to align with comparable European supplies. French milling wheat this morning’s lower by $2.50/MT at 221. Australian and Argentine wheat supplies become available in a couple of weeks.

Corn values in Brazil continue to march higher as the country’s Fuels of the Future bill is expected to boost domestic corn demand for ethanol. Brazilian corn futures hit a new contract high yesterday as farmer selling has all but stopped on uncertainty over the Safrinha production outlook with the delayed start to soybean planting. With last year’s production lower and increased on-farm storage, the grain flow out of Brazil is very different, with exports down over 10 mmt (394 mbu) from last year.

Argentina’s corn export pace has been greater than a year ago, thanks to increased production, but traders there say selling has also slowed recently. Farmers have turned the bushels they needed into cash in the short term while they wait to get a better feel for the weather and the production outlook going forward. Rainfall has returned to the country's core production areas, though models continue to point to signs of possible trouble as we move through December into January and February.

Soybean export demand cannot necessarily be described as incredibly robust, but it appears much stronger than traders had anticipated ahead of harvest. Gulf basis has increased exponentially since the end of harvest, with crushers across the interior firming as well once the combines in the area stop rolling. Many believe farmers have found an alternative to delivering supplies causing the sharp uptick in cash values, while others are starting to wonder if the crop was not quite as large as predicted, with harvest moisture below 10% in some parts of the country.

The South American weather forecast remains consistent with prior runs, with the general agreement that rains will soak both Argentina and Northern Brazil over the next 10 days. Showers will linger in Central Argentina for another 24 hours before 8-10 days of dryness develops. Totals into late Thursday are estimated at 1-2″, and this system by itself allows October rainfall in Córdoba, Santa Fe, and N Buenos Aires to match longer-term averages. Precipitation will be absent from key areas of N Brazil for another 3-4 days, but near daily rain chances are offered for Mato Grosso, Goias and Minas Gerais October 26-November 2.

Live and feeder cattle futures pushed higher yesterday, with a mixed outlook for the opening today and the risk off across the investment marketplace. Live cattle gained on the anticipation of a higher weekly cash trade and feeder cattle gained despite higher corn prices. Bids and offers have yet to develop, but strength in the CME has set the tone for better price. Box beef values were mixed on Tuesday, with the choice cutout picking up a $1.10 to a 14-week high of $323.96 and select was off $1.41 at $294.80. The choice/select spread rose to a $29 .16 choice premium up $4 from a year ago and the second highest on record for late October. The choice cutout has been higher for 13 consecutive days and gained a $24/CWT. It’s a large number of consecutive days higher since May/June 2023. Seasonally, the beef market peaks into the opening of November. The cash trade continues to drag futures higher, as the futures market is fearful of pushing premiums out into the new year.