Wheat futures lead overnight weakness.

This morning’s grain trade is softer led again by wheat, as French milling wheat breaks to new three-week lows, but still well above its August low. Russia continues to reach for market share even though supplies will dwindle at the year's end. Much of the pressure seen yesterday in soybeans was driven by potential negative developments for vegetable oil demand worldwide. First, President-Elect Trump’s new choice for the head of the EPA has a troubling history with biofuels. From co-sponsoring a bill to basically do away with the Renewable Fuel Standard to arguing that higher ethanol blends were impractical, Zeldin has not been what one would call friendly to the industry. In addition, rumors began circulating that Indonesia was possibly looking to push back their B40 biofuel mandate, which sent Palm Oil prices tumbling, pressuring bean oil.

While the B40 mandate delay rumors proved unfounded, the Indonesian government reiterated its commitment to not only B40 in 2025 but also targeting B50 for 2026. Soybeans have recovered from their middle of the night lows, after Indonesia confirmed their plans for B40. As Trump fills his administration, worries over how we approach our trade partners over the next few years remain. Senator Marco Rubio has been chosen to fill the Secretary of State role. Rubio is not a fan of China and has been barred from being able to enter the country with a handful of other Republican Senators since 2020. Rubio has said as recently as last week that the war in Ukraine is a stalemate and needs to be brought to a swift end as well.

Yesterday’s export inspections were in line with expectations, and though we saw a slight slowdown in corn and soybean shipments, both remain ahead of where we were a year ago. Strong corn shipments have pushed us to outpace last year’s early season loadings by over 30%, with the USDA only forecasting a minor increase. Soybean shipments are ahead of last year but need to remain relatively stout through the end of January to meet current USDA projections. Wheat shipments were at the high end of expectations, as the recent basis and spread strength has indicated an uptick in nearby demand. The quick pace of corn and soybean harvest has also allowed wheat to regain some space in the export pipeline.

After the close, the quick harvest pace mentioned was confirmed, with over 95% of corn and soybean crops harvested. The ease at which the pipeline was able to handle the crop with a near record-fast harvest pace in the face of several logistical hiccups is nothing short of amazing.

The overall trade is running with the bearish attitude that Chinese demand for corn, wheat, and soybean imports in 2025 will slow down amid domestic oversupplies. China’s ag ministry sees its 2024/25 soybean imports at 94 MMTs on sliding hog feeding margins. China has been stockpiling soybeans ahead of the potential trade scuffle with the US, so future import demand remains a question. When there is uncertainty, the markets revert to selling until proven otherwise. The grain trade needs to see exports improving to nontraditional customers to offset bearish thoughts, given the current strength in the US dollar back to the price levels on the high side of the past few years.

Yesterday, live and feeder cattle were higher, and there is a steady outlook for early trade this morning. December cattle is trying to recover and close the gap made last Friday morning. Initial asking prices this week in the South are quoted $188-189 which would be $1-2 higher, Packers have yet to show any interest in trading this week. The midweek outlook is anticipated to be steady.

IA State University estimates cattle feeding margins showed a positive $26/head in October. This was a $98 increase over September but $118 less than a year ago. Compared to last year, the average feeder cattle cost was $483/head higher, feed costs were down $20, while the average sales live price was up $4/CWT. The $104/head interest cost was unchanged from September and reached a record high. Estimated returns on finishing 560-pound calves were significantly higher at $251/head.

December live cattle created early week lows in the support area of 182.50-183.00. That area has now become significant, with closes below that level bearish. Resistance is 185.00-185.50.