Again wheat prices lead overnight grain strength.

Light grain strength overnight continued for wheat as Black Sea war tensions expanded. Overnight news surfaced indicating that Ukraine launched its first Western made long-range missiles into Russia that hit an ammunition dump. News that the Biden administration has approved the use of Western-made long-range weapons on Russian soil was celebrated by Ukraine and some of its allies, while Russia struck down the decision as an unnecessary escalation. The timing of the decision post-election and all the conversation about peace talks and negotiations proves interesting, as the Biden administration delayed their decision, which was initially expected back in September.

Ukraine did not waste any time, according to media reports, choosing to strike Russia’s Bryansk Oblast overnight. Russia’s Defense Ministry says Ukraine launched a handful of US made ATACMS missiles, hitting a Russian military facility with one, while air defense systems shot down the others. If true, this would mark the first time Ukraine has used US made long range weapons on Russian territory, marking a major escalation in the war.

In response, Russia updated its Nuclear Doctrine overnight, adding that it can attack non-nuclear countries with nuclear weapons now if they perform aggressions on the Russian Federation or its allies and are supplied weapons or supported by nuclear nations. Russian officials say the adjustment is meant to send a message to The West. This change was threatened back in September and was thought to be one of the reasons the Biden administration had potentially held off on making the initial decision. In addition, Russia added drones to the list of what is considered an act of aggression. How this impacts global trade flows remains to be seen, with some signs of concern showing up in the outside markets but not necessarily seen outside of some minor strength in wheat overnight.

Renewable fuel demand around the world is spurring increased vegetable oil demand, with India in yesterday for another purchase of US soyoil. US soybean oil export sales are off to a record start, already outpacing USDA export projections six weeks into the marketing year. Cheaply priced US soybean oil is seen as a bargain around the world, with continued strong demand expected, something that could create an interesting market dynamic if domestic producers are as short the physical as some say they are. Uncertainty over tax credits after the first of the year is keeping blenders on the sidelines for now, though Biden claims he will clarify 45z tax credits before leaving office.

Yesterday, NASS reported that 49% of the US wheat crop is rated good/excellent, the best in three years. The record wet November has aided Plains wheat, with the Kansas wheat crop now rated at 49% GD/EX. Ratings are expected to improve over the next two weeks before the crop enters dormancy in December.

South American weather shows daily showers across Northern Brazil that produce 10-day accumulations of 3-6.00″. There is no evidence of a weakening monsoon, but it should shift South in two weeks. Temperatures range in the 80s to lower 90s.

A higher start for the week for live and feeder cattle futures on Monday, with a steady opening indicated this morning. December live cattle recovered last week’s losses, while strength and deferred live cattle supported a strong rally in feeders, mostly $2-3 higher. Negotiated fed cattle will likely not trade until Wednesday/Thursday with next week’s slaughter to be holiday reduced. Box beef prices had choice jumping $3.94 while select gave up $0.69.

The November WASDE report made minimal changes to the USDA’s feeder cattle price forecast. Even after the recent rally in futures, the CME generally valued below the USDA’s forecast. Nearby futures this week are $7 over last week’s Oklahoma auction but just $3 under the USDA forecast. The CME is slightly above the USDA for the first quarter of 2025 but $7 under the USDA for the second quarter and $5-6 under for Q3. Feeder cattle supplies have been record low in 2024 and will further tighten in 2025, which will underpin the cash and futures prices on sharp corrections.