Russia launches an ICBM with conventional weapons.

This morning’s grain trade had seen wheat post the strength overnight as Russia used an Intercontinental missile to make a strike on Ukraine. Traders are working to determine whether the escalation between Russia and Ukraine is severe enough to disrupt grain production or trade out of the region, but so far, they seem to believe it is not. After having used US-produced long-range missiles on Russian targets to start the week, we got confirmation yesterday that Ukraine had used British-produced weapons in an attack on Russian soil as well.

Russia continues to say this is an escalation that will not go unpunished, adding it can and is willing to reach a US missile base in Poland if provoked. The situation potentially saw another escalation overnight as well, with reports from the Ukrainian Air Force that Russia targeted Eastern Ukraine with an Intercontinental Ballistic Missile (ICBM). If true, this would mark the first time a weapon of its kind has been used in warfare, as they have been designed to carry nuclear weapons an extended distance. A Western official quickly denied the claim, though officials say it is too early yet to tell, saying they are studying video and evidence on the ground.

Japan is moving to increase its ethanol blending mandate. There is talk that they will strive to reach an e10 blend in their fuel by 2030, with an e20 target by 2040. With much of Japan’s fuel infrastructure not necessarily set up for increased blends, it will take time to see a sharp jump in demand. However, with Japan’s limited ethanol production capacity, they will likely rely heavily on ethanol imports to meet their goals. In yesterday’s reported ethanol trade, we saw another solid week of ethanol production, though the overall figure was down on the week. Stocks saw a slight build, but we have also seen supply movement into the Gulf, something that supports the idea we will continue to see record or near-record ethanol exports to finish the calendar year. However, the recent rally in corn and the decline in oil prices has pushed national grind margins into the red. The losses of US ethanol producers will start to worsen due to discounted energy values into 2025.

Brazil and China continue to sign new ag trade pacts. They included Brazilian meat/grain on Wednesday following the G20 Rio meeting. China approved the importation of Brazilian sorghum as a new source of supply, and this was in a snub of US sorghum, which is historically used to produce a drinkable alcohol called Baijiu. There are no import restrictions on sorghum into China.

Yesterday, cattle futures consolidated recent strength and settled mixed. Feeder cattle futures did extend their gains and closed higher with January feeders marking the second consecutive close above the 200-day moving average. The cash feeder Index extended weekly gains, advancing $0.58 to a 15-week high of $254.26. The index is now within $8.00/CWT of the July record high. Negotiated fed cattle trade has still been thin, with limited volume in Nebraska reported at $290, which was steady with last week. Cattle slaughtered midweek has totaled 371,000 head, 13,000 more than a week ago, but 11,000 head fewer than a year ago. Meanwhile, box beef values were weaker, with choice declining by $2.40 and selected off by $0.92.

This Friday at 2:00 p.m., there is the Cattle on Feed report. The October marketing rate is 105%, placements are 104%, and the November 1 feedlot inventory is 100% of a year ago. Both the placement and marketing rates will be at 5-year highs. December cattle will likely watch the cash market to lead an attempt at 188-190.