Will Russia/Ukraine have issues again over the weekend?

This morning’s grain trade has turned firmer after a soft trade, with the US dollar pushing to a new 13-month high of 108.07 before retreating half its gains. Despite the dollar's strength, gold pushed over 2700, while bitcoin challenged 99,500. We could see a short-covering day today, with players not wanting to have any increased short exposure going into the weekend. It appears that most of the new confrontations we have been seeing in the Russian/Ukraine war that appears to be escalating have been occurring over the weekends.

Yesterday morning’s export sales figures showed another week of solid business, with soybeans and wheat on the higher end of expectations and corn in the middle. Corn’s export growth so far this year versus last is remarkable, already sitting 8 mmt or 315 million bushels larger than last year’s book at this time. With over half of the USDA’s projections already committed before the end of the first quarter of the marketing year, it appears the USDA may have to up its export demand figures in upcoming supply and demand estimates.

Soybean export sales are now 9% ahead of last year, with the USDA forecasting an 8% increase year over year. However, when it comes to the corn and soybean business down the road, traders are quick to point out the trade risks that come with Trump’s tariff plans. Many believe the corn business we are seeing is heavily frontloaded due to those risks, which will only become clear with time and if we see strong purchasing continue or slow as we move ahead.

When looking at corn purchases, it is also interesting to note the aggressive purchasing pace we are seeing by Unknown. Purchases by Unknown are up over 250% from a year ago, with an additional 5 mmt or 197 million bushels of ownership on the books. Many traders want to say this is Mexico, but with Mexico already off to a record purchasing pace, up 10% from a year ago, why they would toss bushels under Unknown is unclear. Another thought is that it is increased purchases by the European Union, which would make sense after widespread poor crops were seen. However, with all our traditional customers outside of Canada and China up year over year, it isn't easy to pinpoint exactly who would be making the large not-so secret purchases.

Malaysian palm oil has lost 8% this week, making it one of the biggest weekly declines in years. This week, the drop in Palm oil prices cascaded through rapeseed oil, canola oil, and US soybean oil values, putting downward pressure on soybeans. Soybean oil’s recent strength had come from export interest out of the US Gulf, having been the world's cheapest veg oil. Soybean oil export sales rocket higher on this, including this week’s announced Indian purchases of 30,000 MTs, which now has soybean oil surpassing the WASDE forecast for the entire crop year. The large soyoil sales pace will force WASDE to adjust soil trade for cash sharply higher within their December report. What’s uncertain moving forward is the green diesel policy, with the Treasury Department failing to authorize 40 5Z and concerns that the incoming Trump administration will eliminate some of the factors of the 2021 so-called Inflation Reduction Act.

South American weather heading into the weekend has no crop threats, as near-to-above-normal rainfall and mild temperatures will benefit the crops. There is a slice of dryness in central Argentina, but amid a lack of a blocking high-pressure Ridge, it’s expected that the parts area will receive needed rainfall in the 10-day window.

Yesterday, we saw a very mixed trade with live cattle futures, which were softer in the spot months while feeder cattle were again pushed higher. On Thursday in the north, cash sales were initially steady, with earlier in the week's trade of $290 dressed. After the close, cattle were reportedly sold for $290-293, which was steady at $3 higher. Live sales were quoted $2 higher at $1 87.

The November Livestock Slaughter report showed that October cattle slaughter was at 111% of September and 101% of last year. However, the average fed cattle carcass weight was up 10 pounds for the month and 27 pounds heavier than a year ago at 918 pounds. October beef production swelled to 2,426 Mil pounds, setting a high for the year, a 5% increase over last year, and the third largest October production figure on record. The year 2002 and the 2020 pandemic were the only years larger. January-October production was less than 1% larger than a year ago.

This afternoon is the Cattle on Feed Report at 2:00 p.m. Estimates are 100% on feed of year ago, placements 103.5%, marketings at 105%.