This morning's grain trade will have soybean oil sharply higher while soybean meal will be lower.

This morning’s grain trade will have an interesting take on soybean products. A sharp reversal of Wednesday’s action will occur as Indonesia will install their B40 biodiesel blends on January 1, which will have soybean oil sharply higher. Conversely, soybean meal will be lower as large deliveries were posted against soybean meal while no soy oil contracts were tendered.

Russian FOB wheat is bid $1/MT lower at $225/MT, with a new agency in Egypt tendering for wheat directly. Export sales this morning for wheat were at 366,800 tons, pretty much as expected. Soybean sales were strong at 2.49 MMTs (a marketing year high, with China taking a large portion of that and having unknown sales of large quantities switched to China). With Malaysian palm oil surging against prior highs and US soy oil being the cheapest world veg oil and export demand occurring, soybeans will be interesting to watch if meal weakness cannot offset soybean oil strength anticipated on this morning’s opening.

Deliveries against the December soybean meal contracts were the largest ever, with no strong stoppers. There were 776 contracts, with Bunge putting out 400, Cargill 300, and ADM 76 contracts. In other deliveries, 111 contracts for corn and 105 contracts for KC wheat were delivered. No Chicago wheat, oats, or soy oil were delivered. The Brazilian real declined to a record low of 6.06:1 US dollars this morning as the Brazilian government failed to plug the looming massive budget hole with tax increases (they cannot just freely print money as the US does). The Russian ruble also reached a low of 112:1 US dollars and is trading at 107:1 early this morning.

Late Wednesday, it was noted that Mexico and the US are making political progress on the border and migration issue that may forestall a trade war. President-elect Trump stated he had a conversation with the Mexican president and felt that they could avoid any need for tariffs.

Favorable South American weather patterns held across Brazil, Argentina, and Paraguay into December 15. Some Brazilian crop estimates are now growing to 172-175 MMTs, which will place considerable pressure on world valuations if they maintain this into the New Year. Soil moisture for the total South American region is considered adequate to surplus.

Live and keep feeder cattle futures bolted higher again on Wednesday. Negotiated fed cattle trade develop higher in all regions. Live sales in the north were $3 higher at $190 while dressed sales were $5-10 higher at $295-300. Live sales in the South were $5-6 higher for the week and $189-190. Estimates of the 5-area average price are near $190. This matches the October high as the best price since early August. Box beef values were lower on Wednesday but still holding onto weekly gains. Choice was off $0.31, while Select fell $1.19.

December cattle are now back testing our long-standing resistance near 190 and are still trading $2 under last week’s cash trade. Wholesale beef prices, though, remain at record seasonal levels, which typically could host a seasonal high this week. The December/February live cattle spread does not offer incentives to hold onto cattle and should quicken the December marketing rate.