The grain trade pushed higher overnight, with soybeans and wheat seeing double-digit gains

This morning’s grain trade is higher across the board, as the Trump Trade, rains in South America, and fears of slowing grain sales could not get soybeans to push below 975 on Monday. With so much negative news digested, short covering is a feature of the bearish index funds as they pay taxes on profits marked to the market at the end of the year. This helped soybean recovery strength in soybean oil, as Malaysian palm oil futures again pushed sharply higher overnight. Malaysian palm oil pushed back to near contract highs, putting US soy oil prices at a record $0.12/pound discount to palm oil, maintaining strong export demand. WASDE has dramatically understated US soy oil exports and will have to account for this in coming reports.

Russian winter wheat crop ratings show that well over one-third (37%) of the crop is rated poor. This is the highest in a decade, and like US ratings, the Russian winter wheat crop rating has little correlation to the final 2025 yield potential. What stands out is a correlation between final harvested acres, as winterkill wheat could be plowed up and seeded to different spring crops during April/May. Russian fob spot wheat prices are $225/MT bid and $226/MT offered.

ERS/USDA will be providing an update to US 2024 Farm Income today, and a further decline in trade is expected to weigh on crop revenue. The lame-duck session US Congress has not made any headway on ad hoc Disaster Assistance bill or an extension of the 2018 Farm Bill. With only 12 days remaining in the 2024 legislative calendar, it’s hoped that today’s US Farm Income forecast will push Congress to act.

The favorable South American weather pattern has become old news over the past five weeks. It looks to be maintained for another two weeks. Rain will return to Argentina in the 10-15-day window.

Live and feeder cattle futures closed lower on Monday after an early rush to new highs. January feeder cattle stalled right at continuation trendline resistance before reversing sharply lower. Rumors of Tyson closing a corned beef processing plant in Kansas in February created the selloff. With January feeder cattle reaching a 5-month high and then closing lower, forging a bearish outside reversal day down the charts, mending will take some time if further selling does develop first. The cash feeder Index started the week at $2.81, higher at $257.13, and was above the January/April feeder contracts.

Following a sharply higher cash trade last week, the negotiated fed cattle trade is quiet and will likely wait until Thursday. Box beef gained to start the week, with choice rising $2.14 and select picking up $2.70. The commitment of traders report showed for the week ending November 26, funds bought 6981 live cattle contracts against commercial selling of 3421. Funds have purchased 77,000 contracts in the last 10 weeks, the most since 2019 and the third largest on record. With such large positions, technical selling from yesterday could prompt index funds to lighten more positions, making for a choppy play the rest of the week on the board.