The November WASDE report is out at 11:00 CT a.m. today.

This morning’s grain trade has soybeans leading any strength after seeing heavy selling yesterday hit after it climbed over 10.00 in the morning. What caused the selling yesterday morning was rumors circulating that Chinese buyers were looking to wash out purchases from the Pacific Northwest. As the day progressed, the rumored washouts or contract cancellations became a potential rolling forward of a cargo or two. This helped soybeans recover late in the day in the overnight session. From a margin standpoint, it would make sense for some Chinese crushers working with multinational global companies to look at supplies out of the Southern Hemisphere. However, we must be aware that Brazil's cash pipeline will remain relatively tight through March, keeping buying interest focused on the US for anything that must be shipped in the next few months. With Chinese crush margins sitting around breakeven through April, we will likely continue to watch their purchase pace slow, with government entities the main buyers in the meantime.

Today, we will get updated supply and demand figures from the USDA, with traders expecting minimal changes to ending stocks. With minimal adjustments to world numbers expected, we will not get a domestic production update for corn, soybeans, or wheat in today’s figures. Traders anticipate a slight reduction in corn-ending stocks, down 30 million bushels from last month at 1.91 billion bushels. Soybean carryout is expected to come in unchanged to just slightly lower, with the same one-million-bushel reduction expected for domestic wheat ending stocks.

Yesterday’s export inspections showed corn shipments at the top end of traders’ expectations, soybean shipments in the middle of the range, and wheat shipments below the lower end of what traders were expecting. The sharp drop week over week in soybean shipments was much discussed with the morning washout rumors. Many want to say the week-over-week decline was disappointing, though when reviewing past inspection data, a drop this week from the strong Oct/Nov pace seen is relatively seasonal. Corn shipments remain well ahead of a year ago, matching the growth in the sales program of over 30%. With the USDA currently forecasting around 2% growth in export sales year over year, many believe an adjustment to export demand is inevitable in upcoming supply and demand reports. As mentioned, wheat shipments were relatively poor for the week, though with the overall shipping pace also 30% ahead of a year ago, with the USDA forecasting a 15% increase, there is room for a slowdown.

China released their updated supply and demand figures this morning, with a slight reduction in their corn production estimates, down just over 3 mmt or 125 million bushels from last month. Rumors of quality issues continue to circulate regarding Chinese corn, with thoughts we could see a move to import better quality supplies after the Lunar New Year Holiday. However, with port stocks in Northern parts of the country hitting 2018 highs, the volume of imports we will see feels difficult to pin down.

Yesterday, live and deferred feeder cattle recovered from last week’s late selling. Every live cattle found support at the 200-day MA and found technical buying. Feeders closed softer even though the cash feeder Index was $0.42 higher to start the week at a record high of 262.25. Last week’s negotiated trade had packers buying 75,080 head, which was down slightly from the previous week, but negotiated volumes remained well above a year ago. 57,119 head were for 1-14 day delivery and 17,961 for 15-30 day delivery. Sales price transactions ranged from $297 for negotiated grid sales to $308 for forward contract sales. All sale types were above year ago, with negotiated sales seeing the largest annual increase of $ 28.

December live cattle have now gone into delivery and are trading slightly above February. This should help Quicken marketing rates. Fed supplies are tight, which could limit late-year corrections. February cattle will hold a broad range on the charts that maintain $184-190 into the year's opening.