Soybean values break to new contract lows.

A widely mixed trade with wheat higher, while soybeans tumble as the Continuing Resolution Bill before Congress offers nothing for soybean oil but has E15 year-round for ethanol in it. The bill before the U.S. House includes $31 Bil of aid for farmers being labeled as disaster aid and economic assistance. $10 Bil will be distributed to farmers according to the Farmers Assistance and Revenue Mitigation Act. The bill includes a one-year extension of the 2018 Farm Bill and allows for the year-round sales of E15.

Soybeans have broken down overnight with nearly ideal weather across Brazil, with only pockets of dryness seen across South America being given much of the credit for the recent sell-off in soybeans. Increased production estimates out of Brazil have us looking at upwards of 20 million metric tons or 735 million bushels of additional production year over year in the face of what traders fear is slowing Chinese demand.

However, another factor playing a major role in some of the selling pressure we are seeing is the collapsing Brazilian real, and ideas Brazilian beans will only get cheaper as we move ahead. Brazil’s currency is one of the worst-performing currencies in the world, losing over 20% in 2024. A battle between the country’s left-leaning president and the central bank over fiscal policy and government spending has resulted in a sharp drop in investor sentiment and worries Congress will leave for recess at the end of the week without fixing a significant gap in their budget.

World vegetable oil values have also come under pressure after running out of buyers and reaching resistance levels that had prompted aggressive speculator selling prior. Indonesia is still planning on implementing B40 after the first of the year, though market bears say it will take months to see that type of blend rate, with questions of whether it is even achievable in the first year. A slowdown in the physical market as we head into the end of the year, and the holiday season is behind some lackluster trade as well, as cash transactions are relatively limited, with traders covered for the most part into January.

Intermarket spreading is finding buying interest in the wheat against firming French milling wheat values. French milling wheat is again today challenging the 200-day MA, with closing above it signals that wheat values want to rise. Meanwhile, we continue to see US domestic values soften in comparison to attract new buying interest from nontraditional customers.

On Tuesday, it was a mixed trade for live and feeder cattle, while the cash index supported feeder cattle with solid gains. A small number of cattle reportedly traded in Kansas at $191.50, which is near steady with last week's periods. Cattle in the South were offered at $193-195, with no Packer interest reported. Box beef prices had choice down $1.74 as the rib primal failed nearly $32/CWT. The rib primal typically forged the seasonal Heiner December and falls into year-end.

This Friday is the monthly Cattle on Feed Report, with the average trade estimates calling for November marketings at 98% of last year and placements at 95%, while the December one feedlot inventory is anticipated to be 100 percent of last year. If realized, the placement rate would be the lowest in four months and the lightest November placement rate since 2016. With such a large ownership by index funds, it’s anticipated that rallies will be kept in check in the coming weeks as profit-taking and position adjustment into year-end could keep the board and check challenging early week gains being the target.