Grains recover on Turn-around Tuesday
Turn-around Tuesday is in full force today, with metals and energies in recovery mode, supporting grain, after yesterday’s climactic false rumor of a 500,000 BPD increase in oil from OPEC was rejected midday by an OPEC minister, creating a dramatic decline and reversal on Monday that had seen grains plummet early and recover late in the session. Follow-through action is occurring today with the Thanksgiving Day seasonal price lift trying to play out.
Yesterday Brazil reconfirmed that it would hold its biodiesel blend in diesel at 10% through March. The proposal is to raise the biodiesel blend rate to 15% as of April 1. However, the new Lula administration can and is likely expected to alter this proposal once he is installed in January as the new president.
Ukrainian and South American FOB corn is offered well below US Gulf prices through May, with Brazilian February soybeans $0.85 cheaper than the Gulf. Even US FOB SRW and HRW wheat are so expensive that Polish wheat is being imported into the SE US. The US grain trade is riding predominantly on domestic demand. A December 9 rail strike is being monitored. It may require an act of Congress to circumvent, as it would be a price blow to delivery rates with the Mississippi already a transportation problem.
Weather models for S America represent daily showers to drop across most of Brazil, with the 10-day rain accumulations in the 3-6.00” range. Rio Grande do Sul holds in a near to below normal rainfall pattern with totals of .5-2.50”. There are 8 to 9 days of dry weather forecasted for Argentina again, with high temps ranging in the 80s to mid-90s. The next chance of rain there is November 30-December 2.
The live and feeder cattle trade was firm yesterday, marking strong closes with a steady outlook offered for early trade today. It’s a shortened week in full production, with the plans will be next week. Choice cutout gained $0.70 while select was $0.40 higher. The choice select spread is now $22.34 choice premium. It was noted that the percentage of cattle making a choice grade for the week of November 12 was an irregular 73.6%. Seasonally choice grade percentage tends to increase into the middle of the first quarter.