WASDE crop report at 11:00

Grain futures were firmer overnight ahead of the USDA WASDE crop report at 11:00 a.m. CT today. Prices softened after the release of the PPI data at 7:30 a.m. as we saw a price rise slightly more than the estimates indicated, lifting the US dollar.

Weather forecasts for Argentina maintain a primarily arid and warm forecast for the next 10 days with a weekend shower potential of .25-1.50”. The rain this weekend is not considered a pattern change but more of an interlude of rain while La Niña continues to weaken. Brazil continues to have favorable weather conditions providing potential yield growth to offset Argentine losses.

Indonesia is working to raise its blending rate of palm oil in its diesel supply to 35% starting in January. Currently, 30% of their fuel oil supply is blended with palm oil. Along with Brazil, a host of Nations are considering raising their blending rates of veg oils to combat rising crude oil prices. On another note, China has announced it will allow overseas traders to trade soybean and soymeal, creating the concept futures on the Dalian Exchange starting December 26.

The EU and GFS weather models maintain that showers will occur this weekend with a return of heat and dryness in the 10-15 day period. The weekend showers are 1.25 and will fall short of evaporation rates. Extreme heat develops again next week, with highs in the 90s and lowers 100s. Soybeans have rallied on the Argentine weather. One must keep in perspective that the Brazilian crop is likely growing as large as the developing losses in Argentina.

The live cattle market traded firm with feeders sharply higher yesterday with a steady better start anticipated today. The cash trade on Thursday was light on moderate trade in the Texas Panhandle and $154, which was $1 lower than last week. Trade in other regions was limited, and additional business will be done later today at the steady lower values. The feeder cattle index peaked back in September at just over $185 and scored a low in October at $172. Nearby futures have pushed above the November highs, which could be the start of the seasonal price lift that cattle futures typically experience into the end of the year.