Brazil roadblocks and Putin comments influence night trading.
Grain futures were mixed overnight, with wheat and corn moving lower on comments from Pres. Putin that the grain corridor was “suspended, not canceled.” This created confusion which immediately brought about selling despite crop ratings for the winter wheat crop at 28% GD/EX, below the 40% estimate. Soybeans moved sharply higher as Brazilian farmers blocked roads in protest of what they believe was a stolen presidential election which was the closest in 36 years.
Other news on soybeans is that the Brazilian real created a bullish reaction to Lula’s presidential win. There also appears to be stable US export demand and rising veg oil/minor oilseed markets, which are still leaning positive. Overnight Malaysian palm oil soared 185 ringgits to a 9-week high. Crude oil also gained almost $2.00 per barrel overnight with the risk-off mentality flowing through the investment community with the US dollar down ¾% as the Federal Reserve gets underway with their two-day meeting. The rate hike occurs on Wednesday at 1:00 p.m. with the press meeting and communiqué at 1:30.
With Putin’s comments, the grain markets will be watching for what does develop over the coming weeks and months for export tonnages out of Russia and Ukraine. Keep in mind that Ukraine can still export 3 MMTs of grain through the west via rail and River tributaries. Brazilian corn FOB basis is little changed this morning though offers are difficult to find after the new year. US corn and wheat prices are noncompetitive, even with an Argentine shortfall in wheat supplies, their currency advantage has them cheaper.
The EU and GFS models have South American weather showing dryness until November 10. Still, November 11-15 guidance maintains a return of normal precipitation to all of Brazil, but Río Grande do Sul in the far south. The Argentine drought worsens nearby, but there remain hints of regional shower activity across key areas of Córdoba and Santa Fe by mid-month. The Eastern half of Kansas and Southeast Nebraska have chances of meaningful rain again built into early next week.
Live and feeder cattle started the week lower yesterday, as December live cattle moved back to test the old contract highs, uncovering strong demand and finishing back to the better levels of the day. Feeder cattle were able to overcome the sharply higher corn market and mounted a modest recovery as well closing near the better levels of the session. Live cattle supplies remain tight, and feedlots will be looking to add $1-3 to sales this week. Box beef was firm on Monday, with choice gaining $0.39 while select was down three cents. The current percentage of carcasses making prime grade is below 2021 over the past year, while select ratings have been above.