Mixed grain trade overnight.
This morning's grain trade is softer after soybeans had seen overnight follow-through buying, with meal pushing to shy of the 440/ton price range before retreating in the early morning hours. US export demand and strong physical disappearance will continue into early spring, as Argentina is not exporting meal anymore until next April. Due to last season’s severe drought in Argentina, meal demand is record large. Argentina will likely run out of beans to process in November, according to the CEO of ADM. Argentina’s Rosario Grain Exchange said over 90% of crop-growing areas received 30mm of rain this past weekend, which will improve wheat conditions and expected yields. More rain is expected early next week.
The EIA’s weekly US energy report this morning is expected to show another modest uptick in weekly corn grind. US crude stocks last week’s release were down, which is counter-seasonal and is key to inventory stabilizing by late autumn. The Middle East conflict aside, exports are absorbing US crude production gains. The soy oil market is becoming very oversold, but after the new year, it will experience renewed demand with more biodiesel plants coming online. Stocks are well below last year’s supplies at this time.
The South American forecast again remains split with Brazil’s northern ag belt, where almost half of the beans are grown, will have too little rain, while Argentina’s ag belt will receive favorable wet weather. Matto Grosso, Northern Goias, and Bahia, where over 40% of Brazilian beans are grown, have a high-pressure ridging aloft over the next 10 days. This puts storm tracks of rain costly across Paraguay, Rio Grande do Sul, and Parana, where 10-day precipitation accumulations will range from 5.00 to as much as 10” of rainfall. Dryness continues in Mato Grosso into November 4, where temperatures now leave the 100s and stay in the mid-/upper 90s.
After a volatile session of lower-than-higher trade Tuesday, live and feeder cattle prices closed mixed with a steady outlook for today. Again, negotiated fed cattle markets were quiet yesterday on limited demand. Small numbers reportedly sold in IA/MN in the $183-184 range on a live basis, which was $3-4 lower, and dressed sales at $288-290 were down $3-5. The rest of the week is expected to follow a similar weaker trend.
The USDA’s feeder cattle price forecast was updated last week and is well above the CME futures following this week’s collapse. USDA lowered its fourth-quarter forecast by $5 to $254 but left the 2024 forecasts unchanged. Futures are now $15-19 under the USDA’s Q4 forecast, $1 one-one 500 Q1 forecast, and is aligned with the USDA for the rest of 2024. We now have all CME feeder contracts through March below the cash index.