KC wheat leads overnight grain weakness.
Grain futures are mixed, with wheat sharply lower, Kansas City making new calendar year lows, while soybeans give up strong overnight gains. Soybeans rallied on the poor planting progress experienced on Friday afternoon's Brazilian progress report. First notice day delivery intentions against November soybeans is tomorrow, with 0 to 150 contracts expected. Also, the EIA will release their biofuel month production report with everyone looking to the size of the US oil demand during August.
The US Central Bank will start its November rate decision tomorrow, October 31, and will announce a decision on Wednesday, November 1, at 1:00 p.m. They are expected to hold rates steady while still maintaining a higher for longer theme. Over the weekend, Israel's war against Hamas reached a new stage of hand-to-hand combat, raising Middle East tensions geopolitically, which will be the focus of the bank rate policies as well.
Ukraine’s Grain exports are reportedly down by nearly 50% in October. Ukraine’s Ag Ministry reported October export data showing a volume of 2.15 MMT vs 4.22 MMT in the same month a year ago. Since the July 2023/24 marketing year began, grain exports are 8.9 MMT compared to 12.9 MMT in the year earlier.
Brazil’s soybean seeding reached 40% compared to 46% last year as farmers have delayed seeding progress awaiting rains across North Central Brazil.
South American forecast models are in better agreement, but a blend of the GFS/EU seems to be the best solution for forecasting two-week rainfall totals. The stuck weather pattern prevails with above too much above-normal rain for Southern Brazil and near to below-normal rainfall for Northern Brazil under a high-pressure Ridge. The start of a normal monsoon is not yet showing, but the EU model is offering better rains across the Amazon than what had been suggested in recent days. The GFS is drier in the forecast for N Brazil, which has been the case for most of 2023 to date. The concern for such delayed planting of soybeans not only extends our export season through February but puts the safrinha corn crop at risk of getting planted so late that it will pollinate during the warm/dry season when the monsoonal rains have ended in April.
Live and feeder cattle closed lower last week despite recoveries in the futures market later in the week. Negotiated fed cattle is also lower, with initial sales in the north $2-4 lower at $183-185, but trade did climb later in the week to $186-187. Early sales in the South were $2 lower at $183, with packers there as well, lifting bids to $184-185 late week. The Commitment of Trader’s report showed that for the week ending October 24, funds had liquidated 20,500 contracts of live cattle. There have been only nine other weeks since 2006 that liquidation was as large or larger. Last week likely created a washout of longs that had gotten tired of owning the marketplace and helped formulate a correction in the long-term cyclical bull market. It’s a cash market that’s anticipated to maintain the bull trend, with November still being a month of sideways action before strong seasonals turn the market higher in December.